Employers are under more pressure than ever to make sure they achieve pay equity. After all, the benefits of doing so are manifold. They include less risk in the face of increased scrutiny, accelerated workforce diversity, and a heightened ability to recruit and retain employees. And employers’ intentions are good: some 67 percent of employers in a 2020 WorldatWork survey viewed pay transparency – which is intrinsically related to pay equity — as increasingly important.
The rub, though, is that just 14 percent of organizations are acting on pay transparency beyond moderate levels. So, there’s an opportunity at hand to rethink your approach to pay transparency so that your strategy promotes a better employee experience.
Here’s the case for pay transparency – and more.
What is Pay Transparency?
In the main, pay transparency is an approach for discussing employee strategies within the organization. It includes openness about pay ranges in a company as well as the public posting of pay ranges in job descriptions.
What is Employee Experience?
In essence, this is a crystallization of all that an employee perceives and observes during their tenure with an organization.
What are the Advantages of Pay Transparency?
There are three chief areas:
- Legal compliance. In a growing number of states, pay transparency is a legal compliance issue. That is why organizations must stay abreast of the law here.
- Employee experience. Employers that make pay transparency a priority achieve a better employee experience. In turn, that leads to improved recruitment and retention plus more engaged, motivated, and productive employees, as well as less absenteeism.
- Pay equity. In tandem with superior analytics, pay transparency can promote better pay equity outcomes.
Pay Transparency and the Employee Experience
Yes, pay transparency is a regulatory issue. But it’s more than that: it goes to the heart of the employee experience. After all, the hush-hush posture that’s been the long-standing employer norm is significantly out of step with today’s workforce.
Likewise, employees are increasingly expecting and demanding more in the pay transparency space, especially in this tight labor market. If an employer has gender pay gap, for example, employees want to know about it, and there are many online forums and websites that will oblige them. Employers that aren’t transparent about pay, and aren’t eager to broach the subject, risk losing the trust of their people, their talent prospects, and even their customers.
The good news is that employees who know that they’re being treated fairly in terms of pay report improved job satisfaction, engagement, and productivity.
The Difference Between Pay Equity and Pay Transparency
Pay transparency does shine a light on pay equity, although the two terms are distinct. Pay equity means paying people the same when they perform the same or similar work, while accounting for factors that include job performance, experience level, and tenure. Employers gain pay equity by using analytics to assess and remediate pay gaps.
Conversely, pay transparency has to do with engaging employees on issues of compensation opportunities through the clear communication of pay structures, ranges, and practices.
In summary, yes, the case for pay transparency has never been stronger, particularly in this labor market in which the ability to recruit and attract employees simply must be paramount.
If you need help with pay equity analysis and remediation, we suggest that you enlist the help of the leading compensation and benefits consultant Mercer for the review and resolution of compensation disparities, a reduction in risk, heightened workforce diversity and ultimately — more organizational success. How does Mercer do it? In the main, it’s through its objective, efficient, comprehensive, and global methodology. The consultant has the experience and expertise to put organizations on the right pay transparency and pay equity/ track.