Eva Majercsik is the Chief People Officer for Genesys, a global leader in customer experience orchestration.
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With pay transparency laws going into effect this year in states like California, Colorado, Washington and New York, there is a new expectation for companies to share how much they pay employees.
Even though these are brand-new laws, I have always been a strong believer in pay transparency. If something is a secret, people are free to assume anything and everything, from good to bad. And with websites like Glassdoor, candidates and employees can easily and quickly check to see where salary levels are compared to their colleagues anyways.
Being transparent and honest up front creates trust by showing that there are no secrets or hidden agendas and demonstrates the value behind the benefits provided to employees.
But not all companies are excited to show their pay ranges in a transparent way. According to a survey by advisory firm WTW, 31% of employers said they aren’t ready and 46% said they are putting off disclosing pay. Some of those who aren’t ready are deflating salary ranges because they are nervous about driving up labor costs, which shows they aren’t prepared to have difficult internal discussions.
Difficult Discussions Lead To Trust And Loyalty
Even though the new transparency laws are meant to provide candidates and current employees a candid view at their pay, many salaries being posted are actually deflated. Businesses doing this are trying to prevent potential hires from asking for top dollar and to keep current employees from finding out if they are being underpaid.
This tactic will fail.
Once those new hires join the company, they will find out the real salary range and immediately not trust their new employer. Meanwhile, current employees will see posted salaries that don’t match their own and begin to lose their trust as well.
Many companies who aren’t sharing the correct details note that they are worried about upsetting current employees, but it really boils down to not having the tools or willingness to look at their pay and benefit program and make needed changes. It is uncomfortable to have that first conversation and begin to review pay programs, but once the ball gets rolling, businesses will be surprised by how much change follows.
After the review, if there are still current employees being underpaid, the company must work together to develop a plan to get them up to market.
This is where the hard work begins.
Managers must be prepared to have difficult conversations about why one person’s pay might be lower than another's. Company leadership must provide tools or courses for managers to understand how to enter those conversations with honesty, empathy and transparency. Having a conversation about paying for performance is hard, but it will not only help your employee understand their pay, it will also help them understand how to improve in their job and develop their career.
Having quality, productive conversations is imperative, so that employees never feel underpaid or undervalued and the business has feedback on how to improve their programs. But after having these initial insightful conversations, companies must follow through with their goal to be more transparent. An easy way to start that journey is to ensure that all job postings across all listing sites are updated with the correct information and reflect the correct pay bands.
Look At The Whole Package
Another concern that companies have about pay transparency is that it could cause an increase in labor costs. This is because current employees can easily view where they land on a pay scale, which may lead to them asking for a salary increase so they start at the top of the pay scale versus starting lower.
When an employee views the posted salary band, their initial focus may be on the base salary, bonus and equity. But the full picture goes way beyond just those three things because there is value in the benefits a company provides. This includes tangible, quantifiable benefits such as healthcare, time off, stock purchase plans, 401(k) matches and others. But there is also value in the employee experience a company strives to provide, whether that means additional time off (such as August Free Fridays at my own company) or flexibility on where or how to work.
Companies that focus on employee experience are constantly looking for innovative ways to provide this value to their employees. Not only will these adjustments incentivize current employees to stay, but they will also provide a filtration tool for new hires when sifting through job descriptions.
According to a recent study by Indeed, 75% of respondents said they were more likely to submit a job application if the pay range is listed. When everything from pay to benefits is transparently laid out, it provides the opportunity for candidates with those requirements to apply and those who are looking for something else to move on.
If the right candidates interview for the right job and both parties are undeniably on the same page about pay and benefits, employees will be happier at their job and will stay.
Conclusion
These new laws don't mean companies can post a salary band with outrageous or deflated numbers and think the job is done. This is an imperative time for businesses to build transparency into the value proposition that they offer to employees so that they can ultimately offer the best employee experience.
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