This trust problem is exacerbated by the current labor market driving higher salaries for new employees. It’s true that it generally pays to get a new job. According to a study by Pew Research Center 60% of people who quit between April 2021 and March 2022 “realized real wage gains,” compared to less than 50% of those who remained with their existing employer. That said, job switching has obvious risks. Of those who quit between January and March 2022, nearly 50% left the labor force and another 18% remained unemployed the following month. Additionally, the window for this real wage gain may be closing with recession concerns looming and ample layoffs especially in the technology space.

There’s a contrast in reality and perception–and often a stark difference in what HR or managers may believe the solutions are, and what may actually drive increased satisfaction. Tony Guadagni, senior principal in Gartner’s Human Resources Practice shares in a statement, “Employee perceptions of pay equity aren’t rooted in compensation. Instead, the main driver of perception is organizational trust — when employees don’t trust their employers, they don’t believe their pay is fair or equitable.”

In reality, 8 in 10 organizations conduct pay equity audits (Gartner HR Research), but “fewer than a third [of employees] are aware their organization is prioritizing pay equity, and only two in five understand how their pay is determined. Many resort to third-party pay sites and conversations with colleagues to gain insight instead.”

Trust must be rebuilt, through better tools and training and improved communications.

“When organizations educate employees about how pay is determined, employee trust in the organization increases by 10% and pay equity perceptions increase by 11%,” Guadagni says.

Gartner suggests three strategies to address pay fairness, especially when inflation is high.

1.) Proactively address employee concerns about pay.

Whether your organization actually has a pay fairness problem or not, employees’ beliefs and perceptions about whether there is a problem is what will prompt them to stay or to leave. Employees will consider and likely discuss–50% do talk about pay with coworkers, a number that’s on the rise–pay, inflation, and raises whether organizations start the conversation, or remain silent; it’s wise to have a hand in shaping the narrative at your firm.

There are many ways to kick off this communication. One leading company provided employees with information that compared employee pay with competitor organizations, showing the differences or similarities in base pay, total cash compensation, and total direct compensation against a “competitive range for [each employee’s] position.” This information was shared with employees in advance of compensation discussions.

2. Adapt communications over the short and long term.

It’s not effective to communicate abut pay once and move on. Consistency is key in building trust and being heard, and employees want to hear about the topic regularly–much more regularly than you might think. Gartner’s 2021 Employee Perception of Pay Decisions Survey showed that 45% of employees want to receive communication about pay at the organization once a month or more.

One method of trust-building communication about pay is to collect questions from employees and create an FAQ and regularly-updated resources for employees to refer back to.

3. Prepare managers to clearly communicate about pay.

About half of employees (47%) prefer conversations about pay take place with their direct managers, but many managers don’t feel confident discussing pay. HR can prepare and equip managers with three tactics.

• Identify employees likely to have concerns.
• This will help managers to think through these conversations in detail and develop thoughtful responses to likely questions.
• Teach managers to respond with empathy.
• Coach managers around empathetic communication when discussing sensitive topics generally, and note that pay is a sensitive topic. The concerns can be rooted in employees feeling undervalued; intentional guidance about how to have difficult conversations equips managers with tools useful in many high-stakes managerial situations.
• Narrow managers’ responsibility.
• Managers often experience overwhelm and uncertainty about what all they need to communicate or address in pay conversations. Outline for managers specifically what they do and do not need to be prepared for, and a plan for addressing questions that are not within that scope.

Finally, acknowledge that many decisions impacting pay-equity happen outside of the HR function, so the value in equipping managers well for hiring and pay-related choices is massive.

“HR leaders need to equip managers with tools that will enable them to make equitable pay decisions while remaining responsive to the other demands on the business,” said Guadagni. “Managers should have access to dashboards that compare pay across their teams and be trained on the critical factors that should differentiate employees’ pay.”