Clarity in Pay Administration

Creating a culture that promotes clarity and understanding in pay practices will yield benefits throughout the employee life cycle.

Transparent pay practices ensure employees understand how pay is determined and afford resources to employees that enhance their understanding of compensation practices while fostering an open environment where answers about pay are readily available.

Recruitment

Providing some level of transparency in pay practices can have a positive impact on recruitment.

While the late 2000s saw a recession and employers experienced an abundance of applicants, the shift in economy since has created a more competitive market. Providing candidates with a sense of pay expectations earlier in the recruitment process can have benefits and ensure a pool of applicants that will be more aligned with the compensation possibilities for a particular job.

There are a variety of ways to promote openness with compensation during the recruitment process, with pros and cons to each. Some strategies are:

• Include starting pay or pay ranges with job postings.
• Make pay plans and structures available on the entity website.
• Discuss compensation at the first stage of interviews.

Because there is no concrete approach, each entity will need to determine what method is most appropriate to achieve goals, and the strategy used may vary from role to role.

Culture

Transparency in compensation practices can also have an impact on workplace culture. Pay is a sensitive and personal subject for many, so when staff are comfortable and feel trusting in this area, it can translate to overall trust in the organization.

To maintain a culture of openness and transparency, it’s important that employees have confidence in the information received. For this reason, it’s important to ensure that staff members who take employee questions about compensation have a thorough understanding of the practices in place and are effective in communicating them to staff.

Below are some additional ways to achieve a culture of clear compensation practices:

• Document pay practices in a compensation manual and make it available to all employees.
• Provide employees with an annual total compensation statement.
• Communicate how employees can inquire about their pay.

As with any new endeavor, start with developing a plan for how to incorporate clarity across pay practices within the organization, and don’t forget to involve key stakeholders in the decision-making process.