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HR & RECRUITMENT

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Pay Transparency – How to Win your Employee’s Trust

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Employers have long treated salaries with a degree of confidentiality not just publicly but also within the workplace. Unless an offer is being negotiated or employees getting a raise, the topic is generally avoided. This is down to the fears relating to potential disputes, talent being poached or impact the ability to negotiate, however, the benefits outweigh these fears.

Being transparent not only allows potential candidates to have an idea of what salary they might earn but also clears up any misconceptions. Moreover, it has the added benefit of increasing employee morale, productivity and retention because when left in the dark about how much colleagues are paid, many incorrectly tend to assume that they are being underpaid. More importantly, will help ensure a fair level playing field across all demographics creating an increased level of trust between all employees.

Pay Transparency

In lieu of a 136% increase in pay transparency on LinkedIn, businesses seem to be split about the topic. This can be seen by HR specialists in 51% of companies saying that their company doesn’t say figures related to salaries with employees or early-stage candidates. 27% of companies share salary ranges while the remaining 22% although they don’t currently share data relating to salaries, they are likely to start sharing in the near future. This has led to candidates turning to sites such as Glassdoor to get feedback from other employees about salaries in particular companies. In turn businesses are trying to own the conversation by sharing this information themselves and as the transparency trends gain momentum, the above figures are expected to improve.

The above data begs the question – So if there’s a growing transparency trend, why do companies still refuse to share data? Three out of every four talent specialists who said that their companies don’t share information cite the potential for dispute as to the main reason. They go further and say that most will just look at the high end of the range then get upset because they make less without looking at other variables.

Other professionals who practice not sharing information express that this makes negotiations easier and more efficient as it creates a level playing field across genders and race which has also led some governments to introduce pay transparency laws.

Leslie Miley, a former Facebook, Apple and Obama Foundation executive expressed that pay transparency would remove the public distrust towards corporations. He goes further and cites data which indicates that African Americans are more likely to earn less than their Caucasian colleagues for doing the exact same job with the same amount of experience.

The report provides a number of steps to help guide companies become more transparent about pay. These are:

Seeing how your pay packages step up

One of the very first steps towards transparency is seeing how much employees earn on average and then comparing it to competitors. Then one can see if there are any pay differences between genders, races within similar roles and experience. Should inequalities be found, create a detailed plan of how you plan to rectify these which can include immediate raises across the board or changing your promotion structure.

Decide how transparent you want to be

Determine what’s best for your company. While commercial sensitivity is understandable there are many degrees of pay transparency. This can take the form of sharing salary ranges when posting a job, share ranges with employees for their roles or even publish exact salaries. There isn’t a one size fits all approach and every company should get executive buy-in before bringing the issue to employees.

Ask employees for their input

Involve your employees in the process, share your proposed policy details and the expected results using multiple channels. Provide a number of feedback methods and allow them to anonymously share their concerns. One could also provide live Q&A’s and one on one meetings. Allowing employees to give their input will instil a sense of ownership and transparency as they would feel involved in the process.

Develop a clear compensation criterion

You would need to make sure that you can clearly answer factors relating to how an employee’s pay is determined. This can include years of experience, past performance and educational background. Determine the salary range and then determine what it takes to be at the minimum, midpoint and high end of the pay bracket.

Train management how to appropriately discuss remuneration

Talking about salaries can be tedious and uncomfortable so managers have to be trained about what questions to ask and how to answer any queries relating to pay. They need to know how to clearly explain and discuss compensation policies and help employees feel comfortable having this kind of conversations.

Take it slow

Having a staggered, multiyear approach can ensure a smoother transition. Consideration could be to share, discuss and train managers in the first year going on to share salary ranges with employees for their own roles the following year and then finally sharing ranges for all roles in the third year. This way the approach is slow and easier to implement and thus could collect feedback and improve.

Communication is important

Ensure that there is continuous communication with your employees and that they are provided with all the necessary information. Continue to provide the rationale behind your decision towards transparency and tie your policies to your company’s core values as this can strengthen both. Such core values one could tie transparency policies to are integrity, accountability and honesty.

As with the previous topics, LinkedIn goes on and shares case studies from different companies and how they look at pay transparency. With transparency the goal isn’t, to be honest, but to pay everyone fairly. Companies shouldn’t discriminate against genders or races as at the end of the day its one’s experience and education which should determine what jobs they do and how much they get paid.

The full report can be viewed here.

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