Everything you need to know about pay transparency

1. Everything you need to know about pay transparency Pay Transparency Rewards & Risks: How To Do It Right?

2. Pay transparency (aka salary transparency or compensation transparency) is one of the most hotly debated topics. It is because it isn’t rare for two people with the same qualifications to be earning different salaries for the same position. Nobody would have known a decade or two ago since salaries were considered a taboo conversation subject. However, today’s workforce doesn’t follow the same rules, and salary discussions are more open and more legislation is coming into place. Almost 40% of the responders to a Blind survey said that they had discussed their salary with at least one other co-worker. It is becoming more common for companies to be transparent about this. Glitch, for instance, decided to share salary ranges for each of the roles. This move toward transparency has been beneficial, according to their CEO. It created trust between employees and the company. Including a salary range in the job description also increased the application rate and earned the company praise on social media. Now, the question is, are you ready to be transparent about salaries and decisions associated with your organization, and how transparent should you be?

3. Who is this article for? Before you keep reading: this article is designed for companies who are NOT currently under any legal obligation for transparency. If you have legal obligations, please follow the guidelines stated. If you are... NOT in a region where pay transparency is mandatory, Looking to boost retention & create a more fair compensation structure, Wanting to get ready for incoming pay transparency legislation. ● ● ● then this article is for you!

4. Do You Need to Bare It All – Levels of Compensation Transparency Choosing to be more open about salary discussions doesn’t necessarily mean you need to publish all the numbers out in the open. There are multiple levels of transparency, ranging from telling a person only what’s owed to them to having an open salary structure. The level of salary transparency ideal for your company depends on multiple factors, including the type of workforce, company culture, practical possibilities, etc.

5. Level 1: Knowing only your salary At this level, salaries are not published inside the company. Everyone can negotiate their salary according to their negotiating skills, even if a hidden salary grid may be in place to frame and define wages. There's a minimal discussion about it, so companies don’t know whether employees are satisfied or not. And employees have no idea of their potential increase if they move up within the company, which can be a source of demotivation. Level 2: Knowing Your Salary and How It Is Calculated A step ahead of Level 1, in this case, someone compiled guidelines for the different roles and levels of each and assigned an appropriate salary range to each group. Now, employees know how much they are being paid and can compare it to the market standards. For example, someone can know that he is being paid X amount based on a market study of salaries earned by people with similar qualifications and experience. At this level, it becomes crucial to have a reliable benchmarking tool that provides data from companies in similar stages of growth. It will allow companies to have trustworthy and unbiased information, but this will also reassure employees on the validity and seriousness of the approach.

6. Level 3: Knowing the rationale for salary decisions This step is another significant one toward pay transparency. One-on-one discussions about the policies and the reasoning for different salaries can be held open. Employers must be available to discuss why they can or can’t match salaries being paid by another company. Contrary to what you may believe, clearly stating that the company cannot match the market standards will not make all your employees leave. Transparency inspires trust and makes employees feel in control of their salaries – they know that they might not be getting the best salary right now, but they can see the growth potential. While some companies cannot match the salary, they can offer other benefits such as a remote location, or working for a positive impact project such as the French start-up EcoTree, labeled B-corp.

7. Level 4: Knowing Your Salary in Comparison to the Minimum and Maximum Range To reach this stage of transparency, companies need to have a defined salary structure. An employee knows the salary range earned by people in similar positions across the company and knows what they need to do to make more. For example, Whereby achieved this level of transparency by using a simple process to build their salary grid: They decided on their philosophy, i.e., which company they wanted to become (flexible, inclusive) And then, they decided to translate this into a set of rules Which translated into a salary bands uk scale accessible to all As Jessica Zwaan, COO of Whereby, explains, “this means we lead with the philosophy first, rather than looking at our team’s salaries and then coming up with rules based on our current pay rates.” It is important to remember because it enables companies to be as fair and objective as possible and create a philosophy that is not driven by past decisions.

8. Level 5: Knowing It All The final step of the pay transparency spectrum is about putting all your calculations out for public viewing. Employees know how much they make in comparison to others. Everyone else does too. An online search for “position at company X salary” may give you the exact amount paid. This is not an easy level of transparency to maintain. Buffer decided to make all salaries public in 2013, and even though employees were initially a little wary following this decision, they wouldn't go back! The team is openly talking about money and asking for fewer raises because everything is more apparent with a base salary based on average wages in the field and the cost of living.

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