I remember when we were told to present a paper on any topic we agree on. It was for my compensation class. Somehow, my team agreed on a topic related to pay transparency and even after our presentation, I have always taken out time to deliberate on the topic and pay transparency in general as it seems to fascinate me for reasons unknown. So, this topic is in honor and or remembrance of my great team members. I miss you all.

Some organizations apply a strict policy of non-disclosure of pay or compensation among employees which is quite surprising especially since most of these employers would readily boast of a healthy corporate culture, practice, and workforce.

Pay transparency simply involves you, the employer (or persons in management group), explaining to employees the pay structure and practices of your organization, giving employees the liberty of discussing compensation related topics among each other and the opportunity to negotiate pay where necessary.

To be fair with compensation, it is expected that there should be equal pay for equal work but the situation may be different. Evidently, some of the factors that determine the pay or compensation of employees are;

  • Prior or existing experience of the employee
  • Market range
  • Level of education
  • Level or position in the organization
  • Competition (pay rate among competitors)

With this in mind, it then means that two employees at the same level or position in an organization may not necessarily be compensated equally if one has more work experience beneficial to the organization than the other. Now that you are aware of all these, here are reasons why you should consider pay transparency within your organization.

1. It encourages fairness and promotes healthy competition

Promoting pay transparency within your company will help build communication among employees, i.e management group and other levels of employees. This will also help them know areas to work on or to improve in ranks and get a promotion. This means an increase in productivity as they are better informed of how pay is structured in the organization.

It also promotes self-development among employees since they are equipped with necessary information regarding the organization’s compensation strategy. For instance, if an employee knows that acquiring higher education or getting a certification will improve his/ her pay, he/ she can then work towards doing so. It will also improve his/ her career growth and development.

2. Attracts and retains top talent

When employees can discuss their salary or wages it sends out a good word for your organization and this helps attract and retain top employees who are interested in your organization. It also gives you an edge over your competitors.

On the other hand, existing talents who are aware of your compensation structure and practice will also not leave the organization because they are well informed and this will reduce unnecessary expenses that go with recruitment.

3. Increases job satisfaction

When employees can freely discuss compensation issues with the management and get a satisfactory explanation of all factors, it clears the air and helps put their minds to rest. With this issue aside, they can then focus on their jobs and do it wholeheartedly.

4. Promotes a positive corporate culture

Pay transparency also demonstrates that your organization has a positive and good workplace culture. By promoting  salary or wage discussions it proves that the organization pays fairly and has no need to hide anything whatsoever. It shows that there is no bias or unfair practices, nepotism or favoritism.

5. Help prevent or avoid lawsuits

Pay transparency helps avoid lawsuits which may bring disrepute to your organization and incur expenses. Lawsuits, in this case, may relate to claims of unjust or unfair practices. For example discrimination of an employee. Pay transparency here may be used as a defense or a strategy to avoid any legal actions.

Now I assume you are wondering;” How do we go about this?” I will give a few suggestions which are very important to get started.

  • During the recruitment stage or before hiring a new employee, explain to him/her the factors that affect compensation within your organization.
  • Apply ongoing reminder of necessary changes or factors that affect pay. Do this regularly or during yearly quarters.
  • Prepare a policy that promotes pay transparency and distributes to employees.
  • Educate and train managers or supervisors on pay transparency and how to handle related questions from employees.
  • Consistently promote salary or wage discussion among employees.

Remember that one of the many reasons why employees leave organizations is because of the pursuit of better pay. If you decide to consider pay transparency within your organization, it will go a long way in promoting a better workforce, improving productivity, reducing irrelevant cost and retaining your top performing employees. I encourage you to make your workplace one that is loved by its employees.

If you need any clarification, need to ask a question or want to make a suggestion, please do so in the comment section. I will love to hear back from you. Do you encourage pay transparency within your organization and how do you go about it? You can also contact me or send an email to [email protected] and I will respond as soon as possible.

You should also follow me on social media, We can talk further!

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Do enjoy your week!

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