Do any of these sound familiar?
- We have employees in only one state, so pay transparency won’t affect us.
- Our state won’t pass any pay transparency legislation, so we don’t need to worry about it.
- We only have a few employees in a state with pay transparency legislation, but it’s not a big deal—we can work around it!
If any of the above sentiments reflect your attitude about pay transparency, pump the brakes! Pay transparency is relevant to all employers, and if you’re not thinking about it (or think it won’t affect you), you may find yourself behind the eight ball.
It’s true that there are only eight states with pay transparency laws, but more changes are on the horizon that may force employers’ hands.
But perhaps even more important than that: Your employees, both current and prospective, are learning about pay transparency, salary ranges, and why they’re getting paid what they’re getting paid (or what they think they should get paid). If your company can’t answer these questions, this will hurt attraction, retention, and engagement.
For this reason, even if you’re “not worrying” about pay transparency, you should be thinking about it. Savvy employers are being strategic about pay transparency instead of reactive. To do this well, you’ll need to address both the tactical and change management angles of pay transparency.
Two Sides of Pay Transparency: Tactical & Change Management
There are two sides of pay transparency implementation: tactical and change management.
| Tactical |
Change Management |
- Solidify your compensation philosophy.
- Review, or, if needed, create your pay infrastructure.
- Ensure your organization is offering competitive pay ranges.
- Align your job titles with your job hierarchy.
- Determine how to handle geographic differentials.
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- Make sure key stakeholders are aligned with your pay transparency philosophy.
- Determine how you will use your compensation philosophy.
- Create a realistic change and communication plan.
- Make sure you understand who’s impacted.
- Identify all individuals who will be impacted based on the change.
- Determine who needs to be involved with the change and when to involve them.
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The Tactical Side
The tactical side of pay transparency deals with ensuring your compensation house is in order; for example, is the data correct, both when you post pay ranges publicly and share with employees already within the company, who are seeing the ranges they’ve never seen before and wondering why their pay isn’t at the top.
To learn in-depth about the tactical side of pay transparency—and get a road map for how to share about pay transparency with your employees in a way that’s compliant—check out Shari’s latest video discussion on pay transparency.
Guidelines For Change Management
The other side you’ll need to address is change management—the process of ensuring the tactical side is implemented and communicated to everyone in your organization clearly and effectively.
Change management is essential in pay transparency to ensure a smooth, fair, and legally compliant transition that maintains employee trust and engagement.
In order to get buy-in of your organization’s compensation strategy, it needs to be communicated thoughtfully and effectively. To do that well, here are some critical steps to take in conjunction with the tactical steps we shared in the video above.
- Ensure key leaders are aligned with your company’s compensation philosophy. Everyone, including (and especially) your executive team, must be involved in this and know why it’s important and what the plan surrounding it is.
- Lean in on the organization’s Compensation Philosophy. Do we have one? If not, do we need to create one? Then, how will we share it?
- Create a realistic plan. How much change will the organization experience in the next 12 to 18 months, and is that expectation realistic? For example, if we have an acquisition, product launch, or system changes, what are competing change priorities? This becomes a critical task project.
- Make sure you understand who’s impacted, and how you’ll communicate with them, including employees, HR, managers, etc. I suggest determining how you’ll communicate first—you may need a broad video message, town hall meetings, intimate learning opportunities, or formal cascading messaging (or a combination of all of the above!).
- Clarify levels of understanding. Who needs to be involved? How will managers communicate the tactical decisions made? Will you need to provide compensation 101 or communication training to managers on how to talk to their employees transparently about pay? When and how will you provide that training?
Resources To Help Address Pay Transparency & Change Management
MorganHR has some of the best resources available for organizations that want to fully address all the aspects of pay transparency, both tactical and change management and learning. If you’re ready to take steps toward greater pay transparency, we recommend taking advantage of the below two offerings to set the right course, both in terms of developing a solid pay hierarchy and communicating changes to your people.
Communication and learning is key to getting pay transparency right, yet in most cases it doesn’t get the attention it deserves. In the absence of pay conversations, employees tend to feel like managers determine their pay by throwing darts on a wall, and managers assume people are just thankful to be getting paid. Ultimately, no one is privy to the reasons why the numbers are what they are—which leads to a disengaged workforce, inconsistent compensation practices, and compliance risks.
If you could get your entire company to understand why they get paid what they get paid, how to get paid more, and how to create more value (as in, get promoted), you could change the entire dynamic of your organization!
You can get started doing exactly that with our CompAware training program. The goal of the program is to create a learning experience for leaders about how to clearly and effectively discuss pay and performance in a way that inspires and motivates their teams. CompAware involves helping leaders understand the compensation basics in your organization that are part of pay transparency, and then how to have engaging conversations—both preparing for tough conversations and capitalizing on positive ones.
These live, interactive 90-minute sessions are delivered virtually or in-person. Training can be delivered to managers, HR Practitioners, or employees. Curious to learn more? Visit our CompAware page.
Preparing for pay transparency legislation (even if it’s not yet required in your state) is an opportunity for leaders to show their employees that they’re savvy about what’s coming. Even companies that aren’t required by law to share pay transparency data can benefit by gaining the trust of their employees.
To help you parse the data around pay transparency, bring in an expert consultant. At MorganHR, we’ll review your data, interpret it with you, and give you a narrative to help you successfully defend your pay data, align your business incentives, and build trust with your employees.
To learn exactly how MorganHR’s HR and compensation consulting expertise can help you, contact us today!
