There’s a tendency for some organizations in Asia Pacific to be guarded when it comes to communicating their benchmarking approach and pay philosophies to their employees. But keeping them in the dark poses significant risks — it sends the wrong message and leaves employees to speculate whether they’re really earning what they’re worth. That, in turn, makes organizations vulnerable to attraction and retention issues.

In short, there’s no real payoff to keeping silent on pay. Instead, organizations need to open up the lines of communication about pay, educate managers and empower them to take an active role in helping employees understand the reasoning behind pay decisions.

Focus on Transparency

If your employees aren’t keyed in to how their individual pay packages are determined, then it’s time to put a compensation communication plan in place. Go without one, and your employees will suspect their pay isn’t competitive and will seek information elsewhere, which can affect their morale and lead to attraction and retention issues for your organization. They need to know there’s a robust process involved when determining their compensation. More importantly, they need to understand this process to feel valued within their organization.

So, when it comes to creating a communication plan, you need to be as clear and up front as possible about how your benchmarking approach works and what factors come into play. Be prepared to include information in your plan that addresses base pay and how it’s calculated, and provide the market data to back up any pay adjustments. Include explanations on any pay changes (increases or decreases and how they’re connected to the market), along with information about incentives.

Equip the Managers

Once you’ve defined the pay elements that need to be communicated, you need to determine when you want to share this information (annually, biannually, monthly), and who should share it. A smart approach is to enlist the help of managers. They’re in the best position to personalize pay for their employees and explain why they’re being paid a certain amount and what they can do to earn more. Just make sure the managers have a firm grasp on your pay system and understand how to communicate it to their employees prior to pay discussions.

See the Payoff

Open and direct communication with employees is best. Letting them in on the long-held compensation "secret" can create good will, leading to stronger commitment to the organization, enhanced trust in management, and other benefits. In short, you’ll have more employees satisfied with their compensation.

The writer is data services practice leader, Towers Watson

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