At a time when pay transparency feels more important than ever, Innecto’s team of consultants is focusing on how building the right frameworks and structures plays a fundamental role in supporting Pay Transparency and Pay Equity. In the first of this four-part series our Director of Business Innovation and Senior Principal Consultant, Sarah Lardner, outlined the ramifications of the EU Pay Transparency Directive, In part 2, we examine what Pay Transparency means to employers in the UK in terms of the structures needed to enable decision-making.
Pay Transparency aims to address and tackle disparity and support a fair and equal environment for a more inclusive workplace, but it is not easy. Many businesses and leadership groups are concerned by the potential consequences, and the many questions it raises:
- If workers can see everyone else's salary, could it affect morale?
- Will we be able to explain why some workers are paid more than others?
- Does greater transparency mean paying everyone the same?
- Could it inflate salaries?
- Could we lose our competitive edge?
Transparency Readiness
We have been working with organisations affected and unaffected by the EU legislation, helping them plot their way through this journey, from gauging readiness to implementing policy, mitigating risks and identifying how far practically each can go.
Much of our work with clients in this area is geared around transparency-readiness. We use a framework of questions for business leaders, HR, managers and employees to gauge a company’s overall readiness to broach the topic of transparency, in pay and elsewhere. Examples include:
- What does transparency mean to us?
- How far do we want to go as a company towards Pay Transparency?
- How ready are we as a leadership group to deal with this?
- Are our pay structures and decision-making capabilities up to it?
- How soon, or quickly, do we want to go on this journey?
Pay Transparency is not without its risks and resistance is likely to come from two main groups:
- Older workforce – who have developed careers and pay in a secretive environment
- Established leaders – whose gut instinct may be to avoid the perceived consequences of Pay Transparency such as salary comparisons, staff attrition and losing a competitive edge in the market.
In our experience, every organisation looking for support in this area has a different jump-off point, but broadly speaking companies fall into three camps:
Type A: Transitional support – organisations with all the frameworks in place for equitable policies and practices but need help moving towards complete pay transparency.
Type B: Structural support – organisations with rigorous job evaluation methods and pay benchmarking tools but without the firm pay structure or policy to make confident data-backed decisions.
Type C: Strategic overhaul – organisations currently operating with no job architecture or pay benchmarking in place, who have more work to do.
Given this range of readiness, the onus on Innecto has been to make each solution bespoke, while applying common lessons and experiences as standard, starting with the three core foundations that underpin every company’s pay structure, policies and practice:
- Educate your leadership
This is often overlooked but is important. More than ever, HR needs to provide clarity around the EU Directive - what it means for companies with and without registered locations in the EU.
HR can get ahead of the game here in flagging the fact that Pay Transparency legislation will eventually happen for companies with a UK-only presence. By explaining the benefits and challenges to senior leaders and the actions needed to be ready, HR can perform a crucial role in enabling cultural readiness around Pay Transparency.
- Interrogate your current practices around pay decisions
PayLab - Innecto’s pay benchmarking solution for gaining clarity around your current and aspirational pay stance
HR needs to lead the way in getting under the bonnet of how pay decisions are currently being made.
Asking tough questions here will help determine your Pay Transparency action plan, which you can use to articulate the journey and key dates to leaders, managers and even employees. Questions might include:
- Could we stand behind our pay policy and approach if challenged?
- How confident are we in how we assess roles?
- Do we carry out equal pay audits?
- Could we articulate and share information about our pay practices, if needed?
- Could we benefit from professional advice and/or from looking at a bespoke tool like PayLab?
- Scrutinise Job Evaluation methods
Evaluate – Innecto’s tool for making job evaluation and levelling quick and straightforward
As HR professionals and business leaders we need to be confident that roles are being assessed fairly and consistently.
The term comparable work is key in the requirements of the EU Directive and will place scrutiny on how roles are assessed and classed as comparable.
Again, we work clients through a framework of key questions, often using our bespoke tool Evaluate as a fail-safe framework to answer key questions:
- Are we confident that our roles are clear and well defined?
- Do we rely heavily on job titles?
- Do we have robust job evaluation methodology for assessing roles doing the same, similar work or work of equal value?
- Could we benefit from professional advice and/or from looking at a bespoke job levelling tool like Evaluate?
By going through this strategic piece of work, companies can build a strong foundation on which to grow, plan new organisational design and transition to a position where they feel more ready for openness and transparency. If you feel you could benefit from a Pay Transparency Assessment and Action Plan, please contact Sarah.Lardner@innecto.com.
Still to come in this four-part series: Next time we look at the five main steps companies can take to prepare and transition towards Transparency. Then in part 4 we will assess how digital platforms are aiding us all in this process.
