The 3rd Step Towards Pay Transparency

The third step toward pay transparency is a cost/benefit analysis. How much time and money are you actually going to commit throughout the year to giving employees what they are asking for: "A better understanding of what fair pay is for their position and skill."

Oddly enough, in this case your cost/benefit analysis should start with costs. Yes, that breaks the rules because you are starting out without a defined goal, but I've got a good reason for this recommendation. In my experience people usually set their initial communications goals so high that they quickly become disappointed because they can't pull them off, given the time and money involved.

There's no need -- and there's little benefit -- to finding out that full-blown open-book management is unrealistic for your company. On the other hand, there's a lot to be gained by getting everyone excited about having more information and insight into their compensation. Better to begin by deciding how much time and money you are willing to commit, which will enable you to define the level of change you can realistically pull off.

Keep in mind as you sort this out that we're talking about not only HR's time and money, but also every executives' and managers'. Every step you take toward pay transparency is going to involve managers and be led by executives.

For example, suppose your initial goal is to help employees understand how their salary range has been determined and why it is competitive. Employees will need to have centralized access to information so they can trust that everyone is being given the same information. Executives and managers will need to become subject matter experts who can conduct technically correct discussions with employees throughout the year. (After all, they will need to support your choice of salary data without quibbling.)

To pull this off effectively, employees, managers and executives will need explanations of midpoints, surveys, etc. which can be made available online. Most important will be the one-on-one discussions that occur throughout the year, though, so manager training and FAQs will be needed.

Think your employees already understand how their salary range has been determined and so on? Time for a reality check. What clues have you gotten from employees about whether they believe they're being paid fairly for their position and skill? Transparency also means you're making your best effort to be not only open, but also understood, so that your decisions are supported.

Odds are, you still have a ways to go -- so what's the best investment from your employees' perspective?

Ready to start from the beginning? You can check out earlier installments in this pay transparency series: What pay transparency means, where to start and how to talk it over with executives.

Everything you do in compensation is communication, so why not do everything better? The popular ebook, Everything You Do (in Compensation) Is Communication @ https://gumroad.com/l/everythingiscommunicationbelongs on your summer reading list. Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create this DIY guide to compensation leadership. Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio and performance management discussions at the Café. Before founding re:Think Consulting, Margaret was a Principal at Willis Towers Watson. 

Comments

[jay schuster]

Unless I am mistaken, the MOST 'transparent' pay systems are in the public sector. This is what one might call 'safe transparency' because they communicate systems based principally on tenure and uniformity. I am told this attracts a workforce that is focused on being 'protected' from the 'trials and tribulations' of real-world risks.

Looking at the service performance of public sector organizations such as the Postal Service, VA, SSA, to name a few, is that really what we want in exchange for money invested in work to be done? Perhaps I am missing something but in my experience "Open Pay Systems' create a situation where everyone is paid similarly and where excellence is viewed as 'odd' and something to be feared.

How many private sector organizations recruit talent from the public sector? One wonders.

[Roy]

When the state of California went public with the salaries of employees at their colleges a few years ago, employee satisfaction did not increase substantially.

Many people that work for the gov't, do so for the job security.

I have seen a lot of movement from the college coaching ranks to the private sector (NFL).

[Roy]

PS.

In January 2015, as much of the world was getting over its post-holiday hangovers, people began disappearing from Carnegie Mellon University's robotics center. At first it was only a few individuals, mostly software developers. Then it became an entire team, and eventually the group included the center's director.

They weren't going far.

Just around the corner, Uber had set up shop in a renovated building that used to be a chocolate factory. Most people at CMU's National Robotics Engineering Center (NREC) didn't even know it yet, but in a building that shared the very same parking lot, the ride-hailing company had embarked on a multi-year project to replace human drivers with computers. And to do that, they'd need all the help they could get. So Uber got to work snapping up some of the company's most talented staffers.

http://www.theverge.com/transportation/2015/5/19/8622831/uber-self-driving-cars-carnegie-mellon-poached