Salary Transparency: Reaping the Benefits Without Posting Salaries
You may know from experience that you can have too much of a good thing. Whether it’s leftover Halloween candy, time spent with family on Thanksgiving, or salary transparency, every person (or organization) has to draw the line at how much is enough.
Some organizations have chosen (or been forced) to go all in on salary transparency—publishing employee salaries both internally and publicly. While the benefits seem worthy and noble, there are plenty of experts pointing out potential drawbacks of public salary information, not to mention the resistance you’re likely to encounter at suggesting such a radical change.
The good news is, posting individual salaries is only one approach to pay transparency. In fact, the best approach for most organizations probably lies somewhere in between completely closed and open. You can increase fairness to employees and reap many of the benefits of pay transparency while still keeping exact pay private.
Open Pay Conversations
Talking about pay feels icky for employees and employers. Unfortunately, only 30 percent of organizations train managers about how to talk with employees about compensation, which may explain why only 17 percent of organizations feel confident in “managers’ abilities to have tough conversations about compensation with employees.” Providing training to managers about how to talk about pay will encourage meaningful compensation discussions.
You can also help managers have open and informed conversations with employees about compensation by providing them with accurate and valuable information about each employee’s pay changes and total compensation. A great way to do this is by having compensation and HR reports available through a Human Resources Database (like BambooHR). Many of our clients give compensation decision makers and influencers (i.e. managers, finance, HR, recruiters) access to this information using our employee self-service system.
You should also make openness about pay (and maybe even openness in general) part of your organizational culture. If employees are genuinely encouraged to bring up concerns they have about pay or anything else, they’ll be much more likely to start conversations. These conversations can reveal problems your organization wouldn’t have known about otherwise and help you solve them.
Salary Comparison Reports
Though it may not be particularly surprising, the chasm between employers who feel they pay fairly (44 percent) and employees who feel they’re paid fairly (20 percent) is pretty alarming. The problem may exist partially because of inaccurate or uninformed opinions about what other people in similar roles are paid. Luckily, there are tools that crowdsource compensation information and provide reports about pay.
Compensation decision makers can use these reports to see how their organizations stack up. Reports can also provide valuable proof to employees and candidates that their pay or offer is, in fact, a fair market rate (of course, that’s assuming you’re actually paying fairly—more on that below).
A couple of examples of salary reporting tools:
-PayScale: Employees can take a quick survey to see what they should be paid and employers can use PayScale (which integrate with BambooHR to ensure that all employee data is up-to-date) to make sure they are paying fairly.
-Glassdoor: You’re likely aware that employees can leave reviews about your organization on Glassdoor, but they can also report their salaries. Glassdoor then creates a report on each organization’s profile that shows a salary range for different roles. So, not only can employees view what others in your organization report to make, they can see what other organizations in your industry or area pay for different roles.
It’s important to be aware that some salary predicting tools are more accurate than others and some tools won’t provide a full picture of roles in your exact industry or location. Because of this, it’s important for those who make pay decisions to be familiar with these reports and their limitations so they can speak with employees and candidates about them.
Defined Compensation Grading
Only 23 percent of employees think that the way pay is determined by their organizations is a transparent process and 31 percent of employers agree. So, for all most employees know, their salaries are determined by someone pulling numbers out of a hat or with a crystal ball behind a big curtain.
One of the best ways to instill confidence and transparency in pay rates is to create a defined and comprehensive compensation grading system to determine everyone’s salary. A grading system can help you rate roles consistently on factors like job complexity, experience required, education/training required, impact to the organization, and more. Your system will then give you an appropriate salary range for any given role. Of course, you will still have to account for which roles are the most in-demand and market rate changes.
Then, when employees want to know the “why” behind their pay rate, you can state that you use the same specific pay considerations for everyone in the organization. Regularly evaluating each role within the company using a compensation grading system also makes it really clear when employees deserve a raise.
On the flip side of the above statistic, if only 44 percent of employers feel they pay fairly, more than half of employers feel they pay unfairly. So, if you try to offer candidates compensation that’s below what they’re worth, delay giving employees deserved raises, or know there are pay disparities among different groups of people doing the same work, stop it. It’s dishonest.
Being open and transparent is a lot more comfortable if you’ve got nothing to hide. Managers won’t feel like they’re up for a fight when discussing pay and will, naturally, feel more comfortable encouraging open compensation discussions. HR won’t have to worry about employees comparing salaries if they can point back to a consistent grading system that’s responsible for the rate of pay. Recruiters won’t feel the need to pull the wool over anyone’s eyes if they’ve checked pay reports to be sure that what they’re paying is a fair market rate.
Transparency is about creating confidence among employees that they are being paid fairly. So, the first step to increasing transparency in pay is to ensure that your organization is paying fairly in the first place. Doing so will help your organization feel more comfortable and supportive of some level of salary transparency.