Pay not the Top Factor in Perception of Reward Fairness

July 25, 2011 ( - When it comes to rewards, it’s neither total pay nor salary increases that have the biggest impact on employees’ perceptions of fairness, according to new research.

The research report released by WorldatWork, Hay Group and Loyola University Chicago professor of human resources, Dow Scott, Ph.D., “Reward Fairness: Slippery Slope or Manageable Terrain?” reveals the top five concerns in reward fairness from the perspective of reward professionals are: 

  • Career development opportunities 
  • Merit increases 
  • Base pay amounts 
  • Non-financial recognition 
  • Employee development/training 


“Reward professionals view career development opportunities as the top reward fairness concern because growth opportunities are in high demand by employees, while at the same time, career development processes are not particularly developed in many organizations,” said Tom McMullen, Hay Group’s North American Reward Practice Leader, in a press release. “Career development concerns are also the number one retention issue for employees, according to our employee opinion database.”  

The research report also identified the top three criteria that impact reward fairness: 

  • Individual performance 
  • Work responsibilities 
  • Overall organization performance 


Items that did not rank as highly include: 

  • Team/department performance 
  • Seniority/tenure with the organization 
  • Time in job 
  • The potential of the individual employee   


When asked what works particularly well in improving the perceptions of reward fairness in organizations, respondents overwhelmingly identified effective reward communications, followed by external benchmarking, reward strategy and design, and non-financial recognition programs.    

According to WorldatWork’s Kerry Chou, CCP, compensation practice leader: “Communication is king in improving perceptions of reward fairness. The best organizations focus not only on the core messages to be communicated, but also the most effective messengers and channels. In addition, these organizations devote significant energy to determining how to sustain core messages and equip managers to effectively communicate them.”  

The research study also addressed the factors that have eroded perceptions of reward fairness in organizations. The number one response was the poor economic environment (e.g., pay freezes, layoffs, pay cuts), followed by inconsistent application and playing favorites. Reward communications and leadership round out the list.   

More than 500 WorldatWork members–primarily reward professionals– participated in this study. The majority (76%) of respondents were from organizations in the United States; the rest were from Canada, U.K., China, Germany, Singapore, Mexico, Brazil, Australia, Switzerland, and Russia. The survey was open from November 15, 2010 through December 20, 2010.  

The research report is at