Pay transparency isn’t something out on a distant horizon, it is already here, and it’s here to stay.
- Ten states have already passed pay transparency laws and legislation is pending in another 15.
- 25% of employees work in a state with pay transparency laws in effect.
Beyond the legal requirements, pay transparency will continue to increase because the labor market has changed: employees and job seekers expect transparency around pay.
Posting hiring ranges on job postings is typically where pay transparency begins, but that is just the tip of the iceberg.
- If you stop there, its likely that employees within your organization watch your job postings and document job titles and hiring ranges in order to understand your salary structure.
Sharing salary ranges with current employees will eliminate the need for employees to spend time and energy creating a shadow salary structure and trying to figure out how their role fits into the structure.
- Communicating your salary ranges will likely prompt other questions, such as what grades or jobs are eligible for incentives and how salary ranges are developed.
Strategic Steps to Pay Transparency
Rather than unintentionally sliding down a slippery slope of pay transparency, a well thought out pay transparency strategy which defines what information will be shared with whom, ensures your practices align with your organization’s culture and values.
Once a pay transparency strategy is in place, and before any information on pay is shared, it’s a good idea to get your compensation “house” in order. Here are some ideas to get you started.
Pay Transparency Step 1: Job Classification
- Establish clear job roles, responsibilities and skill requirements
- Categorize positions based on their relative value to the organization
- Ensure job titles and descriptions accurately reflect work performed
Pay Transparency Step 2: Analyze Compensation Structure
- Assess salary ranges and pay bands to identify inconsistencies
- Review process for assigning jobs to a salary range for unintended biases
- Ensure alignment of salary ranges to market rates
Pay Transparency Step 3: Compensation Practices
- Review compensation practices to identify any inconsistencies or gray areas
- Assess bonus structures for unintended biases and inconsistencies
- Compare policy to practice, ensure alignment and document exceptions
Pay Transparency Step 4: Salary Administration
- Ensure clear guidelines are in place for setting base salaries
- Review actual practices to confirm compensation processes and guidelines are adhered to
- Ensure consistent processes for salary adjustments, promotions and salary reviews
Pay Transparency Step 5: Performance Management
- Ensure performance management and compensation processes are aligned
- Establish clear and objective performance evaluation criteria
- Link compensation decisions to employee performance
Pay Equity
Once you are comfortable that your pay policies, processes and procedures are clearly documented and followed, consider conducting a pay equity analysis to identify and address any areas where past practices may have led to inequities in compensation.
Summary
While it would be ideal to fully assess and update your compensation structure, policies and practices before increasing your level of pay transparency, in reality, you may need to start sharing more pay information with applicants, managers and employees as you work through the items above.
Begin with your pay transparency strategy to help guide how, when and with whom you share information – laying the foundation to foster fairness and accountability.
Contact Us
For assistance in developing a pay transparency strategy, reviewing your compensation practices or completing a pay equity analysis, reach out to Beth Ostrem or Amy Ryan for more information.
