11 February 2019

Advancing pay equality remains high on the political agenda.  Whilst the political focus is on driving pay equality by publicly disclosing pay differentials, organisations should consider more broadly how to make pay transparency a reality if it is to keep pace with the changing demands of the workplace and expectations of employees. There are three key employee requirements that need to be met with Pay Transparency.  

Employee understanding

The first being employee understanding. A Glass Door Survey, from 2015  highlighted that many Employees don’t understand how their pay is determined - A whopping 69% wish they had a better understanding of what fair pay is for their position and skill set at their company and in their local market. The other factor to tackle here is that employee’s perceptions of how they are paid often differ from the reality.  A Harvard Business Review study in October 2015, based on a Payscale survey, revealed a gap in employee perception on how they are paid relative to market – 64% of those who were paid at market rate thought they earned less than that rate.

Belief in Fairness

The second employee requirement is belief in fairness. One of the most compelling facts about employee turnover is that when an employee leaves an employer for reasons relating to pay, it is not over the absolute value, but over the perception of whether they are paid fairly relative to their peers and the market. Although, fairness isn’t provable and is too emotive to be quantifiable, you can demonstrate that your policies are equitable and that what matters to employees isn't that their pay be equal but that the system for awarding it seems fair.

Trust in pay practices

Another key principal underlining pay transparency is for employees is trust. Ultimately transparency breeds trust between employers and employees. In fact for millennial employees, trust and transparency have been demonstrated to be key engagement factors. Which is probably why many of the companies adopting open salaries are in the high tech sector, as they have greater numbers of millennial employees.   Pay transparency can help to eliminate any friction or noise around how pay is determined and hopefully create a more open and trusting environment where people can feel comfortable they are paid for their effort and contribution.  

So when considering how to promote pay transparency it’s worth knowing that there are three things employees want to know:

  • How their pay was determined;
  • How they can influence their pay;
  • How it compares with others.

To find out more see our joint webinar given by Curo’s Co-Founder, and Principal Consultant, Ruth Thomas, here.

Posted by Ruth Thomas

Industry Principal, Curo.

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