Half of Your Employees Think They're Underpaid—Here's What You Can Do About It
Founder, Evil HR Lady
Do you pay your employees fairly? Of course! You did your research when making salary offers, you award regular cost of living raises and you pay for their overtime work. Still, according to a recent study by Robert Half, 46 percent of employees feel that they are underpaid.
This, of course, doesn't necessarily indicate the truth about salary, since these particular findings are based on feelings. I'm a fan of dealing in facts, so I'd want to double check everyone's salaries, and, depending on my findings, come back and say, "Yep, even though you feel like you're underpaid, you're not. Now get back to work."
But, that's bad management advice. People's perceptions are their realities. If you simply dismiss their concerns with "I've double checked, and you're not underpaid," it's not likely to fix how they're feeling, which could lead to disengagement over time. Instead, if an employee approaches you to discuss their salary, I'd recommend taking the following steps.
1) Find Out What They Really Do
The job someone does and the job you think they do are often two different things. Good employees, especially, tend to take on additional responsibilities just to make sure the work gets done. You may not know that Jane does an audit by herself because Heidi never gets her half done on time. Steve may be writing code to automate routine tasks.
There may be many things they are doing that you are not aware of, which is not to say that you are a bad manager. On the contrary, it's likely that you are a good manager who allows your employees to work independently and they've risen to the occasion. Just ask, and determine whether they're doing enough additional work to constitute a pay raise.
2) Ask What They Consider Fair Pay
If someone says she's underpaid, it makes sense to ask what she thinks fair pay is and why. After all, she must have some idea of what she wants if she's asking. If she says she'd like a raise "Because I do a good job," that's a less substantial claim than"I know that our competitor pays $5,000 more for this same job."
If there's actual data to support an employee's request for a larger salary—be it intel on competitor salaries, or a documented improvement in output and performance—you should absolutely consider it. If an employee is earning less than she could make elsewhere, there's a good possibility that she'll quit, and you'll have to hire someone new—making the market rate. You're not saving any money not paying someone correctly.
On the other hand, it's also possible that your employee has wildly unrealistic ideas about salary. She may be new to the workforce and not understand that you don't get a 10 percent raise every six months. Or she may be under the mistaken impression that everyone else earns substantially more. Regardless, if this is the case, you can sit down and show her data to support how you arrived at her current salary. If she still insists she's underpaid, you have to say, "I disagree. If something changes, we can re-evaluate, but until that time, this is your salary and it's fair."
3) Don't Be Defensive and Dismissive
Employees' concerns that they're underpaid often stem from finding out what their co-workers earn. The law allows employees to discuss their salaries, so never punish someone for raising this issue, and don't dismiss their question. In fact, it's worth taking a regular look at what similarly situated employees at your company earn. Are you willing to stand up in court and justify why a woman at your firm is making less than a man in a similar role? Are their jobs really that different?
An employee that comes to you with a salary complaint is much better for you than an employee who goes to the Equal Employment Opportunity Commission, hires a lawyer or leaves to get new job. Take their question as a gift, and an opportunity to re-evaluate what everyone earns.
As for those people who feel they earn too much? Yeah, well, we should all be so lucky.
Photo: Creative Commons
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