More than two-thirds of employees, 67%, believe their companies should be more transparent with their pay practices. More than half, or 51%, said organizations should share how much everyone in the company is paid, a number that increases to 58% when you ask Millennials.

According to engagement platform Lattice’s State of the Employee Experience Report, these points – combined with moves by 17 states to implement pay transparency laws – could signify a broader shift toward increased openness around pay. It will also make life more complex for companies who’ve not embraced the practice in the past, Lattice said.

As U.S. inflation remains high and markets indicate looming economic uncertainty, the report offers insight into employee expectations and perspectives around upcoming compensation cycles — and highlights growing demand for more transparency and understanding around how pay decisions are made.

In terms of individual compensation decisions, more than 30% of all employees said they didn’t have a clear understanding of how their pay was adjusted around promotions and raises. Men were over 10% more likely than women to say they had a clear understanding of how their salaries were determined. Men were also more likely to say they were satisfied with their organization’s level of pay transparency.

Bias in Compensation

Employees believe bias plays a role in pay decisions, and that organizations aren’t taking action to deal with it. More than half, 51%, agree that bias exists around gender, age, race or other factors that impact compensation decisions at their organization. Of these, 31% strongly agreed.

In addition, some employees believe their organizations must do more to proactively address bias. About 31% said their company wasn’t taking adequate steps to address the biases that exist in compensation review processes, for example. Sixty-one percent either said they weren’t sure whether their company was using any tools or technology to measure pay equity, or knew their company wasn’t using any tools at all. With recent research indicating that 66% of organizations were planning pay equity initiatives for 2022, these results suggest a gap between employee expectations and company actions, said Lattice.

In a year of economic volatility and skyrocketing costs of living, employees want more frequent pay adjustments and specific percent increases in order to feel that their work is being adequately valued.

More than 30% expect to be considered for compensation increases every 3-6 months if they meet or exceed expectations in their current role. Nearly twice that, 58%, are looking for potential compensation increases to happen more frequently than once a year.

Finally, assuming that performance is meeting or exceeding expectations, 32% of employees said they’d want a 4-5% increase in compensation in order to feel that their work was being valued. About 23% are looking for a 6-10% increase. These expectations could outpace compensation budgets and create additional challenges for HR leaders who need to keep talent engaged while keeping their business steady in economic headwinds. The planned salary increase budgets of many organizations are hovering below 4%, Lattice said.

By Mark Feffer

Mark Feffer is executive editor of RecruitingDaily and the HCM Technology Report. He’s written for TechTarget, HR Magazine, SHRM, Dice Insights, and TalentCulture, as well as Dow Jones, Bloomberg and Staffing Industry Analysts. He likes schnauzers, sailing and Kentucky-distilled beverages.


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