Perception is Reality: The Importance of Pay Fairness to Employees and Organizations

The importance of pay fairness to employees can be observed by its relationship to a number of important work and life outcomes including employee engagement, turnover intentions, work stress, psychological and physical health, and life satisfaction. But fair pay is not just important to employees; it is also in a company’s best interest. There is a significant body of research suggesting that organizations with a more engaged workforce outperform their peers on a number of organizational performance metrics.

In this report, we discuss why fair pay is so important and reveal how fair pay and employee engagement are linked. Then, we present steps compensation specialists, HR practitioners and managers can take to ensure they are promoting perceptions of fair pay.

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