Employees Think They Are Underpaid - How To Fix It Before They Quit

If you're an entrepreneur, then you will face the problem of finding and retaining the right employees to grow your company. Keeping good employees is hard enough when they are well compensated. But if your workers feel like they are underpaid, it's going to be much harder to keep them motivated and engaged in their work. 

Compensation may be a taboo subject matter, but neglecting it puts your company in jeopardy. Pay is a significant factor in the engagement of employees because it is more than simply a number; it is an emotional indicator of how appreciated an employee is by their company.

Unexpected resignations pose considerable challenges for managers, particularly those who are unaccustomed to dealing with them. People quit their jobs for a variety of reasons.

“Many organizations underestimate the complexity of getting paid right,” Scott Torrey, CEO of Payscale, said in a release. “A strategic, consistent approach is required before you can even adopt any level of pay transparency.”

It's an often-cited statistic that employees believe they deserve a raise every single year. But if you want to keep your staff happy and engaged with the company, you need to know why this is happening and how to fix it before they quit. 

Employees Think They Are Underpaid - Here are some Do's and Don'ts for Managers

While making wage proposals, you did your research, you gave your employees regular cost-of-living increments, and you compensated them for their overtime work. Despite this, according to a recent study by Robert Half, 46% of employees think they are underpaid.

According to Payscale's Fair Pay Impact Report, the majority of employees have no idea if they are being fairly paid, and more than half of employees plan to quit their job within the next six months if they perceive they are being underpaid.

42% of employees who were paid above the market rate for work felt they were underpaid. According to Payscale's data, 57% of employees who are paid at market rate believe they are underpaid, while 72% of employees who are genuinely underpaid believe they are.

Of course, because these conclusions are based on feelings, they may not necessarily reveal the truth about salary. Most employers prefer dealing with facts, and double-check everyone's pay and, then on the basis of findings they may counter say, "Yes, even if you think you're underpaid, you aren't. It's time to get back to work."

However, that is poor managerial advice. People's perceptions are their realities. If you simply ignore their worries by saying, "I double-checked, and you're not underpaid," you're unlikely to change their minds, which could lead to disengagement in the long run.

Instead, if an employee contacts you about their wage, the following procedures are recommended to take:

Discover What They Actually Do:

The job that someone does and the job that you think they do are frequently not the same. Good employees are prone to taking on additional responsibilities simply to ensure that the work is completed. There could be a lot they're doing that you're not aware of, but that does not mean you are a lousy boss. On the contrary, you are most likely an excellent manager who empowers your staff to work autonomously and who has seen them rise to the challenge. Simply inquire and see if they are putting in enough extra effort to deserve a salary boost.

Ask What They Consider Reasonable Pay:

Reaching out to employees directly through surveys and other engagement strategies is one way to increase transparency, yet just 38% of employers inquire employees about their pay satisfaction.

If someone claims to be underpaid, it's reasonable to inquire as to what he considers to be appropriate pay and why. If he's asking, he must have some concept of what he wants. "Because I do a fantastic job," he argues, is a less compelling justification than "I know our competition pays $5,000 more for this identical task."

Do evaluate an employee's request for a higher compensation if there are actual facts to back it up—whether it's information on competitor's salaries or a recorded increase in output and performance. If an employee is paid less than he could make elsewhere, he'll likely quit. You won't save any money if you don't pay someone right.

Don't Be Dismissive and Defensive:

Employees' uncertainties of being underpaid are sometimes fueled by learning how much their coworkers make. Employees are allowed to debate their salary under the law, therefore don't criticize them for doing so, and don't overlook their question.

Instead, in the given situation, it's worthwhile to analyze the basis of their claim. Otherwise, are you willing to go to court and explain why a woman in your company earns less than a man in a similar position? An employee who comes to you with a wage issue is far better for you than one who files a complaint with the Equal Employment Opportunity Commission, employs a lawyer, or quits to get a new job.

Some Good Ways To Keep Employees Happy

A happy employee is a productive employee. It's as simple as that. Feeling motivated and appreciated goes a long way in the workplace, which can be especially important for small businesses. Happy employees are unequivocally more creative and they turn out to be better leaders and good team players.

Here are some ways to integrate happiness into the office every single day:

Provide Beneficial Compensation Package:

Communication is the key! Talking with employees to develop the best benefits package for them is indeed the key to their general happiness. Conduct an office-wide survey to determine what types of benefits are most vital to retain your employees. Is it necessary to take maternity and paternity leave? What are retirement and education benefits? You may not know exactly what they require until they tell you. You may be providing benefits that no one uses or wants. Be prepared to listen and make changes when you deliver the survey.

Treat Everyone Like Adults:

Employees are frequently frustrated in companies where their abilities are not valued. Would you be annoyed if someone hired you and then felt the need to continually watch over you, correct you, or do your job for you? Do you ever wonder why you were hired in the first place? Helicopter bosses are the worst bosses imaginable. Have faith in them and give them the authority to complete the task. Treat everyone in your company as if they are grownups who are capable of doing their jobs.

Allow growth:

Growth at work is vital to ensure that people feel free to take risks, struggle, receive assistance, improve, and progress. This is another example of the importance of fostering a transparent workplace culture at your office. Give your staff explicit instructions on how to pursue career advancement in the company, and make sure they are aware that it is possible. It is one of the most effective methods for maintaining happiness and motivation.

Offer Appreciation:

A little appreciation goes a long way. This is why there are celebrations when children reach achievements, and then there is "Teacher Appreciation Week." Implement a similar policy for your staff at your organization. Learn that rewarding people for their efforts is the best way to ensure that they are happy in their jobs. Providing lunches twice a month, holiday parties, surprise gift cards, an employee of the month, or the occasional raise can all help motivate your entire team. One of the most effective strategies to keep employees pleased is to acknowledge their efforts.

To Wrap Things Up

As a CEO or manager, one of the most rewarding things you can do is to keep your staff motivated. An office that encourages transparency, communication, progress, opportunities, and rewards for employees would, in the end, make the system better. You may avoid being shocked by a great employee giving you bad news if you understand the primary reasons why employees leave and take proactive efforts to remove them. Do not take your staff for granted; remember they are your most valuable asset.