How to ensure you have an equitable and gender-inclusive approach to pay
The trend towards pay transparency is gaining traction and landmark legislation, including the EU Pay Transparency Directive, will apply different kinds of pressure. On a more practical level, a new generation of workers is more inclined to demand openness and fairness.
People – and companies – worry about pay transparency. They worry about the resentment and difficulties it can cause for morale if wider pay information is shared. There is also a fear that greater transparency leads to paying everyone the same, which might lead to inflated salaries or losing a competitive edge.
Get ready for transparency
Pay transparency is not black and white. Companies need to identify their current level of transparency and appetite for increasing it. The following five statements provide an initial assessment of the current and desired position on pay transparency.
- We have a basic pay framework that outlines pay bands, which are published in job adverts, but our staff probably have limited knowledge of how their pay is determined and how they can progress.
- We have a job evaluation system to determine roles of a similar level that is linked to a pay structure. Staff understand how their roles are evaluated and how pay is determined. We publish a statutory pay gap report.
- We benchmark our salaries against external market data and carry out equal pay analysis which means we can confidently justify any differences in pay and take action to address any variance.
- We communicate a clear career progression pathway to all our employees, and they understand how their pay is determined and how they can progress. Our pay structures allow flexibility and are underpinned by robust market data.
- We educate our managers and employees about how pay is determined. Pay progression is transparent throughout the organisation and our people feel comfortable talking openly about pay and equity.
Innecto supports clients on reducing the gap between the current and desired position on pay transparency. Our framework of questions help business leaders and HR professionals identify the areas for improvement.
- Comfort level - As HR professionals, ask yourselves whether you and your company leaders have the confidence and comfort to go transparent. For most, the answer is ‘no’.
- Cultural shift - Educate your leadership about pay transparency and what it means. This is a shift in mindset and culture and senior leaders may need time to adjust.
- Could you defend your current approach? Question how your pay decisions are being made, and whether you could mount a robust defence of your current approach if needed. Ask how confident you are in the way you assess roles and whether you could benefit from equal pay audits if you don’t do them already.
- Comparable work - Scrutinise the systems you have in place for job architecture and evaluation. ‘Comparable work’ is a key phrase in regulations such as the EU Directive and businesses need a way to assess roles that are doing the same thing, carrying out similar work or performing work of an equal value. If these concepts are alien, you most likely need help to navigate through them.
- Draw up an action plan – Whether talking about comparable work strategy, gender equality measures or other diversity, equity and inclusion (DEI) initiatives, going through this process helps you identify your current position, measure internal appetite for transparency and set out next steps.
It is difficult to identify an approach on pay transparency that works for every company. In most cases, it comes down to context and having governance and structures in place that enable you to flex and achieve the right kind of transparency for you around pay decisions.
Where there is an information vacuum around pay fairness, gender equality or other DEI measures, staff and potential candidates will infer meaning and make assumptions. On the flip side, choosing to spell everything out can create its own issues.
There is also a generational shift at play and much of the client work we are doing in this area is aimed towards the under-40s. Facing an uphill battle in the housing market, these workers are hungry for career and pay progression and will jump ship if they’re not able to see an upward trajectory.
Typically, this generation also uses online tools like Transparency Street and Glassdoor and will infer meaning from data, much of which falls in the same information vacuum. But these people loom large in your short-term and long-term future so be ready to talk about transparency and your aspiration to achieve it.
In partnership with Innecto Reward Consulting
We have more than 20 years' experience in getting employers' pay and reward working harder for them.