Fairness in Compensation


In organizations, employees may feel that they do not receive enough compensation for the work that they do. This is a common grievance amongst employees when they have worked there for a long time, have years of experience, are highly skilled, or feel that they put in more effort than it is worth. The concern here is whether the compensation is actually fair or if the employees have a point. The only way to know this is to look at it from an outsider’s perspective and to look at all of the information. For the employees, the only perspective they have is their own. This means that, according to their own feelings and thoughts, they deserve higher pay. Uncovering the truth and speaking with the employees may help to find a solution to this problem.

What is Fairness in Compensation?

Fair compensation is compensation equal to the value of the work and employee. These values might seem subjective to some, but there is a way to get actual information here. Rather than going by biased judgment or feelings, you go by market information.

Determining the value of the work is not that difficult. Positions have average pays across the entire field. A person who works as a marketer for a major company can compare their pay with that of other corporations. You can compare the exact position in one company with the same position offered by similar companies. Each one should have similar pay, though some will receive higher or lower depending upon other facts. Taking the average pay for the position will give you an idea of the work’s value.

To figure out the individual’s value, you have to look at their resume. For example, take two people working at a science laboratory. They work in the same positions and have nearly identical work experiences and skills. The difference is that one has a doctorate while the other only has their master’s degree. Typically, the person with the doctorate will expect, and receive, a higher pay. However, if both have similar positions and similar work, the person with the master’s degree might expect to receive the same amount. The truth here is that, in most cases, their professional “worth” is more linked to the job they perform than to their individual value.

Fairness looks at these two factors to determine what amount an individual should receive. Other factors do come into play, such as a company’s current finances, but these are the two biggest reasons for compensation amount.

How Should You Determine Fairness?

You have to look at the current market and the employees. If employees state that their compensation is not fair, then take the time to listen to them. Brushing off their complaints will only lead to them becoming upset. If they feel that they do not receive an amount they deserve and if they feel that management is outright ignoring them, they will not put their all into their work. It is likely that their attitudes and disapproval will lead to financial loss and lost business. To avoid this, research market data and actually start building your case.

How Should You Approach This?

Your first step should be bringing in a third party. A third party is a neutral outsider with no connections to employer or employees. Their only objective is to determine whether compensation is fair and to help everyone talk about it.

Make sure that you are in a good space. Do not attempt to make yourself appear superior in any way. You want to keep yourself on the same level so that they feel the conversation is more truthful. A trusting, comfortable environment will keep everyone at ease.

Once everything is set up, show them the information. Talk to them about the market data. Make sure that they know what to expect elsewhere and make sure that they know where your organization stands in comparison to average compensation. This will give your employees a better grasp on the fairness of their compensation.

Make Them Feel Important.

This is imperative with any business. If you want to avoid this type of discussion in the future, and if you want to keep the employees satisfied, you have to make them feel important. When the compensation is fair, you likely cannot do that through a bump in pay. What you can do, however, is open up a line of dialogue. Talk to them about the pay policy at the organization and tell them they are welcome to go to you with complaints or concerns. Have a full process set up for those complaints, too.

In short: Fair compensation leads to better overall performance from the employees. They are more likely to do a good job, which means that they are more likely to benefit your company. And everybody wins.