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Employees Incorrectly Assume They Are Underpaid

February 14, 2006
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It seems a lot of employees think they are worth more than they actually are, according to a recent Salary.com report. The survey of 1,500 employees found that 65 percent of respondents plan to look for a new job in the next three months. And 57 percent of those employees say they are looking to leave because they feel that they are underpaid.

However, according to Salary.com’s research, only 19 percent of these workers are actually underpaid. Further, 17 percent of those employees are actually being overpaid by their companies.

The reason for this disconnect is that often employees are given inflated titles or have a misunderstanding of what their industries pay, says Bill Coleman, senior vice president at Salary.com.

In the late ’90s employees grew accustomed to getting 20 percent raises, along with better titles. But when the market turned, a lot of companies continued to give better titles instead of better pay, which resulted in many employees having inflated titles, he says.

To address this, companies need to create a more transparent compensation structure that rewards employees based on performance, Coleman says.

"It’s important for employees to understand what goes into the decisions around their compensation and what is expected of them," he says. "Often the way employees perceive their performance and the way their managers perceive it are very different."

Jessica Marquez

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