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What employees really want to know about their paychecks

Reuters/Gary Cameron
Be clear about pay.
By Corinne Purtill
Published Last updated This article is more than 2 years old.

How can a company retain good employees? Paying them more is one obvious answer. There’s also another, more cost-effective option: being honest with people about why they earn the salaries they do.

The compensation data firm PayScale recently surveyed more than 500,000 employees on their satisfaction at work and intent to leave their jobs. Pay wasn’t the most important factor behind either metric; employees who felt appreciated were the most satisfied, and those who were optimistic about their company’s prospects were the least interested in leaving their jobs.

But pay matters—and so does an employee’s understanding of how the company arrived at the figure on their check.

Employees who believed that their company’s pay process was fair and transparent were 13% less likely to leave than employees neutral on the subject. Those who felt entirely in the dark about what factors into their pay were 57% more likely to plan on leaving in the next six months, said Chris Martin, lead data analyst at PayScale.

Pay-process transparency doesn’t mean making salaries public. It means explaining to employees the factors that go into determining compensation. This information has value. In some cases, employees actually prefer a lower salary disbursed through a transparent process over a bigger paycheck with opaque reasoning. Previous PayScale research (paywall) found that 82% of employees whose companies paid below market value—but explained the reasons for that low salary—remained satisfied at work.

Being open about the logic behind salaries is a relatively inexpensive way to boost employee satisfaction, but most companies aren’t taking advantage of it. Only 23% of workers surveyed said their company was transparent about its compensation process.

“What we saw in a big way with satisfaction is that how people feel about the process matters much much more than what they are paid,” Martin told Quartz At Work. “There’s this thing that companies can do for free, which is improve their communication about why people are paid what they’re paid.”

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