I have been supporting clients with implementing new approaches to pay for many years, and I have noticed a consistent desire to achieve pay transparency. However, I have also noticed that transparency means different things to different organisations. For some, transparency is simply about being open on how pay is derived, the process of designing pay ranges or applying pay increases. For others, it may be about publishing indicative pay ranges on job adverts. What is becoming more prevalent is the desire to move to a full transparency model, where pay bands are published internally. Is that full transparency, I can hear you say? You are of course right, that is a step away from full transparency, but it goes back to perception and comfort levels.
The reality is that complete transparency is operated by a few organisations - generally, US tech companies, such as Buffer and Gitlab. These types of businesses have their doors and windows wide open, and you can completely see what salary every employee is on, and employees get to suggest pay increases to their peers. Perhaps even more transparent is the model operated by Sweden, Finland, and Norway, where they publish everyone’s tax returns - they consider transparency to be key in wiping out the gender pay gap, and they are probably not wrong.
It is believed that complete transparency has business benefits, and there is a direct correlation between employee retention and pay transparency. It’s about taking the mystery out of what employees are earning and laying it out there – only by doing that, can you ensure that each decision made around pay will be open and up for scrutiny if not done in the right way, holding leaders accountable for how pay is managed.
As with most things, how you should approach transparency depends on what is right for your business. In my experience, there is a nervousness around committing to transparency, at any level. Unlike new tech start or scale-ups, companies generally have legacy issues, and there is a lot of existing dissatisfaction around pay. The first thing that needs to happen is to get pay equity right – understanding what your approach to pay is, how you make decisions, what you pay to whom, and what the implications are. Only once this is established can you begin to drive your pay transparency strategy and practically help shape how pay is addressed and managed going forward.
Our clients have often asked us how they can tell if they are ready for greater transparency, or what is stopping them from achieving transparency, so we pulled together a simple model. Our slider model asks some questions and based on the answers, identifies whether they are ready for complete transparency, and even if they are committed to doing it. The slider model also helps identify what level of transparency they should start with, but the model essentially identifies what steps are needed to work towards the aspirational level of transparency.
If you would like to discuss pay transparency in detail or would like to see our transparency slider model in more detail, please do reach out. I can be contacted via email (sarah.lardner@innecto.com) or call our office on +44 (0)20 3457 0894.
