Establish and communicate your pay philosophy.
- Organizations should decide the level of pay they feel comfortable paying
(i.e., above the market, at the market, or below the market). For example, a
pay philosophy statement could be: "to pay at the mid-point for other
organizations in our industry and our geographic area."
Conduct a salary survey. - Salary surveys can
provide management with a basic understanding of how well they are paying
compared to other organizations. However, be careful in using the results.
Salary survey data rarely reduces employee concerns about their pay. Common
complaints include: "the wrong comparison organizations were used," "our
organization is unique," and "the cost of living is higher here."
Make certain employees know that pay is just
one part of their total compensation. - Annual total compensation statements
should be provided to all employees that clearly show that their total
compensation is far greater than what they see in their paycheck.
Carefully manage the messages supervisors
transmit to employees. - First line supervisors often sabotage the pay plan by
telling employees that their pay is low. Supervisors should be trained as to
what to say about employee pay, how to say it, and what not to say.