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Creating Pay Transparency in the Workplace

Compensation transparencyJessica Miller-Merrell, blogging4jobs

When you hear the phrase “transparency in the workplace” what comes to mind? Does the infamous Open Door Policy come to mind? Or do you cringe at the idea of being more transparent? Transparency is one of those buzz words that are thrown around quite a bit in corporate America, but how many actually practice it? According to the Bureau of Labor Statistics the median number of years that wage and salary workers stay with an employer is 4.6. This number is up from a January 2010 statistics at 4.4 years. Being transparent in can make employees feel more satisfied and want to stay with you longer. 

This is especially true when it comes to being transparent about compensation plans and philosophies. Pay transparency has become a big topic recently and has put employers in the hot seat to deliver on transparency in this aspect. Of course, most companies are only going to want to be transparent with their compensation philosophy after they've already taken the time to develop one. 

An argument against creating an open and transparent workplace surfaces when there is something to hide. In the aspect of pay, when an employee is being paid outside of the typical salary range for their position, specifically below it, companies had better be prepared to explain why that is. Having a sound compensation philosophy in place, that is communicated to employees, helps you to explain to them why you pay them what you do. Along the same lines if you are open in communicating how your employee is performing and where they stand in their pay range, you are empowering them to understand the importance of maintaining or improving their performance. 

One of the greatest case studies in pay transparency comes from the company SumAll. When they opened their offices they started an approach that promoted complete transparency. Workers were able to see anything from investor agreements, company financials, performance appraisals, hiring decisions, and the big one, employee pay. Creating an environment of complete openness helps take away some of the secrecy from the job. When workers feel like there are no secrets to uncover they’re able to focus on being more productive at work. 

Empower your employees to take hold of their careers with transparency about your compensation philosophy and their pay. You don’t have to broadcast or put a post-it note on someone’s forehead with his or her salary, but meet them and make sure they understand where they stand. PayScale Insight's new Employee Pay Report can make this discussion very easy to have for HR professionals or managers. Those who are making above the median will feel a sense of appreciation, and those below it will know how much room they have to grow in their position. One of the biggest things to remember when creating an environment of transparency is that too much information is better than no information.

Does your company practice complete pay transparency? Let us know in the comments below.

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