Charles Cotton

To coin a phrase, ‘it’s good to talk’, and, according to the latest Employee Outlook survey by the the Chartered Institute of Personnel and Development (CIPD), published in March 2015, there is a clear link between employer communication and pay satisfaction.

Of those employees who reported a pay rise in 2014, pay satisfaction was 73% higher among those whose employer had the rationale behind the decision explained to them than those who received no explanation at all (59%). Even if employees had their pay frozen or cut, those who had some employer communication were more satisfied with the outcome than those who had not.

When it comes to employee benefits, we know that employers that prefer to be more transparent about their package with their staff are likely to see business benefits through better employee relations, productivity, absenteeism and retention than those organisations that are less open.

Reward satisfaction also depends on the quality of the pay and benefits communication. However, most HR practitioners do not actually think their organisation has invested enough in communicating and explaining their reward package to staff, so it is clear that something needs to change.

Pay and benefits can easily be the single largest expenditure in many organisations. In professional services firms, for example, it can represent more than half of all money spent. Yet much of the reward spend and all the effort spent designing appropriate pay structures and benefits could be wasted if not enough time and energy is invested in communicating to staff what the firm is doing, why and how. If you do not invest in talking to your staff, you could be wasting your employer’s money.

If you’re going to get a return on your investment in your reward spend, you also need to invest energy and time in communicating what you are doing to employees.

Charles Cotton is performance and reward adviser at the Chartered Institute of Personnel and Development

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