Why Your Business needs a Fair Wage Structure
Benefits of having a fair wage structure.
Salary is one of the factors that affects employees’ job satisfaction and their decision to stay with an organisation.
A fair wage structure can keep employees focused on their performance which will impact their reward and progress in the long run. Coupled with a transparent pay policy, these can reduce perceptions of unfairness.
How can employers ensure that their employees are fairly compensated and their job offers are fair to attract and retain talents?
Here are some key considerations (not exhaustive) for organisations:
- What is your organisation’s wage strategy? Is there a need to pay higher-than-market level to attract and retain talents or calibrate according to your budget?
- Does your organisation fairly value different job positions based on their job scope and responsibility?
- Do you know what other organisations are paying for similar job roles?
- Have you participated in any wage market surveys?
- Does your organisation’s wage structure have variable components that allow for more wage adjustments in response to changes in business conditions? What are the indicators to trigger and justify wage adjustment so that it is fair to both employers and employees?
- Are there objective criteria to assess performance?
- Is performance fairly linked to the distribution of increments?
With a robust and systematic compensation and benefits policy and framework in place, employers can also clearly explain the organisation’s salary framework and offer.
Organisations with a systematic wage structure would be able to address the perception of unfairness by having open conversations about pay with their employees.
During recruitment, they can better engage potential employees in a reasonable discussion about pay — to help job seekers understand the organisation’s pay structure and the considerations associated with pay, and how they will be paid. This would avoid any misperception or misunderstanding that the offer is unfair.