COMPETITIVE? Employers use salary survey data to review the total compensation provided to employees by their competition for talent (aka other employers).

EQUITABLE? Employers perform pay equity audits to determine if pay disparities among employees performing substantially similar work exist. And if they do, employers research what caused the pay disparities and if they are based on legitimate business justifications or gender, race, ethnicity, age, etc. Then employers fix the pay disparities.

WITHIN BUDGET? Employers model the base pay and incentive payouts (sales and bonus) under different scenarios to ensure that they do not overspend.

FAIR? Employees consider not only their own situation but also the situations of others whom they use as references for comparison and to determine if their pay is fair.

* To influence these comparisons, employers communicate the processes used to make pay decisions and the factors considered. The standard processes and consistent use of them on all pay decisions is what influences an employee’s perception of fairness.

* The assessment of whether pay is fair is based on an individual’s perception. It is very difficult for employers to have all their employees believing their pay is always fair.

* There are things that the employer’s pay decision makers know that employees do not know so the difference in perception is normal.

Employers can decide to let go of trying to achieve the goal of fair pay and instead say, “fair is a place where they judge pigs.”

Thoughts?

#payequity #paytransparency #compensation #humanresources #rewards