The demand for salary transparency is growing. We explore the benefits for you and your employees, how you can implement it, and how good communication can help you achieve it.
The workforce is changing. We’re bringing new ways of thinking, new values, and new standards to our workplaces – and we expect our employers to match our values. Many of us actively search to work for honest and accountable organisations.
One result is that pay transparency has gained increasing momentum in recent years. Various countries are implementing legislation to enforce it. This shift has been driven by the pressure to close the gender pay gap, promote fairer pay systems, and improve employee satisfaction.
What is pay transparency?
Pay transparency is openly sharing information about employee compensation, including salaries, bonuses, and benefits. There isn’t a one-size fits all approach to suit every organisation, but organisations can choose to implement some or all of these options.
- Including pay bands in job adverts.
- Disclosing salary ranges for all roles.
- Sharing market and benchmarking data.
- Discussing how pay decisions are made.
- Being open about the factors that influence pay, such as education, experience and performance.
How can pay transparency benefit you and your employees?
By focusing on pay transparency, companies can:
Reduce the gender pay gap. A review by the Institute of Employment Study for the Equality & Human Rights Commission showed there’s “overwhelming” evidence that greater pay transparency promotes fairer pay systems.
Reduce resignations. Employees who understand how their pay is determined are more likely to feel valued. This increases employee satisfaction and loyalty, and reduces churn.
Create a larger talent pool. Job seekers are more likely to apply for roles that are transparent about pay.
Boost career progression. When employees understand the factors determining their pay, they can set realistic goals and work towards them. This allows managers to have better career development conversations with their teams.
Become a responsible employer. When companies are transparent about pay, they take responsibility for fair pay.
What should companies be doing?
According to HR magazine, companies need to “start planning for pay transparency sooner rather than later.” This will help you attract talent in today’s market – and get ahead of potential legislation changes.
You may want to start with a pay audit, to identify and address any disparities. Then use surveys and data to find out what your employees really want to know about your pay structure, and consider whether your current company culture and pay structures reflect that.
Once you know where you are, and where your employees would like you to be, you can create a policy to outline your company’s approach to pay transparency. This could include a plan for implementing pay transparency, and setting goals so people can see the direction of travel. It will tell your colleagues what information you’ll disclose, and how you’ll communicate it.
Six steps to communicating with clarity
When you communicate pay transparency, these key steps can help make your messages are clear and compelling:
Don’t wait for employees to ask about pay transparency. Take a proactive approach and communicate your policies and practices upfront. This can help to build trust and credibility with your people.
Be open and honest about your pay policies and practices. Provide clear information about how you make pay-related decisions, what factors you consider, and what employees can do to advance in their careers and earn higher salaries.
Provide context. Explain your pay philosophy and how it aligns with your overall business strategy. You may also want to provide market and benchmarking data to help employees understand how their pay compares to others in the industry.
Use a variety of channels. Reach everyone with a mixture of town hall meetings, email updates, company intranet posts, and one-on-one conversations with managers. We all digest information differently so using various communication methods will help your message reach more people.
Managers play a key role. Train your line managers on your pay policies and practices, as well as how to have effective employee pay conversations, so they can have open and honest conversations with their team members.
Actively seek feedback from your employees on your pay policies and practices. This will help your employees feel heard and valued, and can help identify areas where you could improve.
Don’t get left behind
Pay transparency is unlikely to go away. Companies that aren’t taking proactive steps to become more transparent about pay risk falling behind, and having the agenda created for them through laws and regulations. Embrace pay transparency and reap the benefits.
A powerful pay transparency strategy has clear and creative communication at its centre. Let us help you engage your people.