Organization strategy

Is your organization ready for pay transparency? Four questions to ask

Jhe movement for pay transparency is gaining momentum. On November 1, New York City will become the most populous jurisdiction in the United States to require salary information in all job postings, join Colorado; Jersey City, New Jersey; and Ithaca, New York. (Several other states and localities have less comprehensive pay transparency requirements.) By early 2023, when similar laws take effect in Washington and California, one-fifth of all workers nationwide will be covered by pay transparency laws .

Meanwhile, research suggests a growing number of employers are sharing salary information in job postings, even when not required, responding to a strong worker appetite for such information. A investigation earlier this year, the majority of workers wanted some form of understanding of how compensation works in their organization, and more than two-thirds would switch employers for greater transparency, even if the pay was the same.

What does this mean for your organization?

Whether you are adopting pay transparency to comply with a new law or simply looking to adopt it in your workplace, one thing remains true: any employer looking to implement pay transparency policies needs a plan for how he discusses compensation with his employees.

At a time when progress on the gender pay gap stalledorganizations including OECD and the National Center for Women’s Rights emphasize pay transparency as a way to close the pay gap for women and workers of color by making it easier to identify and address pay gaps. However, if not carefully implemented, pay transparency policies can have undesirable effects. consequences for employee sentiment, engagement and performance. Employers who release salary information without context risk alienating employees and asking them more questions than they originally did. And without structures in place to tackle pay inequality, pay transparency will only reveal pay gaps, not solve them.

To help workplaces adapt to these changes, Charter has published Prepare your organization for pay transparency: a step-by-step guide in collaboration with OpenComp. The free playbook is designed to guide organizations through this process. Here are the key questions to ask yourself, week by week.

At three weeks: what does compensation look like in your organization?

Make sure your compensation strategy allows you to compensate your employees fairly and equitably in five data-driven steps:

  1. Benchmark salaries with current, verified and relevant compensation data.
  2. Develop a compensation philosophy by determining your market position, compensation mix, segmentation by department or role, and geographic strategy.
  3. Create a job leveling framework that defines seniority, expectations, and responsibilities for a specific role, as well as the process for progression through levels.
  4. Review or create salary ranges and set minimum, midpoint and maximum cross-functional salary ranges for similar jobs.
  5. Define your processes for promotions, merit increases, and bonuses by creating eligibility criteria, reward amounts, and reward schedules.

Two weeks: How do you communicate your compensation philosophy to employees?

Now that you’ve defined your compensation philosophy, it’s time to share it. To shape your strategy, start with a few simple questions: who, what, when, how and why?

A successful strategy focuses on building trust in policies by helping employees understand, advises Ashley Brounstein, senior director of people at OpenComp. “It all starts with education,” she says. “If you don’t understand how decisions are made, you can’t trust the process and you can’t trust how your own compensation is paid.”

A week away: How do you talk about compensation throughout the recruitment process?

To comply with the strictest pay transparency laws, job postings must include a specific salary range, with a minimum and maximum, that reflects actual compensation to the best of your knowledge. To comply with Colorado and Washington (but not New York) laws, it must also include a description of other benefits and benefits, including allowances, bonuses, retirement programs, and insurance offerings.

But beyond compliance, the job posting is often also a candidate’s first impression of a company’s culture. As such, it’s a powerful way to communicate your compensation philosophy and how you value fairness and transparency. To present your best asset to potential candidates, include additional information such as a full role description, information about your organization’s compensation philosophy, and a company presentation that emphasizes your work, your culture and your values.

Week of: How do you maintain a fair approach to compensation?

Pay transparency does not always lead to true pay equity. Systemic change only happens when company leaders can champion change from the top down, so create a plan to maintain your compensation philosophy even as your organization changes, grows, and reacts to external forces like the inflation or recession. Practices such as regular compensation audits and equity analyzes are key to identifying variances along favor lines, and proactive budgeting to correct compensation gaps ensures that leaders can act quickly to make salary adjustments that correct wage inequalities.

For more tactical tips, best practices and tools, including templates, scripts and reflective activities for each week, download the full playbook from Charter’s website.

By working on each of these issues, organizations can develop a comprehensive strategy that goes beyond compliance, preparing leaders to openly discuss compensation while empowering workers to understand and defend their own compensation – in short , to develop a fair, transparent and equitable strategy.