However, one aspect of the working world that we still seem to have problems talking about is salary. Pay transparency has been praised as a way of potentially closing the gender pay gap, as well as encouraging employee engagement and less competition.
In a recent study by Blind, 60% of participants (mostly from the tech industry) answered ‘yes’ when questioned if they have been discouraged by HR from sharing their salary with fellow employees. The social networking app, which is popular amongst tech companies, also asked if professionals shared their salary with colleagues, to which 40% answered ‘no’. Closer to home, a survey carried out by CIPD showed that only 21% of Irish companies calculated their gender pay gap for employees.
This is quite a big problem in the modern climate, given that pay transparency has been championed and gender pay gap revelations are increasingly being reported in the media. The most recent figures published by Eurostat in 2016 reported that the gender pay gap in Ireland was 13.9%, which was lower than the EU average but still a long way off from where it should be. This has led to the Irish government presenting the Gender Pay Gap Information Bill to the Dail.
To address the issue, we can expect to see more regulations being enforced that require employers to show if there are any differences in gender renumeration and if so, to what extent.
Employers will be obliged to report the following information:
- the difference between the mean and median hourly remuneration of male and female employees
- the difference between the mean and bonus remuneration of male and female employees
- the difference between the mean and median remuneration of part-time male and female employees
- the proportions of men and women receiving bonuses and benefits-in-kind
If there are considerable differences, the organisation will then have to publish statements explaining the reasons why there are such gaps, as well as the measures that have been/will be taken to eliminate these differences.
With all of this in mind, we have included a few pointers below to encourage employers to increase salary transparency in their organisation.
Research Industry Compensation
If you wish to encourage pay transparency in your organisation, it is important to research pay ranges in your industry. A quick online search will provide information on salary and additional compensation in numerous industries, which are quite often broken down by roles and geographical areas. Websites like glassdoor.com, salary.com and indeed.com will provide information you need to ensure your business is within the same range as your competitors so you can start a transparency conversation with your workforce.
Audit Current Employee Salaries
You can’t look forward without knowing where you currently stand. Have an in-depth look at what your employees are currently earning, why certain staff members are earning more than others and how this can be amended to be more in line with overall industry salaries. Consider added bonuses and benefits that individual employees may have compared to others and look at the reasons behind this. Based on your findings, examine company finances and the best way to close the pay gap.
Assess Your Workforce
Whilst you may be on board with transparency, not all staff members will feel the same. You need to decide, overall, if your workforce will embrace the proposed change. If your employees aren’t happy with pay transparency, then the plan may fall flat or even lead to an increase in staff demotivation and turnover.
It is natural for there to be some resistance from certain members and groups, with some being more distracted than benefit from the change. As the expert in your business, you are best poised to determine the response to salary transparency, however if you are unsure of the reaction you may receive, then simply ask your staff what their thoughts are. If you decide to go ahead then make sure you are equipped to deal with kickback.
Train & Educate Management
For any changes to work, you need to gain the support of your executives and key people who will be engaging with your employees directly. Managers and supervisors are often front-line communicators and are the first people your employees will go to if they have an issue or any questions and so you need to guarantee your managerial team are on board with the plan and will positively reinforce information.
Ensure your managers know which information is being shared with employees, how quickly it will be shared and what the benefits are to the change. Supervisors need to be trained in dealing with tough and complex conversations so you and they are confident they have the skills to answer any questions that might arise. Brainstorming and feedback sessions are vital to prepare for every aspect.
Start Being Transparent
Once you have decided the best course of action and wish to be transparent, let all your employees know what each of them are earning and encourage meetings with staff members who may have issues with the current situation. Initial confusion will most likely arise but try to think long term - social sharing start up, Buffer, made all their staff earnings public online in 2013, and as a result, applications from qualified workforce went up by 50% in the next month.
Eliminate Salary Negotiation Going Forward
Eliminating pay negotiations is a drastic approach, but for some companies is arguably seen as the simplest solution. In 2015, the American company, Salesforce, eliminated its negotiation policy in its 13 global offices across Europe. It is quite often stated that men are stronger negotiators than women, and so rather than encouraging more competition and back & forth at interview stage, it simply eliminates the practice of negotiating.
In addition to this, some Scandinavian companies have taken a two/three tier approach with all junior employees earning a set amount and all senior staff members going up a tier but still earning the same as colleagues on their level. This cuts out pay gaps and questions as to why someone might earn less than their counterpart.
With all of this in mind, it’s important to remember that there are different approaches and levels to salary transparency. Therefore, you need to look at what is best for your company and employees before proceeding with your chosen route.