Pay transparency is coming. Are you ready to lead the way?

Making the case for pay transparency

Pay transparency saves time and money for human resources (HR) in recruitment and hiring. Research from 2022 found that including transparent pay information reduced the average cost-per-click for a job advertisement by more than 25 percent. Pay-transparent job postings are also believed to attract higher-quality candidates who are seeking out employers that make pay transparency a priority. Companies that embrace pay equality can show their existing employees and candidates that they care about equity. Regular benchmarking of salaries allows firms to ensure they are not paying substantially above the industry market, as that would be wasteful, and that they are not paying significantly below market, because that would be fiscally irresponsible in attracting new employees, retaining quality staff and motivating their workforce.

While payroll, finance and accounting professionals will continue to advocate for pay transparency, existing and forthcoming legislation will emphasize their role in education about adopting compliance and equity practices within their organizations.

Getting Started

It can be overwhelming to decide where and how to get started, particularly when your organization may have limited staff and related expertise and compliance remains the primary driver for pay transparency. A recent report from Mercer revealed, “Only 16 percent of Canadian employers have implemented a pay transparency strategy, while 41 percent have strategies in development, and 22 percent plan to develop their strategy within the next year.”

Allison Venditti is a career coach, HR expert, salary negotiation whisperer and founder of Moms at Work (an organization dedicated to helping women find fulfilling careers, make more money and discover the sense of community they have been missing). She is a long-time advocate for pay transparency and created a Pay Transparency Toolkit with templates to help people advocate for pay transparency.

Venditti told HCM Dialogue that organizations starting their work in pay transparency should avoid comparing themselves to extra-large organizations. Ninety-eight percent of all employer businesses in Canada are considered small businesses (with one to 99 employees), so there are a lot of players in the early stages of pay equity efforts without the multi-billion-dollar annual budgets or staff resources that extra-large organizations like Netflix or AirBnB have to launch pay transparency initiatives. It’s just not a fair comparison.

Venditti reminds people charged with compliance that this is a large undertaking and that very few businesses have salary benchmarking in place (comparing employee pay to the broader market to offer fair and competitive compensation), so they are starting from scratch.

Slow deliberate steps are key to success

Venditti cautions against approaching compliance as a knee-jerk reaction and reminds that, “Nothing to do with finance and HR should be a rush decision, as rush decisions make for poor policies. Pay compliance must be well thought out, as it is too important to do a rush job on.” She adds, “Your urgency is not my emergency,” noting that HCM professionals have many different responsibilities, and these efforts shouldn’t derail business as usual.

Venditti says placing people in the right job band for the first time is complicated. She provides the example of the 2018 Pay Equity Act, a proactive pay equity initiative put into place for federally regulated workplaces with 10 or more employees. As a part of this process, federally regulated workplaces were given three years to establish a pay equity plan before becoming subject to the act. This took years to implement, and it wasn’t rushed, nor should it have been.

A new level of advocacy for change

While pay equity legislation addresses new position postings, it doesn’t address pay transparency for people already employed within an organization. Venditti points out that those who work in payroll and accounting are in a unique position of already knowing what employees are being paid. In turn, if they notice any significant discrepancies in pay among comparable roles, they should be making noise. By pointing out a pay discrepancy to the appropriate member of leadership via email, a paper trail is created to document the ask, and the response. Flagging and tracking such discrepancies can also help an organization prioritize which departments should be analyzed for pay band benchmarking first to meet budgetary constraints.

Communicating Efforts

We are still in the early stages of pay transparency, and Venditti points out that it has only been flagged as a significant initiative for about the last five years. She asserts that every person involved in HR knows that organizations are trying to establish policies and procedures that will work for their specific company. Much of the planning is going on in the background, but it is important to communicate with employees about the efforts underway to build and maintain trust. Employees, for the most part, want to know that their company is working to define a strategy that will allow them to be compliant with existing and impending regulations and is also building a roadmap as to where they want to go above and beyond compliance to create a fair and equitable workplace.

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