Here’s why one analyst thinks pay is key to better employee retention and satisfaction

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I CAN’T TELL YOU HOW OFTEN I’ve heard that “people don’t leave because of pay, they leave because of their boss.”

Now, as we continue to slowly recover from the pandemic and lockdown, we’re finding out that people leave jobs and take new ones for all sorts of reasons.

But what seems to be most important to people today is what has ALWAYS been most important to people – how much they get paid.

Josh Bersin, the well known HR technology analyst, dug into that not too long ago in his article Why Do Corporate Pay Practices Feel Broken? Because They Are. This cuts to the heart of his argument:

“New research by ADP and also by LinkedIn shows that pay has become the #1 factor in employee satisfaction. And no wonder: inflation is raging, people are overworked, and CEOs keep asking employees to be “more productive” (read “work harder”).

And how do companies keep up? They’re talking about laying people off, getting rid of jobs with AI, and forcing people to come back to the office. And in the middle of this, pay equity laws are getting passed and companies like Goldman are paying $200 million settlements for unfair pay.

Somehow, this just doesn’t make sense.”

Why is pay such a big deal right now?

THIS RAISES A LOGICAL QUESTION — Why has better pay become such a big workplace issue right now? Josh has an answer for that as well:

“Our new research on pay practices identified the problem: corporate pay practices simply have not kept up with the new world of work.

Companies are facing a myriad of new challenges (rare skills which are hard to find, employees working in highly varied cost of living locations, inflation, and a continued war for talent). And what are we using to manage this? A set of old salary bands and job levels designed in the 1930’s and 1940’s.

This problem is getting more urgent. We just finished meeting with Cisco, one of the most esteemed tech companies in the world. When asked ‘what element of your wellbeing are you focused on?’ employees answered that ‘financial wellness’ is by far their #1 priority (70%). And despite Cisco’s competitive wages, 27% have a high debt to income ratio and 44% have a ‘high degree of financial stress.’

Companies need to deal with this.”

I haven’t dug into Josh Bersin’s new paper on this — The Definitive Guide to Pay and Benefits: The Road to Systemic Rewards – but smart and timely research reports are what Josh and his organization does best. I‘m sure that this Definitive Guide to Pay and Benefits is no different.

A pretty good definition of the employee experience

One more thing: Josh is also good at summarizing issues like this into a single paragraph. It’s one of the things that makes him an insightful analyst and highly sought after conference speaker.

He adds this, and it’s not a bad answer to the question, “just what makes up a good employee experience, anyway?” Here’s what he says:

“Why do employees decide to come to work for your company? It’s not that complicated.

They want a job they like, they want to learn and grow, they want to feel part of a mission they relate to, and they want fair pay and equitable treatment as a worker. Add these things up, and include a dose of good management, and there’s no reason to provide pet benefits or expensive perks to keep people happy.”

I sometimes struggle in conversations about the employee experience to articulate just exactly what the employee experience really is. That’s why this little bit from Josh is so valuable, because it cuts to the heart of what the employee experience is — and why companies and organizations everywhere really need to focus on getting it right.  

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