Why Employers need a Pay Policy

Dealing with wages in a changing economy.

Pay is a sensitive subject for both Employers and Employees. At worst the common cause and healthy culture Employers are trying to foster can be eroded by disagreements around pay. And with inflation rising we can expect to have the topic to arise more frequently.

We therefore recommend Employers develop a pay policy. This is a document that sets out basis for pay rates and pay rises and provides transparency that Employees pay is fair.

We have identified 4 characteristics of a successful pay policy.

Transparent

The fundamental point of the pay policy is that it doesn’t leave employees wondering why they are paid less than they expect. So the pay policy needs to make clear why people are paid what they are.

fair

Quite natually Employees want to feel that what they are paid is fair. No-one expects a gift from their Employer but no-one wants to be taken advantage of either.

widely supported

Even if a policy is fair and transparent it will fail without the buy-in of Employees. As far as possible we need agreement and support from the team through discussion, explanation and listening.

Settled

This is not a policy to update frequently. Part of the point of the pay policy is that the friction that conversations about pay creates disappears. Moving the goal posts on a regular basis a recipe for on-going friction with winners and losers.