It's a tale as old as the hills, one that still rings true: Employers think they're paying their employees a fair wage, and employees disagree.

The most recent support for this schism comes from PayScales. The research, based on some 7,600 responses from bosses and workers, reveals a substantial gap on the fairness issue: 73 percent of employers believe they are fairly compensating their workforce, but only 36 percent of employees agree.

“Despite the buzz surrounding employee engagement, there is still a chasm between employee and employer perceptions on many key issues: pay perceptions, pay transparency, and employee value,” the survey concludes.

The survey also uncovers some bright spots from the employee perspective. Among them: An increasing number of companies are handing out more and larger bonuses. However, PayScale noted, “This trend … is the result of continued low wages for employees.”

The survey adopted a theme others have moved to, that of culling out “top-performing companies” to see what they do to encourage engagement compared with the bulk of corporations. Not surprisingly, the survey revealed that top performers are ahead of the pack in finding progressive ways to reward and manage workers.

Who Makes Decisions Around Employees' Pay Raises?

First things first, most employers gave raises to their employees last year. Of those who gave raises, about four in 10 gave them to essentially all employees. Overall, 90 percent of top performers gave raises, compared with 84 percent of average performers.

Most average and top-performing companies gave raises in the 0 percent to 5 percent range; meanwhile, 14 percent of average companies and 15 percent of top performers shelled out between 6 percent and 10 percent.

Transparency continues to be the exception rather than the rule, even with top performers, as 47 percent of them checked the little box that said “we have transparent, open communication around pay,” whereas 40 percent of the average Joes agreed with that.

Human resources is still the most likely place to find the person who sets the pay raise level, but only by a hair. Half of average companies said HR set comp structures, and 55 percent of top performers said they delegate that to HR. CEOs are the most common alternative compensation setters, particularly at small and medium-sized companies.

The survey suggests that HR's independence from finance is secure, at least for now. More than two-thirds agreed that HR should make decisions independent of finance, and less than 8 percent said they have HR reporting to finance.

Developing a Compensation Strategy

Having a compensation strategy was far more common among top performers (49 percent) than among average companies (38 percent). Almost twice as many large companies have a comp strategy than do small employers, although there's really no reason a small company can't develop one.

Across all company sizes and industries, recruiting remains difficult. The proportion of respondents in each industry who report a lack of qualified candidates for their postings was as follows:

Engineering and science—71 percent
Manufacturing—65 percent
Tech—59 percent
Retail—58 percent
Health care—56 percent
Business and marketing—50 percent
Education—47 percent
Nonprofit—44 percent

Top performers are much more likely to cite this candidate shortage. For instance, 80 percent in the science sector said they couldn't find enough good job seekers. And to fill top-gun positions, top performers were about 10 percent more likely to say they shelled out more to acquire talent than their average performing peers.

Instant Insights /

Better Pay Means Better Engagement

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