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Pay Workers what they Deserve

It goes without saying that people want to be paid what they believe their value to be. Simply put, an individual’s perception of his or her value is based on two primary factors – internal company value and external (market) value. Given the current employment market, with multiple years of job growth and low unemployment, competition for employees is at an all-time high and has driven the external value factor to the forefront.

In order to avoid some of the common missteps that employers make related to compensation, EctoHR focuses its efforts on the following key actions.

Do your Research

A successful compensation strategy begins with a fairly thorough understanding of the current compensation market within your region and possibly within your industry. By using benchmarking tools such as PayScale,, or other industry-specific sites, employers can determine the “going rate” for base salary, total compensation, benefits packages, and more, for positions ranging from Sales Representatives to Construction Project Managers. It is important to note that these tools may not provide a fully accurate picture of what is going on locally with specific positions. Examples of this include an incredibly competitive Metro Detroit market for Project Managers and Estimators in construction, which has led to senior-level compensation packages being offered to less experienced staff on a fairly regular basis.

One other key reminder is that there are times that EctoHR sees organizations focus their compensation research too narrowly on a specific industry. The reality of a competitive recruiting market is that employees may have as much opportunity to transition industries as they do to stay within their historical industry.

Communicate Effectively

Money is a highly emotional topic and when it comes to compensation, it is best to communicate it directly, thoroughly and respectfully with your employees. Taking the time to explain to employees how and why the employer arrived at his or her wage level is important and helps support an environment where employees feel appreciated and as if their voice can be heard regarding compensation. In a recent study by PayScale, 82% of employees surveyed mentioned they would stay at a company if they were underpaid, as long as their employer was transparent about the reason. Being transparent with your employees gives them a sense of trust.

Examples of employer best practices that EctoHR recommends and supports its clients with include:

  • Annual compensation reviews for all staff at a designated time within the year. This includes a consistent process for reviewing Cost of Living Adjustments (COLA) and Merit increases.
  • Providing individual and confidential Total Compensation Statements to all employees on an annual basis to ensure that employees see the complete value of their package, including any discretionary pay, benefit investments, retirement plans, and other fringe benefits.

Be Proactive

The best defense is a good offense. Proactively going to employees to discuss their compensation, explain the reasons, and provide an increase (yes, it is largely true – everybody wants to make more money!) typically will help employees feel valued. EctoHR often hears departing employees make comments that the employer never proactively offered a raise or that the only way an employee ever got paid more was to go and demand or beg for an increase. This type of environment where only employees that push and advocate strongly for themselves get additional benefits creates employee relations challenges with those employees that are more likely to take a more passive approach to their own compensation.

Overall, it is important to remember that your employees are smart. They likely already know if they are being compensated fairly and discussing compensation should only help, versus hurt. By knowing the market, communicating consistently, and being proactive, employers can help build trust and retain employees for the long-term.

If you have any questions regarding your compensation strategy, or would like help to determine whether you are paying your employees fairly, please reach out to a member of the EctoHR team at or 810-534-0170.

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