<p><em>Pay communications are a cost-free tactic open to all employers and have been demonstrated to deter job-seeking behavior, with a high degree of pay transparency being the most effective at building trust and increasing retention.</em></p><p>Most employees have no idea whether or not they are fairly paid. In the current hot job market, employees who assume the worst about their pay are shown to be 50 percent more likely to seek a new job.</p>

Pay communications 

<p>The truth is that most employers do attempt to pay employees fairly and competitively. According to Payscale’s Compensation Best Practices Report, <strong>over 80 percent of employers say that they pay employees equitably based on salary data to keep employees engaged</strong>. Less than 8 percent of employers admit to trying to pay employees as little as possible to save on payroll costs.</p><p>Unfortunately, <strong>organizations do a poor job of communicating their pay practices and intentions to the workforce. </strong></p>

Pay transparency

<figure><picture><source media="(max-width: 40em)"><img width="705" height="396" alt="Report: More than half of workers believe they’re underpaid. Here’s why" srcset="https://images.fastcompany.net/image/upload/w_562, https://www.fastcompany.com/90679350/ar_16:9, https://www.fastcompany.com/90679350/c_fill, https://www.fastcompany.com/90679350/g_auto, https://www.fastcompany.com/90679350/f_auto, https://www.fastcompany.com/90679350/q_auto, https://www.fastcompany.com/90679350/fl_lossy/wp-cms/uploads/2021/09/p-1-report-more-than-half-of-workers-believe-theyre-underpaid-heres-why.jpg 562w, https://images.fastcompany.net/image/upload/w_937, https://www.fastcompany.com/90679350/ar_16:9, https://www.fastcompany.com/90679350/c_fill, https://www.fastcompany.com/90679350/g_auto, https://www.fastcompany.com/90679350/f_auto, https://www.fastcompany.com/90679350/q_auto, https://www.fastcompany.com/90679350/fl_lossy/wp-cms/uploads/2021/09/p-1-report-more-than-half-of-workers-believe-theyre-underpaid-heres-why.jpg 937w, https://images.fastcompany.net/image/upload/w_1153, https://www.fastcompany.com/90679350/ar_16:9, https://www.fastcompany.com/90679350/c_fill, https://www.fastcompany.com/90679350/g_auto, https://www.fastcompany.com/90679350/f_auto, https://www.fastcompany.com/90679350/q_auto, https://www.fastcompany.com/90679350/fl_lossy/wp-cms/uploads/2021/09/p-1-report-more-than-half-of-workers-believe-theyre-underpaid-heres-why.jpg 1153w"></picture></figure><div dir="ltr"><cite dir="ltr">By Amy Stewart </cite><span dir="ltr">4 minute Read</span></div><p dir="ltr">It’s a crazy labor market. Wages are increasing, job openings are exceeding candidate applications, and employees everywhere are quitting. Organizations are scrambling to figure out <a href="https://www.fastcompany.com/90657446/a-key-mistake-leaders-are-making-is-causing-the-great-resignation-here-are-3-ways-to-fix-them" rel="noopener noreferrer" dir="ltr">retention strategies</a> that will actually work. PayScale recently released a <a href="https://www.payscale.com/data/fair-pay-impact" rel="noopener noreferrer" dir="ltr">fair pay impact report</a> analyzing whether employees know if they are fairly paid and the impact their perception has on job-seeking behavior.</p><div>advertisement</div><p>The results don’t look good for employers. In fact, the analysis shows that most employees have no idea whether or not they are fairly paid. In the current hot job market, employees who assume the worst about their pay are shown to be 50 percent more likely to seek a new job. However, PayScale’s research does signal something employers can do to increase employee retention in a volatile market: pay communications. Pay communications are a cost-free tactic open to all employers and have been demonstrated to deter job-seeking behavior, with a high degree of pay transparency being the most effective at building trust and increasing retention.</p><h2>Most employees believe they are paid below market . . . even when they aren’t</h2><p>More than half of employees (51 percent) believe they are underpaid when they are actually paid at market or above market rates according to analysis of PayScale’s crowdsourced salary data.</p><p>Specifically, PayScale’s fair pay impact report shows that employees really have no idea if they are paid fairly. A whopping 86 percent of employees surveyed believe they are paid at market or below market when they are actually paid above market rates. Meanwhile, 28 percent of underpaid employees believe they are being compensated fairly . . . until they find out otherwise.</p><div>advertisement</div><h2>The perception of unfair pay impacts intent to leave</h2><p>PayScale’s analysis also shows that employees who believe they are underpaid are 49.7 percent more likely to look for another job. Overall, employees who believe they are underpaid represent almost two-thirds of people (65.8 percent) who fill out salary profiles on Payscale’s website. Collectively, Payscale’s research on the impact of fair pay perceptions shows that pay communications are woefully underutilized, a fact which should concern most organizations.</p><p>Pay can be intensely personal. Without a frank conversation with their manager about how their pay is determined, employees are apt to assume not only that they are underpaid when they aren’t, but also ascribe negative intentions to their employers for why they are underpaid. Some will assume that their employer is intentionally trying to take advantage of them when they know that most people with their job are paid more at other organizations.</p><p>When left unaddressed, these assumptions fester and lead employees to seek job opportunities where they believe the pay is better and processes are more transparent.</p><div>advertisement</div><h2>Pay transparency correlates to less of a chance employees will look for other jobs</h2><p dir="ltr">The truth is that most employers do attempt to pay employees fairly and competitively. According to PayScale’s <a href="https://www.payscale.com/cbpr" rel="noopener noreferrer" dir="ltr">Compensation Best Practices Report</a>, over 80 percent of employers say that they pay employees equitably based on salary data to keep employees engaged. Less than 8 percent of employers admit to trying to pay employees as little as possible to save on payroll costs.</p><figure><picture><img alt="Fast Company announces details of seventh annual innovation festival" src="https://images.fastcompany.net/image/upload/wp-cms/uploads/2021/07/poster-fast-company-innovation-festival-annoucement-2021.jpg"></picture></figure>

PayScale’s fair pay impact report shows that employees really have no idea if they are paid fairly. A whopping 86 percent of employees believe they are paid at market or below market when they are actually paid above market.


career

Career

corporateculture

Corporate Culture

<p>It’s a crazy labor market. Wages are increasing, job openings are exceeding candidate applications, and employees everywhere are quitting. Organizations are scrambling to figure out <a href="https://www.fastcompany.com/90657446/a-key-mistake-leaders-are-making-is-causing-the-great-resignation-here-are-3-ways-to-fix-them">retention strategies </a>that will actually work. PayScale recently released a <a href="https://www.payscale.com/data/fair-pay-impact">fair pay impact report </a>analyzing whether employees know if they are fairly paid and the impact their perception has on job-seeking behavior. </p>

<p>The results don’t look good for employers. In fact, the analysis shows that most employees have no idea whether or not they are fairly paid. In the current hot job market, employees who assume the worst about their pay are shown to be 50 percent more likely to seek a new job. However, PayScale’s research does signal something employers can do to increase employee retention in a volatile market: pay communications. Pay communications are a cost-free tactic open to all employers and have been demonstrated to deter job-seeking behavior, with a high degree of pay transparency being the most effective at building trust and increasing retention. </p>

Most employees believe they are paid below market . . . even when they aren’t

<p>More than half of employees (51 percent) believe they are underpaid when they are actually paid at market or above market rates according to analysis of PayScale’s crowdsourced salary data. </p>

<p>Specifically, PayScale’s fair pay impact report shows that employees really have no idea if they are paid fairly. A whopping 86 percent of employees surveyed believe they are paid at market or below market when they are actually paid above market rates. Meanwhile, 28 percent of underpaid employees believe they are being compensated fairly . . . until they find out otherwise. </p>

The perception of unfair pay impacts intent to leave

<p>PayScale’s analysis also shows that employees who believe they are underpaid are 49.7 percent more likely to look for another job. Overall, employees who believe they are underpaid represent almost two-thirds of people (65.8 percent) who fill out salary profiles on Payscale’s website. Collectively, Payscale’s research on the impact of fair pay perceptions shows that pay communications are woefully underutilized, a fact which should concern most organizations. </p>

<p>Pay can be intensely personal. Without a frank conversation with their manager about how their pay is determined, employees are apt to assume not only that they are underpaid when they aren’t, but also ascribe negative intentions to their employers for why they are underpaid. Some will assume that their employer is intentionally trying to take advantage of them when they know that most people with their job are paid more at other organizations. </p>

<p>When left unaddressed, these assumptions fester and lead employees to seek job opportunities where they believe the pay is better and processes are more transparent. </p>

Pay transparency correlates to less of a chance employees will look for other jobs

<p>The truth is that most employers do attempt to pay employees fairly and competitively. According to PayScale’s <a href="https://www.payscale.com/cbpr">Compensation Best Practices Report </a>, over 80 percent of employers say that they pay employees equitably based on salary data to keep employees engaged. Less than 8 percent of employers admit to trying to pay employees as little as possible to save on payroll costs. </p>

Report: More than half of workers believe they’re underpaid. Here’s why

Pay communications

Pay transparency

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