Show me the money: Getting real about pay transparency in the workplace

Most employees would agree that greater transparency about pay is a good thing, but actual practice varies greatly across different organizations. The results from Payscale’s 2023 Compensation Best Practices Report demonstrate some of these differences, as only 45 percent of compensation and human resource professionals surveyed indicated they already include pay ranges in job postings, and only 65 percent have formal pay structures. While it does appear that legislation can get organizations moving in the right direction, there are many additional steps that should be considered to better integrate pay transparency into organizational practices beyond simply including a salary range in a job posting.

Going beyond a salary range during recruitment

If your organization includes salary ranges in its job postings, it has taken the first step in being upfront with potential applicants. However, simply including a salary range without any context can leave applicants wanting more. Organizations can take the additional step of not only including a salary range, but also including background information about the process they follow to determine it. For example, many non-profits and professional associations rely on external research through organizations like the Canadian Society of Association Executives, which produces an annual Benefits and Compensation Report. This report summarizes benefits and compensation across different positions, considering contributing factors such as number of employees, geographical location, and annual revenue. Similarly, other organizations conduct a regular market analysis to ensure they are paying their employees fairly. If your organization is doing the work, don’t be hesitant to share it. Providing this information shows your future employees that they can trust that their salary is based on actual research and that the process followed is shared openly and honestly.

Empowering managers to continue the conversation

Once an individual signs their employment agreement, many managers breathe a sigh of relief and assume that an awkward conversation about salary won’t happen again until the next performance review cycle. However, it is important that managers feel empowered to discuss salary on an ongoing basis, which includes having the proper tools and training to engage with their employees. Payscale’s report highlights that manager training on pay communication only occurs in 49 per cent of organizations.

If managers are expected to have these types of conversations with their employees, it is up to the team responsible, typically the human resources department, to provide access to training and clear, understandable documentation in the form of a formal pay structure or pay/compensation system paired with credible research. With access to this type of information, managers may feel less hesitant entering conversations about compensation and can make sure staff have a clear understanding of where their salary fits within the system. In more fully developed systems, managers can also speak to additional incentives beyond salary that comprise the full compensation package for each position, including benefits, vacation time, working arrangements and other perks.

The alternative? Managers who are untrained in communicating salary may pass on the conversation to other departments, such as human resources or payroll, or avoid the conversation altogether. That leaves each employee making assumptions about their salary and, in most cases, they are going to assume that their pay is unfair and that your organization has something to hide.

Maintain open lines of communication

While discussions about salary usually occur during hiring and performance reviews, that doesn’t mean that organizations should feel hesitant to communicate with their employees throughout the year. This could include making a salary range document permanently available on an intranet or sending staff letters at the beginning of each fiscal year to outline any salary adjustments that have occurred, such as a change to a position range or a cost-of-living increase. These ongoing communications let employees know that salary is not a topic to be avoided and that issues such as pay equity are a priority. While some individuals will still be unhappy with their salary and may leave as a result, at least this won’t be due to a lack of information or making assumptions that may not be true.

The discussion around pay transparency is ever-evolving and will likely continue to evolve over time, whether through government legislation or shifts in best practices across different industries. However, by being proactive and taking additional steps to share salary information more freely, whether legislated or not, you can improve transparency, accountability, and trust in your organization among new and current employees alike. Many organizations tout transparency as an important core value for business excellence. Use this legislation as an opportunity to “walk the walk” and take additional steps to be open and fair about compensation with your staff, beyond the government mandate. This honest approach increases staff loyalty and retention, reducing the number of times you need to write a job description in the first place, which is a huge win for any organization.