The Future Workplace Relies on Transparency: What Leaders Need to Consider
Embrace salary transparency to attract and retain top talent while fostering a culture of trust and fairness.
A new workplace transformation is on the horizon. With a growing demand for salary transparency, HR and business leaders must evaluate their approaches. Jessica Reeves, COO at Anaconda, details key areas of consideration for successfully navigating building a transparent approach.
Across the U.S., state and local jurisdictions are increasingly passing legislation to make salary transparency mandatory. California, Rhode Island, and Washington are the most recent additions to the growing list of states enacting salary transparency laws, requiring employers to provide insight into compensation through actions like sharing salary ranges in job postings and providing ranges for employees inquiring about the range for those in their current position. While this type of visibility is not yet required everywhere, tomorrow’s workforce views transparency as a non-negotiable, with 85% of upcoming and recent graduates less likely to apply for a job if the pay isn’t disclosed in the listing. However, this is just the tip of the iceberg. Employers must ingrain compensation transparency externally and meet existing employees’ desires for a work environment built on open communication.
As HR and business leaders navigate the largest workplace transformation since adopting remote and hybrid work, understanding where to start remains a large unknown for most.
Finding the Pay Transparency Approach that Aligns With Your Organization
There’s no universal formula for implementing transparency – and a one-size-fits-all approach isn’t the answer. Instead, given the nuances of defining transparency and the potential impacts sensitive conversations around pay or performance may have on employees, decision-makers must balance a strategy that aligns with company values and fosters a culture of trust.
Taking on a new approach may be overwhelming for leaders, but changes don’t all need to come simultaneously. Rather, identifying small steps and achievements that will move the organization in the right direction can help leaders navigate the changes and mitigate the potential to backtrack on decisions.
To ensure you’re on track to successfully implement transparency into your plans, HR and business leaders should:
- Evaluate the level of transparency you’re comfortable with: Utilizing third-party tools such as Open Comp or Carta is an excellent place to start to ensure the organization has accurate information on employee salaries and industry benchmarks. Align on the depth of information that your organization wants to share, especially if state or local jurisdiction has yet to outline what is expected.
- Determine how to share information internally: When sharing pay information internally, there are several options: share a range with the employee only, share it with the employee and their manager, or share it across the whole organization. Providing employees with total rewards statements is another approach to explore to provide more individualized pay information.
- Communicate the strategy to your existing workforce: Taking small steps creates a stronger path for positive impact, so sharing updates as new decisions are made can help employees understand each decision’s purpose and impact while gradually releasing changes on a timeline that works for your leadership team.
- Pinpoint how pay transparency can best be implemented to develop trust/entice future candidates: To reap the full benefits of transparency, it’s important to identify the value the new approach brings. Providing candidates with upfront pay information, even if not required by the city or state, can create an initial sense of trust that can propel candidates forward. At the same time, if the salary doesn’t align, it prevents candidates from applying if they’re likely to turn down the job ultimately.
With many approaches possible, evaluate how you want to manage these conversations based on your organization’s unique needs. When implemented thoughtfully, these changes can promote workplace productivity and confidence, helping to retain and attract employees.
Allowing Data to Power Your Strategy
Business leaders rely on tangible outcomes to identify opportunities to drive their desired results, making data a driving force in decision-making for leaders and candidates. Workforce pay data help decision-makers ensure industry standards are met and that you’re remaining competitive in the hiring landscape while providing candidates with the assurance that they’re receiving pay that’s on par with those with similar experience/roles.
Three easy ways to leverage data in your strategy include:
- Implementing data tools that support internal processes ensures all information is available to make realistic decisions on pay changes. This includes tracking employee salaries to determine if the pay is fairly distributed, making proper adjustments to pay as needed, and communicating current compensation with the organization and particular roles.
- Comparing pay to industry standards ensures offerings are competitive for similar roles outside the organization. Industry-standard pay has become a requisite for attracting and retaining talent, as only 32% of employees believe they’re being paid fairly.
- Pinpointing and communicating how experience, tenure, and skills, among others, can impact pay ranges and provide valuable insights into handling these decisions and discussions.
See More: How To Build Trust Through Data Dignity
Building Trust With A Transparent Approach
When information isn’t available, people create their own stories. Employers that don’t want to participate in discussions around transparency will still find themselves at the center of pay discussions, as nearly 42% of Gen Z and 40% of Millennial employees have shared salary information with a colleague or other professional contact. Due to limited information, these conversations will often be peppered with incorrect details. This spread of misinformation around pay, and thus fairness, within an organization, can cause turmoil among employees, resulting in poor performance, a negative culture, and attrition.
Pay transparency is also important in closing racial and gender pay gaps in the workplace. Women employees continue to face pay disparities, earning just 82 cents compared to a man’s dollar. This gap is even further widened for non-white employees, Black women earn 65 cents to a man’s dollar, and Latina women earn 60 cents. Women are also often shortened in negotiations as they’re more likely than men to be turned down after asking for higher pay. This leaves women in a position that doesn’t allow for career momentum as it does for their male coworkers.
Equipping women in the workforce with the insights they need to feel empowered and using data to create more equal opportunities opens the door for more just compensation and professional growth opportunities across your workforce.
See More: How Transparent Communication Builds Trust
Leading the Way for the Next Transformation
While building a transparent approach can feel intimidating, the value it can bring to an organization is undeniable. Today’s workforce demands a career journey that won’t keep them in the dark regarding wages, and they’re willing to go elsewhere to meet these needs.
Businesses that establish an environment that advocates for employees and provides the necessary resources to highlight their value within the company will be leaders in this transformation.
Can salary transparency in the workplace help attract talent, close pay gaps, and build trust? Share your thoughts with us on Facebook, Twitter, and LinkedIn. We’d love to hear from you!
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