On January 1st, California and Washington joined Colorado and New York City in enacting pay transparency laws. There will be others to follow (New York State’s law is awaiting the governor’s signature). Even with all the talk of pay transparency these last few months, there are still many questions…how will this affect our organization? What will employees gain from this knowledge? How do we implement pay transparency in our organization?
Let’s see if we can answer a few of your questions about pay transparency before we touch on implementing it within your organization.
It promotes fairness and equal pay. Pay transparency reduces gender, ethnicity, background, and other demographic and characteristic-based biases that fuel wage gaps.
Employee motivation increases. Pay transparency motivates employees to work harder to advance their careers. They can see the rewards of how their pay is directly related to performance and career progression.
It helps to attract and retain staff. Money is typically not the number 1 motivator for most candidates, but in today’s inflated and expensive market, salary and compensation have quickly become a sticking point.
It shows trust, honesty, and respect for the staff by opening the lines of communication around compensation, equality, and fairness.
It can be difficult to implement and maintain. Pay transparency is much more than putting a salary range on a job posting. Organizations must review their current pay scales, possibly make internal pay adjustments, and communicate this to employees.
There could be resentment or insecurity if one employee feels underpaid compared to new staff members.
New employees may feel uncomfortable or exposed when their salaries are visible to others.
While you can see both the advantages and disadvantages of pay transparency, the pros can ultimately outweigh the cons when the process is implemented correctly. Before rolling it out to your organization, there are several steps to take first.
The Big Picture: Develop a compensation philosophy and create a plan of what pay transparency looks like within your organization. Look at job titles, job descriptions, expectations, productivity, and qualifications for each role. Review each position and the average market compensation. This will require extensive behind-the-scenes work. Create a performance management framework that maps out behaviors, productivity, and performance rewards. This framework should also include a management plan on how the organization will help employees reach those goals.
Perform a market compensation study: This requires looking at each employee’s compensation to ensure there are no discrepancies with the new pay structure. There will inevitably be discrepancies. Research any significant discrepancies. Do the employee’s responsibilities not match up with their job title? Maybe they transitioned into a new role and didn’t receive a pay change. The difference needs to be rectified unless there are legitimate reasons for it.
Communication: This is a critical component of any rollout. It should be a company-wide presentation on the compensation philosophy and performance framework, but it needs to be reinforced with one-to-one meetings with managers. It is essential to let employees know what they are paid and why they are paid that salary. Sharing the market research and benchmarking that has been used is highly encouraged so that the process is understood. The crucial factor here is that the information is easily digestible and understandable. Employees need to comprehend each factor determining their compensation and how they contribute to their individual pay.
Even if you are not in one of the states where transparency is required, sharing with employees how their salary is determined can boost motivation and morale when they feel they can trust they are being paid fairly.
At The Batten Group, we have helped organizations with salary analysis, job descriptions, titles, performance management, etc. Contact us today for more information on getting started with pay transparency in your organization.
By Maureen Flynn|2023-01-25T10:08:13-05:00January 25th, 2023|Blog|Comments Off on Pay Transparency at Nonprofits