Pay conversations are a vital driving force in creating fair pay for everyone, however, both employee and employer still struggle to have these conversations confidently. Organizations need data and technology to take the steps needed to establish effective pay strategies and structures while building in pay transparency and fair pay initiatives. Taking these steps demonstrates the organization’s commitment to pay equity and enables confidence in your people managers and workforce to have useful pay conversations.
What your employees really want to know about their pay
Employees may feel discouraged to approach pay conversations with employers, and often its due to employers not having clear pay strategies and structures established, resulting in not being prepared to have informed talks around compensation.
Employees want increased transparency around pay to reduce biases and to help close pay gaps at their companies. They want to be able to talk about pay and be informed on how their pay is set, what opportunities they have to increase pay over a period of time, and how their pay compares from an equity perspective to their peers.
Benefits of talking about fair pay
When employees don’t understand compensation practices at your organization, they could adopt a belief that they are being underpaid (rightly or not), which will lead to less engaged employees and possible retention issues. When employees feel valued and aren’t spending time worrying about whether their pay is fair—their more likely to be fully engaged with their work, and a more engaged workforce leads to better business outcomes.
When organizations engage in fair pay conversations and adopt fair pay practices, it improves employer brand reputation and retention and attrition rates; reduces time and costs related to recruitment; and aligns business practices with pay transparency legislation.
Our expert panel answers our customers most challenging questions around talking about fair pay:
- Nasim Assadi, Vice President of People, Angel City Football Club
- Ruth Thomas, Chief Product Evangelist, Payscale
- Lexi Clarke, Head of People, Payscale
Your top 5 questions about fair pay answered
1. Why is it so hard to talk about fair pay?
Pay has become a taboo subject resulting in a social norm to view pay conversations as uncomfortable, especially for women. Pay secrecy was conditioned into workplaces with policies in place for disciplinary actions should employees disclose their pay to peers. Layer this with organizations not having an effect pay structure or range in place for pay determination leads to ineffective conversations all around.
2. What can you do to set the stage for fair pay conversations?
It’s important to understand that there is no one “right” way to have fair pay conversations. It’s critical to understand where your organization sits on the pay transparency spectrum and how transparent you want to be about how pay is determined. Once you determine your place on the spectrum, you can take the steps towards developing your compensation philosophy:
- Define pay philosophy and fair pay goals
- Externally benchmark jobs for a starting point
- Create fair and unified job structures
- Create pay structures
- Assess pay equity, including uncontrolled and controlled biases
- Build a sustainable approach to fair pay
3. How can you prepare managers for effective pay conversations?
Effective comp talks are critical to employee retention. Employees want to feel heard, and managers want to effectively advocate for employees around performance. Ensure your managers are trained on the organization’s pay philosophy so they can explain to employees how their pay was determined, how progress can be made, and how their pay compares to their peers. Providing managers with tools and data to support pay conversations will create more focused and meaningful talks about career trajectory, growth, and opportunities for their teams.
4. What else should you be talking about to support fair pay conversations?
Fair pay is part of an organization’s wider DEI strategy and equity pillar. Fairness means paying employees the same amount for comparable experience, skills, training and other job requirements. Data shows that when companies adopt transparent pay practices, the gender pay gap disappears as they are forced to clean up pay discrepancies. Solving pay equity issues across the lifecycle of talent metrics will help create a fair and equitable work environment and organizations will be better positioned when pay transparency legislation lands.
5. How should you communicate where you stand on pay equity?
Employees and other stakeholders are increasingly holding their leaders accountable for pay equity and gaps in pay. To communicate where you stand on pay equity requires organizations to create sustainable pay equity programs with ongoing analysis. Based on that analysis, you’ll know where the organization sits on the pay transparency spectrum, which will inform what to be transparent about on your communications. Payscale is here to help organizations make the commitment to talk about fair pay today. We’ve created a fair pay handbook to help guide you on the steps and tools needed to create fair pay initiatives and how to effectively talk about pay.
Additionally, if you missed our fair pay discussion with our panel of experts, watch now and learn what you can do to drive fair practices within your organization and how to prepare your managers on having informed compensation talks.