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February 17, 2004
Less Than Half of Employees Think Pay Policies are Fair

More than 60 percent of the nation's employees describe themselves as satisfied with their compensation and benefits packages, but just 45 percent view their organizations' pay policies are fair, according to the results of a survey sponsored by the Society for Human Resource Management (SHRM) and CNNfn.

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In addition, 27 percent say their base pay does not fairly represent their contributions--at least when compared to the contributions of other employees.

SHRM notes that its previous research shattered one myth: that money is the most tangible satisfier for employees. Yet the new survey results suggest to the organization that pay-related issues--like communication about pay, or designing pay policies that employees regard as fair--can affect job satisfaction.

The survey also focused on the perceptions of human-resource professionals. Seventy percent of them described the employees at their respective companies as satisfied with their compensation. How did the employees describe themselves? It turns out the HR folks pretty much had their fingers on the pulse; employee satisfaction totaled 63 percent.

SHRM said HR pros now need to help their organizations communicate their pay policies in order to raise that percentage.

"Although compensation is only one component of overall job satisfaction, communication within the organization is another. Organizations should take every opportunity to communicate with their employees on issues of importance in the interest of transparency and open communication within the organization," said Susan R. Meisinger, SPHR, president and CEO of SHRM.

"This survey reveals that employees tend to believe their company's pay policy is fair if HR professionals explain compensation packages to them," said Ken Jautz, executive vice president and general manager of CNN Business News. "The survey results show that for working Americans straightforward communication from their employers about their compensation is absolutely critical to their job satisfaction."

Illustrating the importance of communication, the survey found that nearly half of the employees who were dissatisfied with the communication explaining how their pay was determined were also dissatisfied with their total compensation package. Conversely, when employees understand how compensation is determined, they tend to be more satisfied with their compensation packages and jobs overall.

One demographic-specific finding reflected generational differences. Workers age 56 and older indicated compensation contributed more to their overall job satisfaction than workers age 35 and younger. This correlates to the belief that less work experience may mean less money. It may also speak to existing generational differences where Generation X and Y workers base job satisfaction more on work/life issues, communication between management and employees, and career advancement opportunities than on compensation.

SHRM and CNNfn are conducting a series of surveys to evaluate employee job satisfaction based on previous SHRM research that rated important components to job satisfaction. Total compensation and pay rated fifth in a list of "very important" components to job satisfaction. According to a September 2002 SHRM survey, employees rated job security, benefits, communications between employees and management and employee flexibility to balance life and work issues as the other "very important" aspects of employee job satisfaction.

Sixty-four percent of employees say that compensation contributes "somewhat" or "to a large extent" to their overall job satisfaction. Of those employees who were satisfied that their pay was a fair representation of their contributions, almost 9 of 10 report overall job satisfaction. This compares to 72 percent of all employees who report overall job satisfaction. This indicates that those who feel that their pay reflects their contributions to the organization are more likely to report overall job satisfaction.

Speaking generally about overall job satisfaction, the vast majority of employees continue to report being satisfied with their jobs. Although 72 percent of employees reporting overall job satisfaction is an encouraging figure, it does represent a slight slip from the earlier surveys. In September 2002, 77 percent were satisfied; in February 2003, 80 percent were satisfied; and in August 2003, 76 percent reported overall job satisfaction. In the same surveys, HR professionals reported their perceptions of employee satisfaction: in September 2002, 79 percent perceived employees as satisfied; 81 percent in February 2003; 72 percent in August 2003; and 82 percent in this survey.

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