I had a lively discussion with Silicon Valley Compensation Association (SVCA) members about pay transparency last week. To begin with, we noted that no one knew of a definition of pay transparency. Pretty promptly, the members suggested it should include these dimensions:
- Sharing salary ranges
- Disclosing market rates
- Publishing policies and procedures
- Announcing merit budget
- Implementing open book management
Just to be crystal clear, the last dimension involves giving, " . . . employees all relevant information about the company so they can make better decisions as workers." And, of course, educating employees so that they not only understand financials, but can use their understanding to make decisions that will improve company performance.
The SVCA members hit it on the head with this definition. The two companies that I found as examples invest considerable time and money in all five dimensions.
The investment seems natural to Whole Foods for many reasons. It embodies their "open books, open doors and open people" philosophy. Picture how (not) credible that philosophy would be if they let compensation be an exception. And, Whole Foods customers, picture how "open" their staff would be if they didn't know whether their company's commitment to them was as passionate as the company's commitment to Fair Trade, for instance. Without pay transparency, Whole Foods would literally be a whole other experience for both employees and customers.
Sumall, a data analytics company, has gotten a lot of publicity for its pay transparency approach. As a startup of 30 to 40 employees, it can easily fashion its own unique approach and pull it off. Interestingly, I found these two quotes about their pay practices from the CEO, Dane Atkinson:
One of the things we didn't anticipate was the amount of education necessary.
It took considerable overhead . . .
If you are not starting from scratch -- and how many could be? -- pay transparency is quite a scary prospect, especially the time investment involved. But lets look at the fundamental truth. Pay transparency acknowledges that pay for performance is a business process that can improve the company's performance and influence its culture for the better. Isn't that what "they" have hired us to do?
It's hard to picture being a little bit transparent (it's a lot like being a little bit -- well you know), but you've got to start somewhere. Try to avoid overthinking or overdramatizing what it will take to execute on your favorite of the five parts of the definition the SVCA members gave. My best recommendation -- pick the dimension you want to work on, and start thinking and operating like everything you do in that area is communication. Then notice how much more meaning you are giving your compensation practices, and what influence that has.
PS I've been talking a lot about pay transparency recently. I've given you a couple of reasons why I have changed my mind about it after all these years, and now believe we will move in that direction. My next article will be about the business and social trends that I believe are pushing us along.
Margaret O'Hanlon, CCP is founder and Principal of re:Think Consulting. She brings deep expertise in communications, compensation and career development to the dialog at the Café. Before founding re:Think Consulting, Margaret was a Principal with Towers Watson. She's wondering if you've read what's on page 62 of Everything You Do (in Compensation) Is Communication? Find out at www.everythingiscommunication.com. It would come in handy right now if you're nearing the last lap of focal review. Margaret collaborated with Ann Bares and Dan Walter to bring this ebook into the world. Filled with innovative ideas, practical tips and experienced advice, it's a quick read and a valuable resource for building your influence as a compensation strategist. Come visit and tell us what you think!
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