How to Implement Proactive Pay Practices For Better Transparency

PayScale recently hosted our Equal Pay Day event and one of our discussion panels focused on proactive pay practices. Specifically, how can an organization better ensure their pay practices are balanced and fair to all employees, regardless of gender and race.

The breakout session for proactive pay practices was hosted by Michaela Ayers, Founder and Principal Consultant at Nourish Events, a consulting agency that offers modern solutions for addressing workplace discrimination. In this session, we discussed the importance of pay transparency, the barriers people are coming up against, how to measure employee engagement and how to form a plan for better transparency. Read on to learn more about what the panel discussed.

Why Is Pay Transparency Important?

When your organization keeps pay practices secret from your employees, those employees are more likely to believe they are being underpaid. Millennials especially do not view pay practices as private, and that group makes up about 50 percent of the workforce today. When you are transparent about your pay practices, you send the message that you value fair compensation and will continue to work to ensure there aren’t biases in your compensation strategy, which in turn will help foster trust with your employees.

Still, many organizations balk at the idea of publishing salaries or being upfront and clear about their compensation strategy and practices. In these cases, it’s often a matter of better educating executive leaders and helping shine a light on legacy issues and decisions. Overall, more knowledge is a powerful tool, but your people need to know how to use it.

So, what can you do today to help improve transparency in your organization? Be sure you understand the why behind how you pay and the dynamics of those practices, especially when it comes to how you approach the talent pool, your compensation philosophy and budget opportunities.

What Are the Barriers of Transparency?

In this breakout session, attendees mentioned one of the main barriers to better pay transparency is executive buy-in. This could be a legacy issue, or it could be something as simple as a lack of knowledge or understanding about the topic. This is where solid data comes into play. By pulling together the latest data around how transparency impacts pay perception and your pay brand , you can help higher ups understand the importance of pay transparency.

Another barrier is the overall attitude toward and philosophy about compensation practices within your organization. Do your executives avoid tough conversations around pay practices? When was the last time you conducted a pay equity audit in order to determine how you are paying minority employees compared to other employees? You need to have the pulse of your organization, from the C-suite all the way down to individual contributors.

The last barrier we discussed was the fear of change. It can be a daunting task to make changes to the current compensation strategy and pay practices, but in the end, it’s so worth it to foster that trust among your employees and improve your pay brand overall.

How Can You Improve Transparency Within Your Organization?

There are many ways to help your organization become more open and transparent around pay practices. First, work to take the pulse of your employees. You can run an employee health survey to see how your employees are feeling about key issues, such as compensation, diversity, whether they feel supported by their managers, etc. Having this data allows you to see common themes. One organization in attendance conducted an employee health survey, and they saw some eye-opening responses around employees’ perceptions around diversity and compensation. They learned pay perception among some employees was poor and that many employees, especially women and people of color, felt their pay was low compared to other employees.   

Next, go back to the data. Being able to support your ideas and decisions with data is key for buy-in from the entire organization. When you look at the data, it’s important to ensure that you’re digging into the details. If you focus too much on the big picture, you might miss an issue that’s important to one group of employees. For example, you might have 95 percent of employees in the organization saying everything is great, but five percent saying things are problematic.

Share the data with your executive team. When an executive team is aware of the issues within your workforce, and they take the time to deliver the message “we notice these issues and we want to make improvement”, it’s one of best of the ways to build trust with employees.  For more information, check out the 2019 Compensation Best Practices report.  

Finally, be sure you understand the big picture and end goal of improved transparency. Can you answer these questions?

    • What does Transparency do for us?
    • How is this tied to results and our organizational goals/needs?
    • What do we do when the results and our needs don’t align?
    • What does it look like when things go right?

If you can answer those questions, you’re well on your way to improving pay transparency and implementing proactive pay practices for your organization.

Tell Us What You Think

We want to hear from you. What are the biggest barriers to transparency you’ve faced in your career? Let us know in the comments.

Want tips on how to ensure pay equity at your organization? Check out our new Pay Equity Hub