Cafe Classic: In the Era of Pay Transparency, Who Has a Voice, Who Has a Vote and Who Makes the Call?

Editor's Note:  As we push forward with pay transparency, let's not overlook that this is about more than sharing who makes what.  It's about more, even, than better explaining the purpose and mechanics of our pay programs.  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, less tolerant of secrecy.

-Tough times and austerity measures pushed many organizations to a new level of information sharing in the last year.

-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 skeptical crowd.

Here's the thing.  Transparent, pay programs built upon input and collaboration 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 in most cases, the organization and its governing bodies (the Board and top management, and whoever they have empowered in this regard on their behalf) retain the right and the responsibility to set the strategy and charter for employee compensation.  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.  Typically, however, this doesn't change who has the ultimate responsibility for the programs and policies by which people are paid.

In the interest of truth and transparency, and with an eye toward earning trust, it is incumbent on us to remind our employees of this reality.  Part of our responsibility in bringing more transparency to pay practices is to also make the rules and boundaries themselves - as they exist in our organization - clear. 

Is it a delicate balancing act, encouraging and considering employee feedback and concerns while reminding them of the limitations of their voice and role?  Yes, it is.  But I think transparency, if that is indeed our goal, demands it.

Your thoughts?

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys hiking, reading and hanging out with family in any spare time. 

Creative Commons image "untitled" by Michaela Daysh

Comments

[E. James (Jim) Brennan]

Everything kept secret is assumed to be obviously unfair and indefensible. What is openly disclosed is expected to be obviously sensible and defensible.

[Karen Kervick]

Of course there are no guarantees either way. And you know what they say about assuming... Unfortunately, even that which is openly disclosed is sometimes not believed, trusted or considered sensible. At least there is a basis for discussion, when openly disclosed. But how does one explain it when the new hire comes in making the same as long term incumbents, or these days even more? It's a tough sell.