Why do employees think they’re being paid below market rates?

The first thing to know is that if an employee hears through the grapevine that someone is earning a higher salary than they are, that employee will conclude that they’re being paid below the market rate. As employers, we can no longer assume that employees do not talk about their salaries to their teammates and to others outside the organization.

The second unavoidable reality is the increased availability of market information. “Crowdsourcing” and online data are claiming a growing share of online space.

Unfortunately, most people don’t know that conducting a market study (benchmarking) is a rigorous endeavour that involves analysing roles, the business context, the size of the company and the business sector. You know as well as I do that job titles are not enough to compare roles! Databases of verified and neutral sources are a precious commodity compared to what is generally available publicly.

Even if you’ve done your market studies, it’s highly likely that your employees have no idea they are well paid unless you’ve communicated it to them! In fact, all tasks related to remuneration management take place behind the scenes in the interest of confidentiality. Your employees don’t know that you’ve conducted a market study, evaluated the positioning of each job and each employee, and evaluated all the factors to ensure they are well positioned on the salary scales.

So, the next time you hear your company pays below market rates, ask a few questions and be ready to make solid, fact-based pronouncements. Better yet, be proactive in your communications!

Contact us for your next benchmarking.

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