Increased Pay May Not Be Best Employee Satisfier

February 12, 2004 ( than one-half (47%) of employees believe that their organization's pay policy is fair, while 27% think that their base pay does not fairly represent their contributions compared to other employees, according to the Society for Human Resource Management (SHRM) and CNNfn's Job Satisfaction Series: Job Compensation/Pay Survey.

The study showed a difference between employees’ perceptions of fairness of compensation policies and satisfaction with pay. Although the traditional thought is that increased pay is the best satisfier for employees, the survey showed that other factors, such as communication about pay and compensation packages as well as implementation of policies that employees feel are fair in addressing individual contributions to the firm also play a role in job satisfaction.

Nearly half of the employees polled who were dissatisfied with the communication explaining how their pay was determined were also dissatisfied with their total compensation package, the survey reported. However, when employees were confident in their understanding of how their compensation was determined, they reported having an increased satisfaction with their compensation packages and jobs overall.

Those in HR seem to be relatively accurate about how many employees are satisfied with compensation packages, estimating 70%, while only slightly less, 63%, of employees actually report being satisfied with their pay, the survey showed.

Sixty-four percent of employees polled said their compensation package contributes either “somewhat” or “to a large extent” to their overall job satisfaction. The survey found that workers age 56 and older said that their compensation played a larger role in their job satisfaction than it did for workers age 35 and younger, something SHRM attributed to generational differences where Generation X and Y workers base job satisfaction more on work/life issues, communication between management and employees, and career advancement opportunities than on compensation.

Although 72% of employees in the survey reported overall job satisfaction, that is a drop from the 76% reporting satisfaction in August 2003. HR professionals showed greater disparity here, reporting their perception that 82% of employees were satisfied. Of those agreeing that their compensation was a fair representation of their contributions to the company, 90% reported overall job satisfaction.