Fair and transparent pay at work

17 Nov, 2021

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PERCEPTIONS OF FAIR PAY AND TRANSPARENCY IN THE NZ WORKPLACE: MANAGERS VS NON-MANAGERS

Think you’re fairly paid?

If you answered “yes”, chances are, you’re a manager.

Those who think their payslips are on the light side are more likely to have non-managerial roles.

That difference also holds true when it comes to perceptions of how transparent an organisation is in terms of its salaries: more managers than non-managers say their company works transparently.

These findings have emerged from the latest iteration of AUT’s Wellbeing@Work study, which began in 2020. Led by AUT Business School Professor Jarrod Haar, the fourth chapter in this research asked two questions:

1. How fair do employees think their pay is for the work they do compared to similar co-workers?
2. How transparent is your organisation when it comes to worker pay?

The survey involved 1080 participants. The sample comprised slightly fewer managers than non-managers (46.5% vs 53.5%), slightly more females than males (53.4% vs 46.6%), and a wide age range (20-70 years), with an average age of 38 years. Most respondents (79%) were from the private sector.

Perhaps surprisingly, given the ongoing headlines about gender and ethnic pay gaps, the findings showed that roughly two-thirds of respondents think they are paid fairly, and 62% think their organisations are transparent.

However, when that cohort was analysed in more detail, significantly more managers than employees (73.3% v. 59.3%) believed their pay was fair; that gap further widened when participants were asked about their perceptions of organisational transparency around pay. Nearly a quarter more managers than employees reported that their organisations were transparent (74.1% v. 51.6%).

Hence, roughly half of employees do not think their organisations are transparent.

These findings are important because they highlight the relationship between employee engagement (which links to job performance), workers feeling inspired to go the extra distance for their organisations (which links to firm performance), and job satisfaction (a key determinant of retention).

Those perceiving greater pay fairness and organisational transparency also had lower job stress.

Overall, gender did not influence perceptions of pay equity and transparency. Surprisingly, while there was no significant sector difference around pay fairness, private sector firms were seen as more transparent (64% v. 54.8) than their public sector counterparts.

Professor Haar says that the impact of these perceptions is significant. For example, while most managers will be aware of their colleagues’ salaries, non-managers rarely have this knowledge. As a result, roughly half of non-managers feel their organisation lacks pay transparency.

He says organisations that focus on building fair and transparent salaries and pay scales, and sharing that information across the business, are more likely to attract and retain talent and, therefore, to succeed.

“The traditional divide between managers and non-managers, in terms of how much information about the broader organisation they have access to, feels increasingly anachronistic. Workers might be paid fairly, but the lack of transparency – or just as crucially, the perception of it – undermines this outcome. These findings should encourage organisations – as some market leaders already do – to openly report pay gaps and work as practicably as possible to narrow these divides.”

Other occupational differences found in the Wellbeing@Work study include:

Useful Links:

• Read profile of  Professor Jarrod Haar
• Study Business at AUT