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07 May 2019

3 ways to build a transparent pay and rewards policy

Many organisations have a sophisticated approach to salary benchmarking. They use commercial data produced through rigorous processes, and they’ll consider factors such as skills and performance. The bottom line? HR teams dedicate a lot of time to making sure they create competitive and fair pay schemes. 


Naturally, most employees don’t know this. They are not aware of how their pay is calculated or how it compares to others in the organisation. 

So how do we build effective pay and reward policies while creating a culture of transparency?

  1. Reinforce your commitment to fairness
    Willis Towers Watson’s 2016 Global Workforce Study found that only around half of employees around the world believe that their pay is fair. With gender pay gap reports triggering widespread questions over equality in the workplace, establishing fair reward practices should be a priority. 

    Firms must ensure their policies encourage inclusivity. If gender and ethnicity pay gaps exist, don’t just publish the figures: examine why those gaps exist. Reinforce your commitment to equal pay by carrying out an equal pay audit. Check if there are equal pay risks and explain what you are doing to correct this. 

  2. Clearly articulate your approach to salary benchmarking
    Most employees don’t know how you calculate their pay or whether you benchmark salaries. All they see is the figure on their monthly payslip and how it relates to their sense of self-worth.

    Help your employees understand how pay is determined. Explain how you distribute the annual salary budget, and clarify how earnings increase in line with career progression.

  3. Develop a communication strategy for your leaders
    People want to know what is happening in the workplace. They also tend to share their concerns with colleagues. In the absence of clear communication from leaders, employees may well speculate on company policies, strategy and future direction – or lack thereof. 

    Rather than letting misinformation thrive, management should take ownership of the conversation. They need to be open and honest about how pay and reward policies operate. It is HR’s responsibility to help them do this.

This article is provided by 3R Strategy. 

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