While recent legislation has caused
Why you should communicate proactively
Studies confirm a significant shift in mindset on the topic of discussing compensation. While older generations still tend to keep pay information more private,
Further, recent mainstream news articles talk directly to workers about how to be more open about your pay and why you should, with one of the reasons cited as greater openness leading to an
While an increase in pay equity is positive, employers need to be prepared to proactively address and communicate their pay practices. Not communicating with employees creates the risk that employees will incorrectly fill in the blanks.
For example, mainstream media news articles encourage employees to collect pay data from websites such as Glassdoor and Salary.com. Because the information on these sites is self-reported, it is not always accurate. Employers who are not sharing information about their organization's pay practices therefore are at risk for having misinformed employees, leading to difficult conversations for managers, dissatisfaction, and turnover.
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Consider how transparent to be
There is a range of pay transparency to consider, both externally and internally. While a number of states now mandate posting pay ranges to job postings, for example, some employers have chosen to post ranges nationally.
From an internal perspective, considerations include sharing with employees what your organization's compensation philosophy is and messaging about your organization's commitment to pay equity. This may include sharing results of pay equity analysis, market assessment results, and how the employer uses these findings. It may also include internally publishing pay ranges by level or grade and educating employees about the ranges for their jobs and rationale for their position within the range. Further, training managers on comp can equip them to have basic discussions with employees about pay.
Many large employers are shifting toward increasing transparency. For example, Microsoft posts pay ranges nationally, not just where required by state law.
Pay transparency is part of your employee value proposition
It's important to think about your pay transparency strategy in the context of your Employee Value Proposition (EVP). The EVP is evolving from traditional elements such as having great rewards (benefits, retirement, pay) working at a great company (organization brand, image, culture) and having a great job (career development, training, security, work environment) to also include elements such as great two-way communication — think leaders as coaches rather than bosses, finding meaning purpose in work rather than just putting in a good day's work and pay transparency rather than limited exposure to the pay/jobs framework.
One of the benefits of pay transparency can be building trust with employees. A study from HR consulting firm Gartner, published late last year,
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Creating your pay transparency communication strategy
So where to begin? Again, share your story as an organization vs. employees filling in the blanks.
At a minimum, internal pay transparency communication strategies should include being transparent about your organization's methodologies on how and why your organization pays the way it does. Employees should have a clear understanding of how compensation is determined and what factors are considered when there are pay adjustments. They should also understand that there is objective, unbiased criteria in place for making pay determinations.
Additionally, it's important to be able to share with employees how their compensation compares to industry and market trends and where that data comes from.
Again, there are many employees who pull data from sites where data isn't accurate and reliable. Many employees don't understand how compensation data works.
A useful tool as you're shaping your communication strategy can include conducting focus groups to test employee knowledge and test your pay transparency messaging.
Education within the organization should consider a mix of media such as:
- Sponsorship materials for senior leaders
- Training materials and talking points for HR, line decision-makers and managers
- Infographics showing your organization's pay framework
- Awareness materials and videos for employees
- Scenario-based videos to support manager training
- Personalized total rewards statements and promotion
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Once your pay transparency communication is in place, continue to measure its effectiveness as you would with any strategy, including quantitative and qualitative measurement.
Staying abreast of changes in state/local labor laws, market research, and employee values all help you have your finger on the pulse of pay and pay transparency, leading to greater levels of employee retention and satisfaction.
