Workers want a fulfilling job, but let’s be clear: compensation is a key factor in attracting and retaining workers. Randstad’s 2020 U.S. Compensation Insights survey reveals the importance of both compensation and transparency regarding pay.

According to the survey:

  • Across generations, 74% percent of millennials expect a pay raise every year in order to stay at their companies, versus 62% of baby boomers and 66% overall.
  • Forty percent of employees say they've only ever received a raise if they've asked for one, but this number is higher among younger employees (55% of Gen Z and 59% of millennials) than older ones (26% of boomers).

Employees are also prepared to leave for greener pastures to get more money.

In fact, 66% of survey respondents say they would leave to work at another company in order to receive a salary increase, and 46% admit that they are considering leaving because they are underpaid.

Pay transparency

The problem with perceptions of being underpaid is that employees tend not to know if their wages are in line with what their colleagues are being paid.

  • 55% said their company does not publish salary or pay information for each role.
  • 50% said they wish their employers would publish salary or pay ranges for each role in the company.
  • 54% said they’re not clear on how pay increases or bonuses are calculated at their company.

What workers want in pay transparency and negotiation

According to Jim Link, CHRO at Randstad North America, one of the most interesting findings in the survey was that over half of people have never negotiated their pay. “Perhaps even more interesting was that 40% of people have only ever gotten a raise if they’ve asked for one — this speaks to the value of being proactive in talking about pay with an employer.”

However, Link admits that pay transparency isn’t ingrained in most company cultures. Employees are in the dark because companies aren’t volunteering to broadcast this information. “A good starting point for employers who want to make salary a more transparent conversation within their workforce is to encourage communication on how raises and bonuses are determined,” he says.

So, how can companies do this? Link recommends polling employees to find out how much transparency they expect from the company. “This way, employees feel they are fully a part of the salary conversation, and it may inspire them to be more vocal about their own salary growth to their reporting managers.”

The effects of being underpaid

The survey reveals that the majority of people expect to receive a yearly pay increase to remain at the company. “It’s safe to say a large portion of the workforce may turn to looking for higher-paying jobs elsewhere when salary growth at their current job doesn’t mirror their salary expectations.”

And Link says women are more likely than men to leave their jobs for better pay elsewhere, which, he says, may be indicative of existing gender pay gaps. Women are more likely than men to leave to make a salary jump (72% vs. 59%) and are also more likely to leave because they say they’re underpaid (51% vs. 41%).

“The bottom line: people will absolutely consider higher-paying job opportunities outside of their current companies when they see their salaries remain stagnant year over year.”

The problem isn’t just with retaining workers. The survey reveals that job candidates are also reconsidering companies that don’t meet their salary requirements. In fact, 41% of respondents reported getting cold feet in the past: accepting a job, changing their mind, and backing out at the last moment. This was more likely to occur among Generation Z (59%) and millennials (50%), but other generations have gotten cold feet as well (41% of Generation X, and 35% of Boomers)

In addition, 33% of respondents admitted to actually ghosting an employer: including 50% of both Gen Z and millennials, and 35% of Gen X.

Does this mean many workers aren’t technically climbing the ladder?

“When employees make lateral moves to other companies for more pay, it’s an indicator they either didn’t expect a raise, or a promotion that comes with a raise, at their current company, which means upward mobility might not have been possible for them if they stayed where they were,” Link says. It might appear that a lateral move would stall career growth. “However, it could very well also spur growth if the move is to a company that will have more opportunities for upward mobility and incremental pay increases.” Also, to some employees, Link says “getting ahead” is exclusively related to salary growth.

Industries and markets succeeding at the salary game

The technology and engineering industries are taking the lead in terms of overall compensation offerings. “This is due, in large part, to the growing demand for certain positions as the technology landscape continues to evolve,” Link says. As an example, he points to a 177% increase in the past five years for robotics engineers. “With technology companies increasingly reliant on newer roles to reflect the changing demands of their industries, they are most certainly prioritizing salary to attract and retain that talent, especially at the entry-level.” Entry-level salaries in both tech and engineering are much higher than entry-level salary ranges in other industries.

“For employers looking to make changes to keep talent, it’s important they evaluate how their compensation stacks up against market-rate salaries within their region and industry,” Link says. “If an employer consistently offers salaries that are below industry average, then there is a very good chance it will be hard for that employer to both attract and retain talent in the future.”