WTW’s Catherine Hartmann, Monica Martin and Amol Mhatre shared their perspectives on workplace transparency and why this trend is gaining momentum in a LinkedIn Live conversation. Here are the key takeaways.
Today’s employees demand greater transparency in decisions regarding their pay, benefits programs, career growth, and performance measurement, and employers are seeing greater value in building awareness on the “why” behind program design. Three factors driving employers towards greater transparency include:
For years, the focus was on fostering better communication with employees. Transparency is the natural evolution in program design. Today, as companies move towards greater pay transparency, other total rewards elements are being pulled into the conversation, including career frameworks, health benefits, diversity and inclusion, retirement benefits, and perquisites – and how decisions about these total rewards are chosen and applied are part of the dialogue.
The idea of transparency will become less intimidating for employers as we see more well-known companies becoming increasingly transparent. We’re already seeing this play out in this year’s Pay Transparency Survey. It’s not that companies are going to have to adapt. They’re going to want to adapt as employees become better consumers of employment and to differentiate their employment deal from talent competitors.
Transparency doesn’t mean that everything must be equal for everyone… neither does having an equitable pay program. Rather, there needs to be a good and demonstrated reason why employee A, for example, does not earn the same amount as employee B. And understanding that reason may inspire employee A to set new goals to improve their performance, increase their contributions and learn new skills to progress in their contribution level and value.
On the benefits side, there are also ways to convey the reasons behind perceived disparity. For example, employer decisions to close pension plans and create different retirement offerings for newly hired employees may result in benefit differences.
When you frame the conversation within the context of the whole suite of total rewards, the rationale behind differences becomes much more apparent. Employees are also more likely to be receptive to these differences if they believe their employers are embracing transparency. Bottom line: employers must be able to show what, how, why, and where there are differences. They can’t hide anymore. And there doesn’t have to be fear of employee backlash as companies become more transparent — if organizations are smart and intentional about how they embrace transparency, they will build trust and loyalty with employees.
There are numerous, and valid, reasons why segments of the employee population have different total rewards than other employees in the same company, even the same division. Now is the time for employers to step back and get their “house in order” by revisiting their career structure, job architecture (job families and functions), job leveling (skills and competencies), and performance measurement fundamentals. By defining the nature of work, explaining how jobs differ, and ensuring this is well-documented and clearly communicated, employers provide themselves with a foundation to speak openly and confidently about total rewards differences. Employers also need to have a strategy on how they will communicate with employees on this topic. What will they say? How will it be communicated and when? How do organizations ensure they get proper credit and goodwill from adopting a transparent mindset?
Companies will differentiate their approach to transparency through delivery, tying transparency to the organization’s mission, and doubling down on company culture. When salary data is more open, the question we pose is, will salaries become a commoditized variable in the total rewards value proposition? If prospective and current employees have a solid sense of the salary range for their job, what levers will employers utilize to differentiate the value they are delivering to employees? Reason stands that,all things being equal in pay, will they focus on other aspects that deliver value? Will employee’s more readily ask themselves: “Do I believe in the company’s mission?,” “Do I work for a purposefully driven organization?”, “Is there flexibility in how, where and when I work?”, “Are the benefits inclusive and adaptable to my needs?”, “Is the company aware of my unique needs?” With transparency, employees will analyze and evaluate these total rewards components in dramatically different ways than just five years ago.
While transparency may increase costs to the organization, consider the cost of not being transparent. If you’re not transparent about your total rewards programs, you run the risk of eroding trust with your employees. When you’re transparent, you have a stronger ability to control the narrative, refine the message and create awareness of these programs to strengthen the value derived from your program design. Here are some guidelines to help you be more transparent effectively.