How to Best Implement Pay Transparency in Your Organization
Pay transparency is the practice of companies openly disclosing information about their pay rates, as well as the pay increases, benefits packages, commissions, and retirement plans employees receive. When organizations practice pay transparency, they may put this information on their website, in job descriptions, or make the information available upon the request of job seekers.
Although companies may be reluctant to share salary information with the public, job seekers increasingly expect this type of transparency—and younger workers actually prefer it. In fact, according to a survey conducted by Bankrate.com, 42 percent of Generation Z workers have openly discussed their compensation with colleagues, as have 40 percent of Millennials. Older people in the workforce are a bit less forthcoming with 31 percent of Generation X and 19 percent of Baby Boomers willing to share this information. As a result, pay transparency is particularly important for the future of your organization, as early career talent is extremely interested in having this data out in the open.
Implementing a Successful Pay Transparency Strategy
Pay transparency is not just about putting facts and figures out indiscriminately. Since it can help or hurt your hiring, you need to have a plan in place as you would any other area of recruitment. The following are some tips that can help you create a pay transparency strategy that will build a favorable employer brand and attract the talent you want.
1. Get Leadership Buy-Ins
A pay transparency strategy isn't something that should be taken lightly, and the leadership of an organization needs to support it. Managers have to go into pay transparency knowing that it not only affects hiring because it can impact whether or not potential candidates want to apply for positions, it can also reveal some issues with equity in an organization if salary data doesn't appear to be fair. Leadership at your company needs to know what you're getting into when you create a pay transparency strategy, and to understand how it will ultimately help with your employer brand. Additionally, information about pay can go a long way toward helping you reach your DEI goals, because if there are equity issues with compensation, they will be brought to light and you can address them.
2. Create Goals
Pay transparency isn't just about making compensation information public: It can be tied to several goals that can help your organization's hiring and retention efforts. For example, one way pay transparency can affect hiring is that it gives you the opportunity to weed out candidates who may be more interested in making a certain amount of money than they are in working for your company. By being upfront about compensation, candidates who want more money will not apply for positions, which can streamline the hiring process because you reduce time spent on salary negotiations.
In addition, being transparent about compensation can help with retention, especially among talent from underrepresented backgrounds, because it forces an organization to create a fair framework for providing raises. Being transparent means that managers are not able to increase pay based on their own unconscious biases or whims; instead, there has to be solid criteria they can reference to explain why certain employees are compensated more than others—and if there are any discrepancies, they need to be accounted for.
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3. Perform a Pay Audit
Before making any information public, your organization should perform an audit to determine what everyone is being paid. Then, if discrepancies are revealed among employees at the same level, managers need to determine if there is a legitimate reason for these differences in pay. Review the data about industry standards and determine how you measure up against the norms. If there aren't good reasons for compensation differences, they need to be rectified immediately.
4. Make Pay Transparency Part of the Culture
In order to have a successful pay transparency initiative, it needs to become part of your company culture. This may require some training—especially since in many workplaces, talking so openly about compensation is usually frowned upon. Your company needs to normalize these conversations, and leaders especially may need to learn new skills to help them address compensation issues effectively with the staff.
5. Get Feedback
How do current employees feel about your pay transparency efforts? How do new hires, and even candidates, view an organization that shares compensation data during the hiring process? In order to find out if people are happy with the information being provided, or if more data needs to be made available, conduct surveys with current employees, as well as candidates, to determine how well your initiative is working.
Pay transparency is becoming more and more common in organizations as the idea of discussing compensation becomes less and less stigmatized. These conversations don’t have to be embarrassing and they can actually go a long way toward empowering employees and creating an environment where everyone is compensated in an equitable way. These tips can help normalize pay transparency in your organization, which can also help you meet your hiring and DEI goals.
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