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WASHINGTON, DC, October 17, 2002 – When it comes to pay, a majority of American workers believe that the grass may be greener at other organizations, according to a Watson Wyatt survey of nearly 13,000 employees.

Watson Wyatt’s WorkUSA® 2002 study found that only two out of five employees (41 percent) believe they are paid as much as their peers in similar positions at other companies. Workers say the situation isn’t much better within their firms -- only half (48 percent) think they are paid fairly when compared to people with similar jobs in their own companies.

“Companies must take a close look at employees’ perceptions of pay fairness both within and outside their own organizations or risk losing people once the economy improves and labor market mobility is restored,” said Ilene Gochman, Watson Wyatt’s national practice leader for organizational measurement and the author of WorkUSA® 2002. “In fact, other Watson Wyatt research has shown that pay dissatisfaction is a key reason why top performing employees leave their companies.”

Employees’ dissatisfaction with their pay is due, in part, to inadequate communication, the survey noted. Only 43 percent of employees said their companies do a good job explaining how their pay is determined, a 13-point drop since 2000 and the lowest figure for pay communication since 1994. One out of five (20 percent) employees said they do not even know what their total compensation packages are worth.

The value of effective communication is evident in the results related to employee benefits. Almost seven out of ten (68 percent) employees said their companies do a good job providing information on their benefits -- a strategy that appears to be paying off. The percentage of workers who believe their benefits packages compare well to packages offered by other companies jumped 10 points between 2000 and 2002 to 42 percent.

“The high marks given to companies for benefits communication suggest that improvements in pay communications are possible. Companies clearly know how to communicate -- they just need to better apply their communication strategies to their pay-related practices,” said Gochman.

When it comes to specific benefits strategies, employees’ reactions were mixed. The majority of workers are satisfied with their leave benefits (71 percent), savings plans (67 percent), health care plans (64 percent) and pension/retirement plans (60 percent). However, the economic downturn has affected employee attitudes toward profit sharing and stock programs. The percentage of employees satisfied with their profit sharing plans fell by 10 points to 45 percent between 2000 and 2002, while satisfaction with stock programs declined by 7 points to 50 percent over the same period.

Gochman said that the study results show that companies must do a better job linking employees’ pay to their performance. “Despite evidence that pay differentials between strong performers and weak performers boost firms’ financial performance, only one-third (35 percent) of employees told us there is a clear link between how well they do their jobs and the money that they earn.”

Copies of the survey report are available for purchase by clicking here.

Watson Wyatt & Company

Watson Wyatt & Company, the primary subsidiary of Watson Wyatt & Company Holdings (NYSE: WW), is an international human capital consulting firm that provides services in the areas of employee benefits, human resources technologies and human capital strategies. The firm is headquartered in Washington, D.C., and has more than 4,250 associates in 61 offices in the Americas and Asia-Pacific. Together with Watson Wyatt LLP, a leading European-based consulting partnership, the firm operates globally as Watson Wyatt Worldwide. Watson Wyatt Worldwide has more than 6,300 associates in 87 offices in 30 countries.

Media Contact

Ed Emerman, eemerman@eaglepr.com, (609) 452-5967