UK firms’ lack of consistency on pay awards to employees is costing thousands of pounds, according to research by HR adviser Mercer.

The study involving  4,990 employees from 16 UK multinationals earning salaries up to £150,000 estimates that over-remuneration of UK employees adds an average of £3,262 per employee to the annual wage bill, while underpayment also adds risk equating to around £800 per employee to an organisation’s bottom line.

Chris Johnson, head of Mercer’s human capital business, says: “Our research shows that companies spend nearly 40% of their revenues on employee pay and yet they fail to deliver their pay policies effectively. Initial data suggests that this leads companies to waste nearly £4,000 per employee, or nearly 8% of their payroll. Employees know that some of their colleagues are over-paid and others are underpaid: this undermines high performance and employee engagement.”