I think the difference between transparency and clarity is fascinating . . . and powerful . . . and frustrating.
Let's say my company just updated the salary structure and my manager has given me a salary statement. It shows that my current salary is $65,000. The midpoint for my new salary range is $60,000. The minimum is $51,000 and the maximum is $69,000.
The company has told me the details of my salary range. In fact, I can see the entire salary structure on the Intranet. They have met their commitment to be transparent about salaries. The facts are out there for me to see.
So why do I feel itchy, vaguely dissatisfied? My salary hasn't been cut. Now I know how high it can go, too. But I've got a bunch of ideas forming, worries really.
What makes my salary competitive? Did HR use good data? Do the other employees with my title have the same salary range? Am I making more than the new guy?
In an online financial dictionary, transparency is defined as, "the full, accurate and timely disclosure of information." The everyday definition involves shining a light to make things visible.
But once I see facts, I have to figure out what to make of them. It's like doing the taxes. I may have a bunch of receipts with numbers, but if I don't know how to sort them, judge their use, understand how and why they apply to me, all those receipts are facts that just confuse me. And then I get frustrated.
That's why clarity is a more useful goal when it comes to talking with employees about compensation. (Clarity’s definition is literal -- to make things clear.) When it comes to employee compensation, I think we achieve clarity when employees understand how our decisions influence (and define) their pay opportunities. Decisions about business goals, culture, competitiveness, data, internal equity and so on.
To me, clarity involves explaining the choices that went into employees’ compensation opportunities. Employees who don't understand our process and our reasons, won’t know what to make of their current salary and feel (needlessly) frustrated.
Transparency is a hot topic right now. I agree that it’s important to shine a bright light on factors that affect a business and its employees. But if you want to achieve understanding and trust by sharing compensation information, experience tells me that clarity delivers.
Margaret O’Hanlon is founder and principal of re:Think Consulting. She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results. Margaret brings deep expertise in total rewards communication to the dialogue at the Café; before founding re:Think Consulting, she was a Principal in Total Rewards Communications with Towers Perrin. Margaret earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming.
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