Only one in three employees feel their pay is fair, finds study

Only about a third of employees surveyed by management consulting company Gartner feel that their pay is fair. The workers who feel their pay is unfair have a 15 percent lower intent to stay in their current job and are 13 percent less engaged at work than those who feel they are being compensated in a just way.

“Employees’ sensitivity to perceived pay gaps is being exacerbated by today’s economic conditions, including rising inflation, and the hot labour market, which is causing a shift in compensation between tenured employees and new hires,” said Tony Guadagni, senior principal in the Gartner HR practice.

For this report, Gartner surveyed 3,523 employees for the second quarter of 2022.

Employees’ perceptions of unfairness can be attributed largely to their trust in their organisations, as per the report. Toxic culture, poor inclusivity, inadequate work-life balance and unfair experiences were cited among reasons leading to undermining trust.

These emotions have grown stronger as budgets have been strained by record inflation and a historically tight labour market has led to new hires earning more lavish compensation than those who remained steadfast during the so-called Great Resignation, the report said.

What companies can do?

“Only 38 percent of the employees we surveyed report that they understand how their pay is determined. When organisations educate employees about how pay is determined, employee trust in the organisation increases by 10 percent and pay equity perceptions increase by 11 percent,” said Guadagni.

The study also suggests that most pay gaps arise from decisions surrounding hiring, promotion and performance assessment.

HR leaders must ensure that managers take pay equality considerations into account when making important hiring and compensation decisions in order to effectively address and sustain pay equity across the firm, the Gartner highlighted.

Developing a pay equity team is also one strategy to be adapted. “An ideal pay equity team consists of leaders and employees across levels, business units and functions with insight into the practices and processes that create pay equity gaps and a visible commitment to pay equity within the organization,” Guadagni added.