How do employees at your organization feel about their compensation? If the answer is “Not good,” a bit of explanation from you or their supervisors can calm those troubled waters and help reduce turnover.

In fact, only one-quarter of U.S. employees believe their base pay fairly represents their contributions to their organization, according a Society for Human Resource Management survey.

The solution: Employees report more satisfaction with compensation (and their jobs overall) if their employer fully explains employee compensation, including how much employees earn in benefits and how their compensation levels are determined.

You may offer comfort to disappointed employees by putting their pay into perspective. Some tips:

  • Compare the pay raise to inflation, which is expected to rise at 2 percent to 3 percent this year. An average pay raise of 3.5 percent or 4 percent beats inflation, so employees are coming out ahead.
  • Explain that raises are limited, in part, by the rising cost of health insurance. Employers around the world—not just your organization—are granting modest raises this year. (Point out the health premium increases your organization has shouldered in recent years.)
  •  Illustrate the dollar value of employee benefits by distributing total compensation statements at least twice a year, not just annually.

Final tip: Familiarize yourself with the answers to questions concerning how much your organization’s executives earn.

New Securities and Exchange Commission rules require public companies to disclose how much their top executives earn in pension income and deferred compensation, so your employees can look this up. They may resent the organization for the higher-ups’ high salaries.  

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