With the rise in technology, employers need to work harder than ever to keep employees satisfied while operating within the salary budget.
And this includes being transparent about staff’s salaries, says research by PayScale.
In a survey of 71,000 employees, 82% reported that they were satisfied with their jobs, even if they were paid lower than average, if their employers clearly communicated why they offer smaller paychecks.
More communication, therefore, leads to more loyal employees, according to the data.
“If you aren’t talking with your employees about pay, chances are that they’re talking to each other and creating their own story of what [the company’s] compensation policy is,” said Aubrey Bach, senior manager of editorial marketing at PayScale, as reported by CNBC.
“That’s not a good thing.”
The link behind the conclusion is simple: Armed with knowledge of what the market typically pays. employers and employees make better decisions in salary negotiation.
However, PayScale warned pay transparency can have a downside, if it’s not put in the proper context.
For example, a start-up may not able to afford paying as much as a Fortune 500 company, but it can come with other benefits, such as greater responsibilities and opportunity for growth.
Essentially, both employers and employees need to be on the same page about their compensation policies to facilitate constructive discussions.
“Ten years ago, employers held all the cards. Now, employees can be much better armed with data,” Tim Low, PayScale’s senior vice president of marketing told CNBC.
However, PayScale highlighted only 20% of people today understand how their employer determines pay.
It warned that such a situation needs to be rectified, as with the economy and overall job market improving, employees are better positioned to demand higher wages and walk if they don’t feel they are being fairly recognised or compensated.
In fact, according to PayScale research, the number one reason people left their jobs was, pay.