An employer benefits from communicating with employees about their pay policies. An employee benefits by understanding how pay is determined, because a sound policy that is consistently administered creates a sense of fairness. Lack of communication tends to breed skepticism among employees in the belief that they are paid fairly.

Develop a finely honed message, which can be communicated consistently and frequently, regarding the business reasons for adopting a particular pay policy. Pay policy supports retention when employees understand that the employer is making a concerted effort to deliver pay that is fair and equitable.

Pay policies are just as important for startups as they are for established companies, because without them companies risk underpaying or overpaying their employees. When a company develops a new pay policy, company leadership ensures alignment with company objectives and assumes ownership for effective implementation.