Implementing Pay Transparency: Best Practices, How to Prepare and What Comes After
Part of a series | Pay Transparency Series
Pay transparency is more than a compliance issue. The practice impacts talent attraction, employee engagement and work culture as well. Following the best practices for implementing pay transparency will help organizational leaders navigate change and respond to concerns that could be raised by future candidates and current employees.
The pay transparency movement is gaining momentum. In the past few years, several states and cities have put laws and regulations in place that require employers to include salary ranges in their job postings.
Employers operating under pay transparency requirements are quickly adopting tools and processes to enable compliance, but that's just one small piece of a much larger puzzle. To successfully implement pay transparency, organizational leaders need to plan carefully, manage the change thoughtfully, consider the work culture they want to sustain or build and, perhaps most importantly, proactively communicate with employees and managers about what pay transparency means for them.
To identify best practices for rolling out pay transparency, we spoke with three leaders at ADP, Jason Delserro, Chief Global Talent Acquisition Officer; Deb Hughes, Senior Vice President HR, Communications and Change Management; and the Senior Vice President (SVP) of Health, Wealth, Tax, Compliance and Business Development. They offered their wisdom and expertise on this new challenge.
What is the value of pay transparency?
Understanding the purpose and value of pay transparency can help organizational leaders build a strong foundation on which to build their programs and processes. Ultimately, pay transparency is about equity, Hughes explains.
This only works, of course, when employers use pay transparency in the right ways. Delserro cites complaints from job seekers about employers posting "super wide ranges that tell us nothing." That's a sign that the organization's approach to pay transparency may lack authenticity. Delserro suggests that employers look for ways to "balance what you're putting out there with being sensitive to your employees."
Used correctly, pay transparency practices can help organizations attract better candidates and streamline the screening process.
"Applicants don't want to waste your time if their expectation of a wage or a salary is not within range," the SVP says, "and that can be difficult to get to very quickly without pay transparency. You want to know not only does this person have the skills and experience for the job but whether they're going to be in a range that you can afford."
Best practices for implementing pay transparency
The journey toward pay transparency may look different for every organization, but there are key steps every employer should take to set off in the right direction.
Conduct a pay audit
It's ideal if organizations can do a comprehensive pay audit to address any existing inequities before pay transparency practices begin. While regulations don't typically require this step, it's difficult to successfully implement pay transparency without understanding your starting point. Organizational leaders need to be able to take on pay transparency practices with the confidence that their employees are being paid fairly.
Delserro notes one concern that employees could react to pay disclosures by saying, "I'm a little bit below the midpoint. What does that mean about my performance? What does that say about me as a person?" For this reason, organizations might consider looking at pay equity as part of an annual focal-point review. Performing an audit before implementing pay transparency can uncover "inequities that were perhaps missed, which creates an opportunity to right-size people and make sure that we're paying them fairly," Delserro explains.
Deliver transparent communication
Before, during and after the rollout, organizational leaders need a clear communication plan that includes formal messaging as well as guidance for one-on-one conversations. This is a crucial part of successful pay transparency implementation. Anticipating employees' questions and concerns is key in guiding communications, particularly when an appropriate pay range for a given location exceeds the maximum range for employees in another area.
"Say we have an associate who works in Augusta, Georgia, making X amount," Hughes says, "and we post a national pay range where they're not even at the minimum of the national range because they're in lovely Georgia, and there's another employee who's performing that role in California. That range might work perfectly for California, but without geographic context, those are the conversations that are going to be really difficult."
It's a good idea to prepare leaders with education and talking points to help them navigate these concerns.
Fuse pay transparency into the work culture
Rolling out pay transparency practices means change, and because it's tied to employees' earnings, this particular change is bound to inspire emotional responses. By planning the implementation thoughtfully and crafting compassionate communication around this change, organizational leaders can answer questions and allay fears before they arise in many cases.
"Working with an HR outsourcing provider and tapping into their HR expertise can help with this," the SVP advises. "They can help you evaluate your culture. What are the things that you're doing? How do you show or communicate things or train those that are doing interviewing in a way that is going to help candidates and employees feel excited and engaged?"
Set goals and measure your progress
You'll want to have ways to measure compliance and accuracy, Hughes says. For example, you'll need to know if your job postings and internal and external processes abide by state and federal laws. In addition, it can enhance your organization's pay equity approaches if you establish a system that helps you leverage the insights you gather along the way.
"Consider setting up feedback loops to understand the sentiments of your leaders, candidates and employees," notes Hughes.
Gather input on your leaders' ability to articulate why employees get paid their salary amount and how much employees understand the rationale. Asking these kinds of questions can uncover disconnects between your pay transparency philosophy and the stakeholder experience, she adds. Checking on these sentiments regularly provides insights to offer additional manager training and leader support and a higher likelihood of addressing and correcting any confusion before it affects talent attraction or employee retention.
Striving for pay transparency success
As pay transparency regulations take effect in more geographic areas, employers will have little choice but to comply or face potentially steep fines. Even in locations without legal obligations, pay transparency is likely to become the standard practice. It's important to get it right.
But pay transparency is much more than just a compliance issue. As adoption continues to expand, organizations that embrace pay transparency practices thoughtfully and intentionally — with a clear understanding of pay equity among employees and sentiments around new practices — are likely to come out ahead. Incorporating pay transparency into the organizational culture in authentic, organic ways will help employees adapt to the change and allow organizations to reap the many benefits pay transparency has to offer.
To get started on pay transparency compliance, check out ADP's free, on-demand webinar that reviews reporting requirements, best practices and other strategic considerations.
Get up-to-date pay transparency resources and best practices at ADP.com/PayTransparency.
