When it comes to employee satisfaction, few topics spark more emotion or confusion than salary. Our latest analysis at Ennova reveals something critical: fairness isn’t only about the numbers, it’s about perception.
Why Don’t Employees Feel Fairly Paid, Even When They Are?
In theory, salary bands and benchmarking tools should give a clear picture of fairness. But here’s the catch: how people feel about their pay often tells a different story.
Our data shows a clear trend. An employee’s position in the salary index is closely linked to how fair they believe their pay is. The further someone is from the middle of the band, the more likely they are to feel underpaid, even if their salary is objectively high.
Here’s what the data shows: perceived fairness doesn’t always follow the numbers.
This disconnect isn’t just interesting, it’s consequential. When people believe they’re underpaid, they’re more likely to disengage, speak up, or leave - even when the numbers say otherwise. And that’s a risk organizations can’t afford to ignore.
What Age and Gender Reveal About Pay Perception
Our analysis also uncovered notable patterns across gender and age. While men tend to report more dissatisfaction, especially at lower index placements, this may reflect higher expectations or a greater willingness to vocalize discontent. Research backs this: men are often more assertive in negotiations and salary expectations.
Interestingly, younger women (under 30) show higher satisfaction with their pay than their male peers. But over time, men often advance further both in salary index placement and in perceived fairness, underlining the ongoing challenge of closing gender pay gaps.
Younger generations, particularly Gen Z and Millennials, are also more attuned to pay fairness. They're quicker to compare, question, and even switch jobs if they feel underpaid. This makes transparency and communication more important than ever.
Introducing Ennova’s Salary Perception Matrix: A Clearer Way to Understand Pay Perception
To support meaningful conversations about compensation, Ennova has developed a Salary Perception Matrix. This is a tool that captures how objective salary positioning (measured via a salary index) interacts with the employee’s subjective perception of fairness.
But understanding the issue is only half the battle. To move from insight to action, you need a new lens, one that clearly shows the tension between data and perception.
The matrix reveals four distinct employee profiles, each requiring a tailored dialogue strategy:
Unbalanced Expectation
Employees in this group score low on both the salary index and perceived fairness. They are dissatisfied, and this typically stems from high expectations that aren’t in line with their current role or contribution.
HR Focus: Begin with empathy. Acknowledge their perspective and explain the reasoning behind salary positioning. Open a dialogue on development opportunities and expectations for progression.
Unrealized Potential
These employees have a low salary index placement but are content with their pay. There’s a healthy alignment between where they are and what they expect.
HR Focus: Keep the momentum. Be transparent about growth opportunities and clearly communicate what’s needed to move forward. It’s easier to keep this balance than to fix it later.
Hidden Mismatch
Although these employees are high in the salary index, they still feel underpaid. There’s a misalignment between reality and perception, often driven by a lack of recognition or unclear feedback.
HR Focus: Don’t dismiss their concerns. Clarify how their compensation was determined, but also explore the less visible drivers, like recognition, influence, or purpose, that may be influencing their perception.
Rewarded as Deserved
This is the ideal match. These employees are objectively well-compensated and perceive it that way, too.
HR Focus: Use this alignment as a foundation for retention and engagement. Recognize their contributions and discuss future growth, new responsibilities, leadership potential, or leadership development support.
Each quadrant calls for a tailored dialogue, from transparency and development talks to recognition and progression planning. Because when it comes to salary, one-size-fits-all messaging won’t cut it.
What Can HR Leaders Do About Salary Perception?
- Start with empathy, not spreadsheets: Numbers won’t fix perceived unfairness. Ask questions. Listen actively. Understand the story behind the sentiment.
- Be transparent, respectfully: Explain how compensation decisions are made. Share the rationale, the metrics, and the pathway forward.
- Tailor the message to the mindset. Use the Salary Perception Matrix to shape meaningful, individualized conversations, not one-size-fits-all responses.
- Use data as your conversation starter, not your conversation ender. Tools like our employee experience platform help turn feedback into real progress. Because when employees feel understood, they engage. And when they engage, they stay.
Understanding Pay Is Just as Important as Earning It
Employees don’t just want to earn more; they want to understand more. HR leaders must move beyond transactional pay discussions and toward strategic, trust-based conversations. Because at the end of the day, perceived fairness is just as important as actual fairness, and both can shape the employee experience in lasting ways.
Key takeaway
Employees want clarity, not just compensation. The ‘why’ behind the number matters more than ever.
Want to dive deeper into pay transparency? Read the next blog post in this series: Pay Transparency 2026: How HR Turns Compliance into Advantage
Get in touch with usCurious how your employees perceive their pay,
and what to do about it? Our specialists help HR teams turn insights into action with the right data, dialogue, and tools.
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