‘Tis the season for glad tidings and good cheer. But in the workplace, that’s contingent on your employees feeling fairly compensated for their efforts. Especially at this time of year, when energy levels are dropping and there’s a distinct sense that everything is slowly winding down…
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So, when it comes to your organisation’s pay practices, what’s the score? Are you due a lump of coal in your stocking, or is Father Christmas going to reward you with everything on your list (we’re assuming that includes a rise in morale, productivity and retention…)? Take a look at these ‘naughty’ and ‘nice’ pay practices, and see how your company compares:

3 ‘naughty’ pay practices:

1. A lack of transparency 

It sounds like an obvious error, but it’s still a frequently made mistake: businesses often lack transparency around compensation, with hidden pay policies driving decision-making. Although there may be a rhyme or reason to pay discrepancies between different teams, if these are explained and justified then there could be a significant backlash - because, believe it or not, employees do compare their salaries. Especially towards the tail-end of your holiday social…

The danger here is unhappy employees (hello attrition risk!) and damage to your employer brand, if these pay discrepancies become a publicly-discussed issue - which has been known to happen.

2. Not benchmarking regularly 

It’s easy to look the other way, when it comes to shifts and trends in the job market. But that’s a no-no when it comes to your pay practices. And a surefire way to lose your talent to competitors who are staying up-to-date with salary benchmarking. One manufacturing company, for example, saw large numbers of their engineers quit when they didn’t update their outdated pay scales to reflect shifts in the market. 

By benchmarking salaries regularly, you can avoid underpaying your top talent. Again, sounds obvious, but don’t underestimate how quickly things can change within your industry. 

3. One-size-fits-all bonuses

‘Naughtiness’ isn’t always totally intentional, when it comes to pay practices. Sometimes you’ll try and reward your workforce and still get it wrong, just by neglecting to be nuanced in your approach. In certain industries, this time of year often means bonuses. But as some organisations have found, not tailoring these bonuses to different teams - based on their performance, for example - can still leave employees feeling disgruntled.

Think of it like a participation trophy. Sure, everyone goes home with something. But where’s the recognition for the people who put in the hours, strived and struggled, and achieved more as a result?

3 ‘nice’ pay practices:

1. Transparent (and frequent!) pay communications

There’s a lot of ways you can be transparent about compensation. Publishing pay bands is a common one, as is sharing salary benchmarks for individual roles, and explaining the logic behind your compensation decisions - both during pay review periods, and ad-hoc (for example, when employees raise the question with managers). 

One real-life example can be seen in Buffer. They made the bold move to make all salary information available, both internally and publicly, including guidance on how employees can work towards higher pay bands. As a result, there was an increase in trust within their organisation - and they saw applications to roles skyrocket too.  

2. Using reliable salary benchmark data

Do you know what’s really nice? Having total confidence that your salaries reflect the market, and that you’re not at risk of employees being poached due to compensation alone. The only way to do that is by staying up-to-date with industry standards, factoring in things like organisation size and location wherever relevant. With trustworthy benchmark data by your side, you can have confidence in your compensation decisions. 

3. Tailor how you show recognition

Love and marriage, horse and cart, pay and benefits - don’t forget that ‘benefits’ piece is a close companion to your pay practices, and should be factored in if you want to get it right. Your employees want different things - from stipends for learning and training, to tailored bonuses, to flexible working allowances. So respond to the wants and needs of your team. 

Personalised benefits programmes are on the rise, and with a multigenerational workforce, they’re a clever way to make sure employee satisfaction is at the forefront. And that’s worthy of a Quality Street or two…

Bar chart comparing average annualized salaries by department, showing customer success and product roles with specific figures.
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