Editor's Note: As we consider steps to bring greater transparency to our pay programs and practices, we do well to remember that this is about more than sharing who is making what. It is about more, even, than better explaining the purpose, operation and mechanics of how pay works. As this Classic post highlights, we must also be prepared to address the questions about who ultimately makes the rules and the decisions - and who does not.
The march to greater pay transparency is accompanied by a movement toward soliciting more input and involvement in pay program design as well as toward more sharing of information on pay program intent, mechanics and administration.
The reasons behind this are many and they include - but are not limited to - the following.
-Transparency and openness are part of the culture and values of a growing number of organizations.
-Today's workforce is more demanding of information and less tolerant of secrecy.
-Tough times and austerity measures pushed many organizations to a new level of information sharing in the past few years.
-Organizations with solid, competitive and well-managed pay programs are realizing that there is little to lose and much to gain by providing more information to their employees.
This trend, however, does change the pay program management game for us. More involved and informed employees are more likely to raise questions, voice concerns and even challenge elements of the pay program. This can be disconcerting for HR and compensation professionals who have worked hard not only to make the programs better but also to involve and push more information out to employees. Instead of appreciation and gratitude, we find ourselves facing a barrage of questions from a testy, skeptical crowd.
Here's the thing. Transparent, participatively developed pay programs are messier and more complicated to manage than programs whose inner workings are closely held between HR and top management. They are ultimately better - to my mind - for rising up and meeting this challenge. But transparent pay programs also require clear communication of rules and roles. About who has a voice, who has a vote and who - ultimately - makes decisions.
At the end of the day, the organization and its governing bodies (the Board and top management, and whoever they have empowered in this regard on their behalf) retains the right and the responsibility to set employee compensation. Period. There are benefits to everyone if they choose to do so by providing thoughtfully considered opportunities for manager and employee input and if they take steps to make the pay program appropriately transparent. Nonetheless, they and they alone make the decisions on the programs and policies by which people are paid.
In the interest of truth and transparency, it is incumbent on us to remind our more strident and outspoken employees of this reality. Part of our responsibility in bringing more transparency to pay practices is to also make the boundaries themselves clear.
A delicate balancing act ... encouraging and considering employee feedback and concerns while reminding them of the limitations of their voice and role? You bet it is.
Are we up for it?
Ann Bares is the Editor of Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.
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