HR Advised to Make Pay Practices More Transparent

More than 9 in 10 companies have a written or unwritten compensation policy, but fewer than half believe their employees understand it, possibly because employers aren't communicating their practices effectively, according to research released by WorldatWork, an association that focuses on compensation, benefits and total rewards. 

WorldatWork said 53 percent of respondents at companies with compensation policies indicated that most or all employees don't understand them. Furthermore, 46 percent said they share minimal information with employees regarding their individual salaries. 

The nonprofit group reported the responses of 600 compensation officers in its "Survey on Compensation Programs and Practices." 

"We’ve seen for a couple of survey cycles that the amount of information that is being shared with employees surprisingly seems to be going down, which is counterintuitive with all of the talk of pay transparency and employers being more open," Kerry Chou, senior practice leader at WorldatWork, told Bloomberg BNA Aug. 25. "Employers are not being more secretive, necessarily, but the amount of information respondents told us they shared was minimal." 

It could be companies aren't saying much because many of them haven't increased wages dramatically and budgets have been flat over the past three or four years, Chou said. When there isn’t a change in budget year over year, companies have a tendency "to fall asleep at the wheel a little bit" and don’t communicate compensation information, he said. 

Better Recruiting, Engagement

If employers are looking to enhance recruiting and retention efforts, being more transparent about pay can help, Scott Dobroski, community expert and research analyst for jobs website Glassdoor, told Bloomberg BNA Aug. 25. Knowledge about pay practices can make employees feel more engaged and lead them to stay at their jobs longer, according to Dobroski. 

The majority of employed adults (69 percent) wish they had a better understanding of what fair pay is for their position and skill set at their company and in their local market, according to research from Glassdoor. Moreover, Dobroski said over half (56 percent) of employed adults feel they must switch jobs in order to obtain any meaningful change in compensation. 

Some preparation is needed to communicate effectively with employees about pay, he said. Before ramping up communication efforts, employers should first do an analysis of the company’s current pay structure, because "no organization is perfect in this," he said. 

HR will need buy-in from top leadership, particularly the CEO, to roll out these kinds of projects, Dobroski added. Companies should have well-defined guidelines for how pay is determined and how employees can advance to the next pay bracket. 

Engaging in this kind of pay analysis will likely lead employers to discover "bumps" in their pay practices, but those are best addressed quickly and shared with employees and prospective talent to show the organization is willing to fix internal problems, he said.

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