Here are the most commonly held misconceptions:
Employers save money by underpaying employees.
It is not in the best interest of a company to pay their employees less than fair value and risk creating high turnover. Low says it costs employers 150 percent or more of an employee's annual pay to hire and retrain someone new. On top of the monetary cost of turnover, company morale is greatly affected when good employees leave. "Counting coins and paying pennies didn't work for Scrooge, and it won't work for you," said Aubrey Bach, senior manager of editorial marketing at PayScale, at the webinar.
People don't leave their jobs because of pay.
According to PayScale research, in 2015, the No. 1 reason people left their jobs was, in fact, pay. With the economy and overall job market improving, employees are better positioned to demand higher wages and walk if they don't feel they are being fairly recognized or compensated. "It's not universally true across industries and geographies, but as the economy is expanding, employees do have a little more negotiating power," Low said.
As important as pay is, however, job satisfaction can be raised in other ways. For example, workers in health-care and education fields often report high levels of satisfaction even in lower-paying positions. "If people are leaving because of pay, dig deeper," said Mykkah Herner, director of professional services at PayScale, at the webinar. "Job meaning and an employee's sphere of influence within their organization are important, too."
Talking to employees about pay will incite a riot.
On the contrary, more pay transparency can help improve employer-employee relationships. And it may be better for companies to initiate the conversation rather than let workers simply hash things out on their own. "If you aren't talking with your employees about pay, chances are that they're talking to each other and creating their own story of what [the company's] compensation policy is," said Bach. "That's not a good thing."
But when companies have been more open about compensation policies, employees have responded well. In a PayScale survey of 71,000 employees, 82 percent reported that they were satisfied with their jobs, even if they were paid lower than average, if their employers clearly communicated why they offer smaller paychecks. "Basically, communication equals more loyal employees," said Bach.