While recent data suggests employers will consider job-hoppers, they're not so happy when top talent decides to hop to greener pastures.

Towers Watson has been chronicling talent management as the economy picks up steam. In late July, it reported that large employers were concerned about the twin difficulties in landing top guns and hanging on to the ones they already had.

Many of their recruitment/retention woes would disappear if these employers simply paid more attention to what they pay people and how they decide what to pay, according to a Towers Watson study.

Key findings include:

50% of employees believed they are not paid fairly compared with other people in similar positions in their organizations;
41% said their company does not do a good job of explaining their pay programs;
60% reported they can distinguish no clear link between pay and performance, which means that a strong majority of employees don't see a logical link between the two; and
50% said their managers are not effective at fairly reflecting performance in their pay decisions.

Not surprisingly, the survey (which gathered information from more than 1,000 respondents) showed that many managers are clueless about this perceived lack of pay equity among the ranks.

For instance, 61% of managers said employees understand how their annual bonuses are determined and 53% said that managers execute their annual incentive programs well.

However, 65% admitted that their employees do not understand how base pay is determined. And only 38% of responding managers believed that they execute their base programs well.

Managers in general are trying to reward their top guns more generously than their average performers. Towers Watson data show that highly rated employees got an average salary increase of 4.5% this year, compared to the 2.6% hike given to middle performers. But even that differential is down from three years ago, Towers Watson noted.

“Pay really matters to employees when they make decisions about whether to join or stay with a company,” said Laura Sejen, managing director, Rewards, at Towers Watson. “But simply offering a competitive salary and annual bonus is not enough to win the war for talent. Employees believe that employers are falling short in how pay decisions are made and that there is much room for improvement.

“Despite awarding better-than-target bonuses and higher merit increases to their best performers, many companies are still not providing enough differentiation in their incentive programs for them to be effective,” she continued.

Instant Insights /

Employers Out of Touch With Compensation: Report

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