Communicating employee salary packages effectively

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Organisations that invest in their workforce’s pay without communicating the investment will be perceived as equal to organisations that haven’t invested in them at all

Most employees are unaware of the various components of their reward package and their financial value. A PayScale survey of 71,000 employees found that most did not know if they were being rewarded fairly or not. Eighty per cent of the respondents who were rewarded above market value thought they were rewarded according to or below market value.

Lack of communication prevents employees from understanding their true value and the extra mile the organisation has gone for them. This results in a sense of indifference towards any change in rewards, which therefore are taken for granted. Not only is this a missed opportunity profit-wise, it's a waste of money.

The total benefits employees receive beyond basic wages can add up to 35% of their paid salary. A well-communicated pay upgrade enables them to do the maths and realise how high their wage package actually is. Good communication of wages and benefits reinforces a sense of personal value, creates a feeling of organisational belonging, and generates high motivation. All these have a profound impact on satisfaction, performance and corporate profit.


Further reading

On-site benefits: How far is too far?

Ditch the glitz in reward management strategies

The future for rewards in a changing world

Reward strategy temperature check


Here's how to build a smart and well-communicated rewards system:

Create a rewards strategy

Behind every change in wages and benefits are people, who must be treated with sensitivity and care. Even in times of uncertainty there is no justification for ad-hoc decisions, and a strategic annual plan is required. This includes data awareness, individual value-based budgeting upgrades and systematic analysis of their impact on the organisation’s vibe and the employees’ motivation.

Report personally

Provide each employee with a personal, simple and appealing annual report detailing their total salary, rewards and various payments. Include happy occasions such as promotions, benefits, training, insurance, and even fitness club memberships. This format is highly effective in terms of cost to benefit.

Look them in the eye

Instead of sending the report via email along with the payslip, initiate a policy of communicating the report to each employee personally, and teach your managers how to conduct such a conversation correctly. A personal conversation offers the employee an opportunity to ask questions and receive praise from their manager. This reinforces both their sense of value and their organisational affinity.

Challenge your policies

A smart reward strategy allocates resources to be wisely used in challenging economic times. If your organisation is in such a situation don’t despair. This is an excellent opportunity to challenge the status quo and improve the rewards policy. Go back to basics, review the policy, and find creative solutions without harming employees financially. By clearly communicating the new policy both in writing and in person we can maintain employees’ sense of security, strengthen their loyalty, and motivate them to help the organisation survive and grow.

Ravit Oren is an organisational leadership expert, an academic lecturer and researcher, a corporate HR executive, a public representative of the Israeli Labor Court, and co-founder and CEO of WALKSTOCK

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