News From Aon Hewitt
1
Contact:
Frances Denny, Marketing Manager ANZ, Aon Hewitt
02-9101- 9042
frances.denny@aonhewitt.com.au
Money Talks but Talk is Cheaper…
27.10.2010 – New findings released today from Aon Hewitt’s Employee Pay Perception Report, show that employers
don’t have to increase pay to achieve higher pay satisfaction. Communication strategies can be just as effective and a
far cheaper way of keeping staff happy...
In the study; which surveyed over 37,500 employees from 110 companies in Australia and New Zealand; workers
were asked 40 questions. Those that correlated most closely to employees’ pay satisfaction rating are listed in order
below:
Table A: Pay Satisfaction – I am paid fairly for the contribution I make to the organisation’s success
Rank (in order of
correlation)
Question
1
Overall, my benefit plan meets my (and my family's) needs well
2
This organisation delivers on the promises it makes to employees
3
Our organisation recognises the need to balance social, environmental and financial
responsibilities
4
I rarely think about leaving this organisation to work somewhere else
5
It would take a lot to get me to leave this organisation
By drawing on Hewitt’s Remuneration Survey databases, in addition to the Pay Satisfaction data, Aon Hewitt were
able to examine the link between the increase of pay and an employee’s perception of their pay level. Findings
showed that to increase pay satisfaction amongst the employee population by 10%, firms needed to increase pay
levels by 8.5%.
“When looking at a median salary of $70,000 per annum, the Employee Pay Perception Report identified that it would
cost nearly $6,000 per employee to achieve increased pay satisfaction, which of course would only increase
satisfaction at that point in time; costs would carry on to the next period and grow year on year.” comment Jairus
Ashworth, Aon Hewitt.
TALK IS CHEAPER...
Interestingly, the Employee Pay Perception Report showed the points below correlated most strongly to the statement
‘I have a good understanding of how my pay and rewards are determined.’ Showing that organisational
communication and ensuring an understanding of pay amongst the workforce can lead to similar positive benefits as
a pay increase, namely retention and perceived delivery of promises. However, other benefits are also derived also.
Table B: Communication of Pay and Rewards
Common outcomes with Table A are highlighted in blue, with additional benefits derived from communication left clear.
Rank (in order of
correlation)
Question
1
This organisation delivers on the promises it makes to employees
2
Overall, the way we reward and recognise people in this organisation helps us produce the
results we want
3
It would take a lot to get me to leave this organisation
4
My performance has a significant impact on my pay
5
The way we manage performance here keeps me focused on achieving this organisation's
goals
6
My manager helps me understand the organisation's goals and how my work contributes to
them
‘The overlap with the linkages to overall perception of pay are striking; we can immediately see that a good reward
communication strategy gives us a workforce that believes their employer delivers on its promises to employees, and
motivates staff to stay. In addition, we can see that when employees clearly understand how their pay and rewards
are determined, staff are focused on achieving goals, and feel that their performance has a significant impact on their
pay’ notes Ashworth.
The results are clear, by effectively communicating their reward strategy to employees, organisations can reap all the
benefits associated with increasing levels of reward AND provide employees with a much better understanding that
their pay is linked to performance.
“Whilst effective communication of reward strategies would have cost implications in terms of time and resources, it
would certainly cost less than an average $6,000 per employee. It is clear that driving pay satisfaction through
increased remuneration is a very expensive process, and fails to emphasise to employees the importance of
performance.” summarises Ashworth.
Key Takeaways:
Employees who perceive their pay to be fair view their organisation positively and are less likely to leave.
Driving this positive perception of pay through higher pay levels carries a higher financial cost, and for some
organisations the linkage may not even be strong, meaning increasing levels of pay may have little impact.
Communicating reward well to employees provides the same benefit to the organisation as increasing the
level of their pay, in addition to emphasising the importance of performance on their pay level.
-ENDS-
About Aon Hewitt
Aon Hewitt is the global leader in human capital consulting and outsourcing solutions. The company partners with
organisations to solve their most complex benefits, talent and related financial challenges, and improve business
performance. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to
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