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How you feel about how your company pays you matters much more than the hard numbers of your paycheck, according to a new survey of more than 500,000 employees by the salary database PayScale.
The survey found that employees believing they had a fair and transparent pay process had 5.4 times the impact on how satisfied employees felt at their company, compared to whether the employee was actually being paid at market value for their role.
In other words, we’re much more sensitive to why and how we’re being paid than what we’re being paid.
Why fair and transparent salaries are so important
Why does so-and-so get paid more than I do? How do raises happen on my team?
When employees know the answers to these questions, they feel like they have more agency over their careers. As any highly paid yet miserable employee recognizes, the zeroes in our paychecks don’t comfort us as much as feeling appreciated and valued by our employers.
“Our study shows that just by having an open dialogue about the pay process and employees’ contributions at the company, employers can ultimately drive better outcomes for their businesses,” Lydia Frank, PayScale’s Vice President of Content Strategy said.
We often don’t know if we’re fairly paid
And the survey found that we could use all the help we can get with clarifying pay processes, because many of us are bad at estimating if we’re being paid fairly. Of the people the survey found were being underpaid at their jobs, almost 90% thought they were paid at or above market rate.
What companies should know
Being transparent about pay doesn’t just keep employees engaged at work — it helps to ensure that they are being compensated equally. Advocates of closing the gender gap argue that being transparent about pay is key to stopping the persistent gap between men’s and women’s salaries. When your company conducts regular pay audits, they can change behaviors and stop unconscious biases between teams.
This study shows us that we care more about processes more than results when it comes to our salaries. To keep us engaged at work, employers don’t just need to have the right answers, they need to show the rest of the class how they got to that number.