While half of permanent employees say they are being paid fairly, even fewer (34%) think that everyone in their organisation is paid fairly, according to a new report from the Chartered Institute of Personnel and Development.

The report finds the perception of unfair pay is being driven by employers’ lack of communication around pay.

The CIPD has called on employers to be more transparent about both their pay processes and outcomes. 

“When people don’t think they’re paid fairly, organisations reduce their chances of attracting and retaining the best talent,” the CIPD stated. “Employers also miss the opportunity to improve employee performance and well-being.”

CIPD’s report also found that 20% of workers think the pay of their CEO is ‘about right’. 

Meanwhile, 60% report that their line manager has never explained to them why they get paid what they do. 

Less than a fifth, or 18% of employers, have a formal process to assess and manage pay risk.

CIPD’s report also showed that 39% of employers have carried out an equal pay audit in the past three years to ensure they are complying with the law.

Charles Cotton, senior reward and performance adviser at the CIPD, commented, “Failure to be transparent about pay can make staff feel that they are being kept in the dark and feed a perception of unfairness. 

“Continued scrutiny over executive pay and gender pay gap reporting shows this is still an issue which many organisations are wrestling with, so businesses need to be on the front foot when it comes to understanding and assessing pay.”

The CIPD said that it wants to see all organisations have a clear definition of fairness which covers both pay processes and outcomes.