Gartner survey exposes workplace reality:

Only 1 in 3 employees perceive their pay as fair – an urgent call for trust and transparency

A recent survey conducted by Gartner, Inc. reveals striking insights into employee perceptions of pay fairness and equity within organizations. With less than one-third of employees believing their pay is fair and a mere 34% seeing their compensation as equitable, it's clear that there's a significant gap between employee expectations and organizational practices. This discrepancy not only affects employee engagement, with those perceiving their pay as inequitable being 15% less likely to stay and 13% less engaged, but also highlights the broader implications of today's economic conditions on compensation strategies.

According to Tony Guadagni, a senior principal at Gartner HR practice, the perception of pay equity is less about the numbers and more about organizational trust. Factors undermining this trust include poor culture, inclusivity, work-life balance, and unfair treatment. The solution? A concerted effort from HR to rebuild this trust through more transparent communication and broader accountability.

Interestingly, the survey found that nearly 43% of employees discuss their pay with peers, and 45% consult third-party sites for pay comparisons, indicating a clear demand for more open and direct communication from their employers. Furthermore, despite 84% of organizations conducting annual pay equity audits, less than one-third of employees are aware of these efforts, pointing to a significant communication gap.

Despite 84% of organizations conducting annual pay equity audits, less than one-third of employees are aware of these efforts, pointing to a significant communication gap.

Gartner emphasizes the importance of educating employees on how their pay is determined, noting that understanding the pay process can increase trust in the organization by 10% and perceptions of pay equity by 11%. Additionally, the survey suggests that HR departments need to expand their scope of accountability for pay equity beyond their silo, equipping managers with the tools necessary to make equitable pay decisions.

As organizations grapple with maintaining fairness in compensation, the creation of a dedicated pay equity team is recommended. Such a team, comprising leaders and employees from various levels and functions, can provide the insight and authority needed to address and correct pay equity gaps effectively.

This survey sheds light on the critical need for organizations to foster a culture of trust and transparency around compensation. By doing so, they can not only improve employee perceptions of pay equity but also enhance overall engagement and retention in an increasingly competitive labor market. A crucial factor in achieving this goal is the implementation of the EU Pay Transparency Directive, which no longer makes it just a best practice for companies to achieve transparency in wage setting but sets it as a binding requirement for all European companies. This change motivates companies to actively work to identify and correct unjust wage differences, contributing to building the trust and openness that are crucial for improving employees' perception of fairness in wage setting.