New study: why it pays to talk about pay

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Too many HR professionals aren't discussing the link between performance and pay with their employees but those that take the time to explain will reap the rewards, says one new survey.

In the study, conducted by CIPD, researchers found that employees are more likely to be satisfied with the outcome of a pay decision if they know the reasoning behind it.

Despite this, just 51 per cent of workers said their organization had explained to them the rationale behind their financial remuneration.

“Businesses that are willing and able to have these discussions with workers could find that it pays off in terms of a greater employee understanding of what the organisation is trying to do,” says CIPD performance and reward advisor Charles Cotton.

Currently, 76 per cent of workers said they hadn’t been told what they needed to do to earn a pay rise.

Cotton added that if employers make the effort to explain pay decisions, workers will be more aware of that is expected of them and will gain a “greater appreciation of how the business will reward and recognize employee success and achievement.”

“These employers are likely to grow and prosper at the expense of firms that are unable or unwilling to communicate about staff pay,” he said.

According to Cotton, “The challenge for employers is to connect investments in increasing staff pay with what the business really needs.”

The number of employees who feel their pay rises do not reflect their performance has risen by 4 per cent since 2013, to 23 per cent.

The study also found that only 26 per cent said their employer was offering them training that would increase their earnings in future.

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