PERCEPTION IS REALITY

Transcription

1 PERCEPTION IS REALITY THE IMPORTANCE OF PAY TRANSPARENCY TO EMPLOYEES AND ORGANIZATIONS Rena Rasch, PhD Lena Bottos, CCP To us, business is personal

2 WORKTRENDS TM REPORT Download your free copy from Kenexa.com Copyright Kenexa,an, IBM 2013 Company,

3 SPEAKERS Rena Rasch, Ph.D. Research Manager High Performance Institute by Kenexa, an IBM company Rena Rasch is the manager of the High Performance Institute s Minneapolis team, which she joined in She also manages the Institute s WorkTrends study, an annual employee opinion survey of over 33,000 workers in 28 countries around the world. Rena strives to provide empirically-based solutions to HR practitioners biggest questions. Topics of interest include employee engagement, generational differences in the workplace, trust in leadership, work-life balance and work stress, unionization intent, why employees join and leave their organizations, and many others. Rena received her Ph.D. in I/O psychology from the University of Minnesota. Copyright Kenexa,an, IBM 2013 Company,

4 SPEAKERS Lena Bottos Vice President, Compensation As Vice President of Compensation at Kenexa, Lena is responsible for managing client relationships and assuring accurate and timely delivery of services. Leveraging more than ten years experience in compensation and benefits consulting, she contributes to research on trends in compensation practice and spends time meeting with customers and other compensation professionals to understand the challenges that HR professionals face in today s market. In addition to numerous interviews with media outlets such as NPR, CBS MarketWatch, and the Christian Science Monitor, Lena has contributed to several books and has spoken at conferences for World at Work and the Society for Human Resource Management. Copyright Kenexa,an, IBM 2013 Company,

5 HOW DO YOU KNOW IF PAY IS FAIR? Objective measures Market alignment Internal equity Subjective measures Perceptions Do I feel valued? Do they respect me? Which matters more? Copyright Kenexa,an, IBM 2013 Company,

6 A FEW QUESTIONS Do you believe your employees are paid fairly? Do you believe you are paid fairly? Copyright Kenexa,an, IBM 2013 Company,

7 REALITY PERCEPTION Aligned to the market (median) Equitable across similarly situated employees Compliant with relevant statutes corporate culture coworkers friends & family articles/publications the internet I m not paid enough for the work I do I don t know why they pay me what they do My coworkers who do the same thing make more than I do Copyright Kenexa,an, IBM 2013 Company,

8 KENEXA S WORKTRENDS TM SURVEY Administered annually or bi-annually since 1984 In 2012, taken online by 33,000 employees in 28 different countries Representative sample of workers across the globe > 200 questions about: Employee opinions and attitudes Manager and leadership behaviors Organizational practices Demographic variables Compensation practices Copyright Kenexa,an, IBM 2013 Company,

9 PERCEPTIONS OF FAIR PAY OVER TIME 70% 60% 50% 51% 55% 55% 54% 54% 49% 57% 59% 58% 53% 50% 40% 30% 20% Copyright Kenexa,an, IBM 2013 Company,

10 PERCEPTION MATTERS Fair Pay Unfair Pay Unreasonable Work Stress 17% 54% Turnover Intentions 15% 49% Personal Life Satisfaction 70% 85% Mental/Physical Health 64% 85% Employee Engagement 33% 78% % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent Agree Copyright Kenexa,an, IBM 2013 Company,

11 DRIVERS OF BELIEF IN PAY FAIRNESS Understanding how pay is determined Knowing how to maximize pay Believing pay is related to performance Copyright Kenexa,an, IBM 2013 Company,

12 DRIVERS OF BELIEF IN PAY FAIRNESS 90% Percent Believing Pay is Fair 80% 70% 60% 50% 40% 30% 20% 10% 0% 15% 62% Understand How Pay Determined 77% 67% 31% 18% Know How to Maximize Pay Pay Related to Performance Unfavorable Favorable Copyright Kenexa,an, IBM 2013 Company,

13 BUILDING BELIEF IN PAY FAIRNESS Actual pay level 10% Understand how pay is determined 26% Pay is related to performance 36% Know how to maximize compensation 28% Copyright Kenexa,an, IBM 2013 Company,

14 PAY FAIRNESS AND ENGAGEMENT EEI Score 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 67% 32% 33% Understand How Pay Determined 73% Know How to Maximize Pay Unfavorable Favorable 40% 77% Pay Related to Performance Copyright Kenexa,an, IBM 2013 Company,

15 CURRENT PERCEPTIONS Copyright Kenexa,an, IBM 2013 Company,

16 COMMUNICATION BREAKDOWN? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Understand How Pay Determined 69% 53% Individual Contributor 72% 73% 60% Know How to Maximize Pay 63% Front-Line Supervisor Mid-Level Manager 86% 78% Executive/Senior Manager Copyright Kenexa,an, IBM 2013 Company,

17 REALITY REALITY DRIVES PERCEPTION PERCEPTION Copyright Kenexa,an, IBM 2013 Company,

18 TRANSPARENCY Copyright Kenexa,an, IBM 2013 Company,

19 BUILDING BELIEF IN PAY FAIRNESS Address the key drivers Understanding how pay is determined Knowing how to maximize pay Believing pay is related to performance Copyright Kenexa,an, IBM 2013 Company,

20 FACT: THEY WILL SELF-EDUCATE Understand their sources Recognize the opportunity for dialogue Don t be defensive Silence does not equal understanding Copyright Kenexa,an, IBM 2013 Company,

21 INSTITUTIONALIZE TRANSPARENCY Field HR visibility Manager training Employee education Go beyond base pay Respect your organizational culture! Copyright Kenexa,an, IBM 2013 Company,

22 PAY FOR PERFORMANCE Define what high performance looks like Pay for Performance vs. Increase for Performance Merit matrix Copyright Kenexa,an, IBM 2013 Company,

23 PAY TRANSPARENCY AND COMMUNICATION CULTURE In my organization, there is open, honest two-way communication. Percent Favorable 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 56% Unfavorable 81% I have a good understanding of how my pay is determined. Favorable 37% 72% I know specifically what I need to do to maximize my compensation. Copyright Kenexa,an, IBM 2013 Company,

24 Copyright Kenexa,an, IBM 2013 Company,

25 BELIEF IN PAY FAIRNESS Impacts engagement (which impacts business results) Can make or break our programs Susceptible to external forces Driven by transparency Is within our control Copyright Kenexa,an, IBM 2013 Company,

26 QUESTIONS? Copyright Kenexa,an, IBM 2013 Company,