When it concerns the topic of compensation, specific discussions about pay equity, and pay transparency, the stakes and feelings are high for all involved. CFOs and employees also have to weigh their earnings against their expenses, abide by their budgets, and create plans for future and future financial goals. In contrast to top executives, employees typically find themselves at the side of the decision-making on compensation without much understanding or influence over how these decisions are taken.
“Am I being paid fairly?” is a crucial question that is more pressing when the economy is struggling, and HR is responsible for answering this question promptly. The ideal scenario is to coordinate initiatives to improve pay equity with leaders and provide training to managers to ensure that they communicate information in the most effective manner feasible. If HR’s efforts are successful, they can bridge the communication gap from the executive boardroom to the employee’s dining tables, ensuring everyone’s expectations are met and safeguarding the company’s investment in talent.
This is a difficult one for HR professionals. However, you don’t have to tackle it all on your own. We’re here to help effectively and confidently talk about pay equity and transparency with every person in your workplace, from the top managers and executives to the entry-level staff. This article will outline three essential steps to help get you to the right place:
How do your employees feel about the issue of compensation?
The process of laying out a solid compensation program that you can build on in the future.
Participating in expert-led conversations which are already taking place.
Uncover How Your Employees Feel
The biggest obstacles to pay equity and transparency are a lack of understanding and communication. In the HR Disruptors workshop, ” Pay Equity Conversations Don’t Have to Be Uncomfortable,” HR expert Becky Lakin emphasized the importance of identifying and filling gaps in your understanding of your employees. She asks, “What do you know, and what are you missing out on? Then, she asks: what can you do to present what you know and don’t?
Becky’s attention to knowledge gaps is crucial since determining what your employees think about their pay is the most practical base for creating plans tailored to their requirements and your company’s. The best way to find the answers is to use surveys on engagement, HRIS data, reports, and one-on-one meetings with specific employees; however, it’s also beneficial to be aware of overall trends in the marketplace and industry.
In our 2022 trends in compensation study, we found that many employees are unsatisfied with their wages and would be thinking about quitting their job if they saw an opportunity with better pay.
Seventy-five percent of employees would consider quitting their job for a pay increase.
A quarter of employees have feelings of anger, discontent, anger, or unhappiness about their work choices.
Most people believe that their earnings are directly related to their mental well-being.
See the full 2022 Compensation Trends Report.
The majority of people want to know if they’re getting paid fairly and know what steps they can take to begin earning more money. And when companies fail to take care of these issues, they could lead to frustration and retention issues. According to a report on compensation for 2021 published by Payscale, most of the anxiety employees feel about their balance could be due to a lack of communication. More than half of employees compensated above or at market believe they are paid less. It’s a shameful, preventable, and costly mistake regarding worker satisfaction and morale!
Pay equity and transparency are crucial for employees. However, it’s vital to remember that transparency doesn’t have to start and end with pay. It’s about communicating. Involving your employees in making specific business decision-making and keeping them up to date will significantly influence how they perceive the leadership of the business and its management and their dedication to their experience as employees and financial security.
In the end, transparency and pay equity are much more complex than the matter of who’s being paid and for what amount. It’s about creating a comprehensive and accurate depiction of the value that your business can bring to employees by providing efficient and timely communication. A full-fledged compensation plan allows sharing of information when transparent communication is essential.
Lead by Example with a Solid Compensation Strategy
Based on the Payscale, “Most organizations want to have more pay transparency but are hesitant to share their pay practices without first having a formal strategy with attention toward pay equity.”
Find everything you should know about creating an official compensation plan that meets your company’s requirements here; however, at the beginning of conversations with the leadership, an essential element is articulating your “why” behind the initiative. The “why” may echo Payscale’s two most frequently cited motives for implementing pay equity initiatives through an official compensation plan:
The drive to develop a proactive strategy for talent aligns with our findings that 60% of job seekers reject employers who are dishonest about their salaries.
While you’re at it, linking company values and compensation should reflect existing programs to improve culture–another crucial aspect of overall retention and engagement efforts. After you’ve put in the effort to refine your mission, vision, and values to make them unambiguous for the entire company, adopting the same language to promote important HR initiatives can be a potent communication tool to get approval from your important stakeholders and work with other executives at your workplace.
A sound compensation plan can help you stand out for the best talent.
Other motives for creating an effective compensation plan to achieve pay equity that you can discuss with Payscale’s respondents may include:
Responding to feedback from employees (53 In response to feedback from employees (53.5%).
To ensure compliance with laws (46 To comply with legislation (46.6%).
A part of an ESG (environmental, social, Governance) strategy (36 percent).
As laws regarding pay transparency have become the norm for many companies and HR departments, leaders in HR and business must understand their legal obligations regarding transparency in pay. This could mean bans on asking candidates to provide the history of their salary and the legal requirement of including pay ranges in job advertisements; however, regardless of the laws that immediately affect your company is a good idea to be aware of what’s happening across the country.
Suppose you are aware of and integrate the purpose of the legislation on pay transparency into a proactive approach to compensation–to increase the equity of all employees in their pay. In that case, you can be confident that your areas of concern will be covered now and shortly. You can rely on your strategy, take the lead from it, and then return to it as a source of information in all future pay discussions.