The Plunkett Pay Equity Framework Step 5 – Communicate Transparently

Part of addressing pay equity is making sure that people understand why they are paid what they're paid. In short, that's how everyone can decide if their pay is fair and if there are questions or problems, it's okay to talk about.

This involves having a compensation philosophy about pay and how that fits with the organization's values, goals, and strategies. A compensation philosophy addresses what is rewarded and why. It provides guidance so that compensation decisions can be made consistently using the same principles rather than ad hoc based on the decision being made in isolation this week.

Once the organization has determined its compensation philosophy and strategy, it's important to communicate what it is, whether it changes things that have been done in the past, and how it will affect compensation decisions going forward.

How to communicate about pay equity

If people have been discouraged from talking about pay in the past, it's good to notice that and assure employees that things are changing, and the goal is to provide fair and equitable pay for all.

This may result in requests for raises from people who would like more money but don't have the bigger picture on budget and what the organization is trying to achieve. If raises are not coming any time soon, let people know that. Otherwise, communications can backfire as the company makes a big announcement about pay equity while it appears to be doing nothing.

The most important part of communications about pay is to not only say that discussions about compensation are welcome, but to mean it. This requires that line managers understand the organizations' compensation philosophy and have the information they need to discuss pay issues with their reports. When there are changes in pay, provide information on why, when, and what to expect.

Some other components of a communication plan can include:

• Discuss the pay equity analysis, results, and plans to address (get legal to help with this)
• Issue Total Compensation Statements to all employee explaining their pay, benefits, the value of those benefits, any vesting status, and who to talk to if they have questions
• Provide resources for managers to prepare for conversations about pay, which may include having a Pay Equity Analyst or related role to develop the resources and support managers
• Schedule regular discussions between manager and reports about pay

Having transparent pay polices, backed up by action, shows that the organization can be trusted to do what it promises and to be forthcoming and explain its reasoning. Pay transparency gives employees a better understanding of and more control over how their performance affects their pay.

This can result in higher engagement. It also encourages people to do more of what the organization is trying to achieve.

Look at the cost savings associated with higher engagement, more retention, and better performance and balance those against the costs of making sure everyone is paid equitably.

Measure to see how it's working

If the pay equity strategy and actions are working, what metrics will be affected?

Is there anything else that should be measured?

Some common metrics influenced by shifts in compensation strategy include:

• voluntary turnover rates
• retention and tenure
• win/loss rates in hiring and how often candidates decline job offers due to pay
• market compensation and how competitive the organization is on pay
• compa-ratio, or the relationship between actual pay and the mid-point of a salary range for each role
• employee engagement
• productivity metrics for work quality and quantity
• revenue per employee

When organizations are starting to assess and address pay equity, it's important to call in the experts. Hire an outside (objective) expert to perform a pay equity audit and report results. An expert familiar with the organization can also suggest what metrics would be most useful based on the type and size of the organization, industry, location, and market data.

Last, don't lose sight of the reasons for doing pay equity assessment—it's good business and the right thing to do.

To gain a better understanding of how to communicate with your organization about pay, schedule a consult.