Creating Pay Transparency in the Workplace: Webinar Q&A

We just finished a webinar with PayScale about Creating Pay Transparency in the Workplace where we discussed different levels of pay transparency as well as the ways pay transparency increases employee performance. (Didn’t catch the live event? No worries. You can watch it here.)

At the end of webinars, we do our best to answer as many attendee questions as we can, but there are always more than we can answer in our ten minute Q and A period. Here are a few of those questions we didn’t get to but think are important for mastering pay transparency in your workplace:

1. How do we reconcile wanting to talk about having high-level employees, but not wanting to pay high levels of dollars for them?

If you want to keep high-level employees, you need to be fair and honest with them. Otherwise, they’ll find another organization that values the high level they provide. If you are genuinely paying high-level employees the best you can (and not just trying to wring high value from them at a discount price), consider other ways your organization can provide value:

· Part time: If you can only afford to pay a high-level employee three-quarters of their market value, maybe you should just hire a three-quarter-time employee. This might be an attractive option for a high-level candidate who enjoys doing freelance on the side or has other responsibilities (family, hobbies, etc.) that consume a lot of time.

· Time off: If your employment competitors offer 15 days of vacation a year, offer 25. Or consider sabbatical options (work for us for three years, we’ll pay you while you take three months off). You can cut back salary and still attract a highly talented travel bug or someone else who enjoys more time off.

· Environment: Forty hours a week is a ton of time to spend anywhere. If you can make that time enjoyable and fulfilling, you’ll have a competitive edge that can beat higher salaries.

These are just a few ideas. Look (or ask) around your industry and see what those high-level employees are missing at other companies. If you can provide what others aren’t, you’ll be able to effectively compensate for the fact that you’re paying at a lower rate than the market.

2. If a company’s philosophy is to lag the market with mid-level and entry-level employees, how would you recommend handling this from a transparency perspective? Especially if employees are looking at their own market studies online.

Your employees are looking up their own market studies. It’s not a matter of if. With so many tools crowdsourcing information—between PayScale, Glassdoor, and others—employees do find out if they’re underpaid. There are a couple of reasons this should concern you if you’re purposely underpaying employees.

First, a PayScale study found that the number one reason employees leave a job is because of compensation. Underpaying employees creates a retention problem. But those who are actually underpaid aren’t the only employees you’re at risk of losing. But people who are paid fair market rates, 64 percent think they’re underpaid. Combine the people who you may purposefully underpay with the 64 percent of the people you pay fairly and that’s a potentially huge group of people to be concerned about retaining.

If you are underpaying, employees know it. But what an individual doesn’t know is if he or she is the only one being paid a little below market. Jill in customer service might wonder if Bob, who has the same amount of responsibility and experience as she does, gets paid at the market rate while she makes slightly less than the market rate. But with pay transparency, Jill can see that she and Bob make the same wage, and she’ll likely feel more satisfied that—at least compared with others in your organization—she is being paid fairly.

She still might leave to make more doing customer service at another company (that’s the risk you run by underpaying), but it won’t be because you are transparent about internal pay. It’ll be because she can easily look up what she can make at other places. What you can do is pay at market rate or provide value for employees outside of pay that makes them want to stay (see the answer to the first question for more details).

3. Could sharing your published ranges be an issue if competitors get their hands on it?  Competitors would know how you pay employees.

Your competitors can find out anyway. They already do! In competitive markets, recruiters contact employees all the time and ask how much money it would take to leave their role. (Have your recruiters give it a try. Chances are, they’ll be able to find out pretty quickly how much your competitors pay.)

4. Not everybody is comfortable sharing their pay with others. What do we do then?

First, pay transparency doesn’t necessarily mean publicly publishing pay. There are different levels. (Check out the webinar for more details.)

If you are going to go all-in and publicly publish and you’re worried some employees will be uncomfortable, get down to the “why”—both yours and theirs. If they’re uncomfortable because they feel like you under or overpay them, then maybe you need to raise their pay or the pay of their coworkers. That’s one of the main arguments for pay transparency—to create equal pay.

Communicate your “why” or purpose for transparency to the company before you do anything. If employees understand the benefits they receive and the benefits the organization receives from transparency, the move will make more sense.

Interested in learning more about pay transparency? Check out our on-demand webinar about Creating Pay Transparency in the Workplace or any of our other on-demand webinars.