Research from Salary.com Finds Improved Compensation Communications Drive Employee Engagement

WALTHAM, MA--(Marketwired - Nov 15, 2016) - Salary.com, the leader in compensation data, software and services, today announced the findings from its 2016 Compensation Outlook Survey, exploring the link between compensation, communication and employee engagement. At a time when only 35 percent of companies report their employees understand company compensation philosophy, the survey reveals the significant impact of managerial communication on employee engagement and retention.

"As the workforce evolves, companies face many new challenges, such as the emergence of the multigenerational workforce, increased competition and high turnover," said Kent Plunkett, CEO of Salary.com. "How companies compensate their employees -- and how they communicate overall philosophy around compensation -- has a far-reaching impact on their teams, influencing how they attract, engage and retain top-performing talent. Our latest Compensation Outlook Survey explores this issue in depth, revealing just how crucial it is for managers and employees to understand and have meaningful conversations about how compensation is determined."

For the last nine years, Salary.com has conducted its Compensation Outlook Survey to gauge how HR practitioners perform their roles in the face of new changes and challenges. The 2016 edition is based on data gathered from HR practitioners at 287 diverse organizations, sharing insights on trends in hiring and compensation programs and how they manage performance, spend their compensation budget and communicate with managers and employees. Highlights from the survey include:

• Link between compensation and engagement: Overall, 62 percent of survey respondents who reported that they pay their employees competitively also report a high level of engagement. Though positive, it begs the question as to why competitive compensation doesn't automatically lead to higher engagement scores.
• Need for improved communication: The disconnect between competitive compensation and engagement levels is often due to poor communication. The survey found that although 89 percent of responding companies have a compensation philosophy in place, only 31 percent formally communicate the philosophy to their employees. In addition, only 35 percent report that they themselves understand their company's compensation plan and philosophy.
• Impact of insufficient training: The survey also found that only 68 percent of participants believe their current performance evaluation approach encourages communication between managers and employees effectively. And even less, 53 percent, say their approach helps to support compensation and promotion decisions. Moreover, only 40 percent say their managers receive formal training on how to discuss compensation with their teams.
• Opportunities to improve: For companies reporting that employees understand the compensation philosophy, the number reporting high levels of engagement is 85 percent -- highlighting the link between a company's compensation philosophy and overall employee engagement. As a result, companies can help to elevate engagement and retention by improving how managers communicate their crucial compensation policies.