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The 4 Elements of a Frank Conversation With Employees About Pay Engagement improves when the teams knows they are paid fairly by objective standards.

By Heather R. Huhman

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


Engagement is a major problem in the workforce, and employers are trying everything to fix it. Companies are looking at professional development programs, new perks and benefits, and other strategies to re-engage employees, but they're missing a critical piece of the engagement puzzle: money.

Employees don't want more money to be engaged -- they just want more communication about it. A survey of 71,000 employees by PayScale found that one of the top predictors of employee satisfaction and their intent to leave was a company's ability to communicate clearly about compensation. In fact, open and honest discussion around pay was found to be more important than typical measures of employee engagement.

To keep employees engaged, talk money. Here's how:

1. Compare salary to the industry standard.

Most professionals don't know how their salary measures up to others in the industry. In fact, two-thirds of employees paid the market rate believe they're underpaid, the PayScale survey found.

And when employees think they are undervalued, they will leave. In the survey, 60 percent of respondents who felt underpaid said they intended to leave their employer, compared with just 39 percent of those who thought they were overpaid.

Employees don't have a clear understanding of their salaries, but they need to. Reassure employees they are being paid fairly and show how their salary compares to the industry average.

Related: 7 Things Employees Wish They Could Tell Their Boss About Salaries

2. Disclose when employees are underpaid.

Employers who underpay their employees when compared to the market average may hesitate to reveal this information to their employees. But transparency and communication are valuable to employees than higher pay.

When employers paid lower than the industry standard, but communicated about the reasons for the lower salary, 82 percent of employees were satisfied with their work. Yet employees who were overpaid and didn't have a conversation about their pay with their employers were less likely to be satisfied.

Employees want to know not only are they being paid fairly, but that their salary matters to their employer. In a survey of U.S. and Canadian employees surveyed by Virgin Pulse this year, 40 percent said they wished their employers cared more about their financial well-being.

Show employees they are valued and take the time to explain how their pay is determined and why they make what they make. Explain why they are paid below the average and what they can do to boost their salary.

3. Keep pay transparent across the company.

Employees also don't know how their salary compares to their coworkers -- and they need to. With so much focus on the pay gap between men and women, women are likely to think they are being underpaid, the PayScale survey found.

In the survey, women who were paid more than average for their job were 18 percent more likely to think they are underpaid than men in the same pay bracket. Even when men and women were paid the same, women were still more likely to believe they were underpaid.

Without transparent salaries across an organization, employees may be quick to believe their coworkers are unfairly taking home more money. Adopting transparency across the company may be the best way to show employees what is made at every level, how pay is determined, and that they aren't being discriminated against.

Related: This Entrepreneur Just Announced $70,000 Minimum Salaries for His Entire 120-Person Team

4. Explain benefits as well as salary.

Pay isn't the only factor that impacts engagement. Employees want to have open discussions about their benefits as well.

Among employees surveyed by Quantum Workplace this year, those who said they didn't have a clear understanding of the benefits provided by their employers were 20 percent less likely to be engaged than those who did have a clear understanding. What's more, employees who did not understand their benefits were 3.4 times more likely to be hostile -- a step below disengaged on the engagement scale.

Sit down with employees to review the benefits offered and how they actually benefit them. For complex benefits like health insurance, bring in an expert or representative from the insurance company to explain them in detail.

HR tools like Benesnap can also help educate employees about their benefits. Benesnap keeps benefits information in one accessible place and breaks down the details for employees to understand.

Benefits are just as important as salary, and helping employees understand them will help them feel valued within the organization.

Related: 5 Affordable Benefits Employees Appreciate But Few Companies Offer

Heather R. Huhman

Career and Workplace Expert; Founder and President, Come Recommended

Waldorf, Md.-based Heather R. Huhman is a career expert, experienced hiring manager and president of Come Recommended, the PR solution for job search and HR tech companies. She writes about issues impacting the modern workplace.

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