Survey highlights disconnect on fair pay

Only half of permanent employees in the UK believe they are paid fairly and only a third feel that everyone in their organisation receives fair pay, according to new data published by the Chartered Institute for Personnel and Development.

The Reward Management survey suggests some employers may be over-relying on ill-equipped line managers to talk to their teams about pay processes and outcomes, resulting in a disconnect between HR perceptions of pay in their organisation and what the rest of the workforce experiences.

In particular, the report highlights that:

• 75% of HR respondents think all (or the majority) of people in their organisation are paid fairly, but only 33% of all workers (or 34% of permanent workers) agree. Likewise, HR respondents are more likely (86%) than the rest of the workforce (20%) to agree that their chief executive is paid ‘about right’.
• Half of HR respondents say line managers have full or moderate involvement in communicating with staff about pay, but more than three-fifths of employees say they’ve never had an explanation from their manager about why they’re paid what they are.
• Among employees who have received an explanation from their line manager, 60% say their manager had done a poor or very poor job of communicating.
• Of those employers whose line managers play a role in making decisions about employee pay, only 38% assess the effectiveness of them in this role.
• 60% of HR respondents claim that their organisation talks about fairness of pay processes and outcomes, but only 30% have a clear definition of fairness and just 10% of staff say their line manager ‘always’ or ‘often’ speaks to them about fairness.
• Few employers survey their employees to check whether they think pay processes (23%) and outcomes (25%) are fair and just 38% encourage line managers to talk to staff about the fairness of both pay processes and outcomes.

The report also shows that just a quarter of employers say that sharing the success of the organisation with employees, and being seen to be fair while supporting the purpose and values of the organisation, are key influences on their pay policies. In terms of external factors influencing pay policies, just 8% of respondents cited pressure from customers or investors to be fair and only 39% of employers have carried out an equal pay audit in the past three years to ensure they are complying with the law.

Off the back of the new report, the CIPD has the following top tips for HR to help improve real and perceived fairness around pay processes and outcomes. They include ensuring staff are paid a liveable wage, consulting staff on what fair looks like, supporting line managers to talk to staff about pay, ensuring they know what they need to do to get a pay rise and evaluating pay fairness by auditing actual pay outcomes.

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