I’ve blogged a few times about pay transparency laws, which are continuing to proliferate. A recent Aon memo gives an overview of the latest regulations — and recommends steps to prepare based on your company’s current bandwidth and resources. Here’s an excerpt:
First, think about the salary ranges themselves. Are ranges well established and ready to be shared both internally and externally? Some businesses already have established and well-maintained salary structures. In fact, 90 percent of companies surveyed by Aon said they at least have salary ranges in place.
– The quick fix: Spot check the market competitiveness for certain roles relative to your peer group.
– The better approach: Start with an updated job architecture to make sure you have jobs and people in the right roles in the first place, since that serves as the foundation of pay equity. You could also conduct an accelerated salary structure design initiative, which many total rewards teams are dropping everything to complete.
Next, consider existing employees’ positions in their salary ranges. Are they currently paid in a way your organization would be able to defend? When they ask to see the range of pay for their job, will it be easy to provide and explain where they are in the range — and why? Employee questions can quickly expose any real or perceived inequities.
– The quick fix: Take your prior pay equity analysis and come up with a list of employees who make significantly less than comparable peers. Once you identify those individuals, notify the manager and develop a plan for corrective actions.
– The better approach: Revisit your Pay Equity analysis with a focus on what it is you are paying for. Is it true that only fully proficient employees are paid above the midpoint? What else drives pay? Is it tenure or experience or education or reporting to the right manager?
Then, consider manager preparedness. How ready are managers to handle these tough questions from employees? Do all managers have a solid understanding of how the pay program works? Communication will be key.
– The quick fix: Provide managers with answers and talking points for tough questions and share your plan for tackling any pay equity issues.
– The better approach: Offer simulations and role play tough conversations to make sure your managers are answering difficult questions effectively. Ensure all people leaders are well educated on the process for setting and moving pay.
Finally, address the bigger philosophical question around transparency. Once companies comply with the laws in each jurisdiction, should they just treat everyone the same whether their state requires it or not? Or should organizations do the bare minimum as required?
– The quick fix: Ensure compliance with local pay transparency laws where necessary and develop plans in anticipation of further legislation.
– The better approach: Be a leader in the movement. Regardless of current requirements, take proactive measures: perform a pay equity analysis, identify existing gaps, revisit your job architecture and salary levels to improve your rewards programs, and implement continuing manager training. Even if your organization is not subject to specific pay transparency laws, lay the foundation for future disclosure and consider whether proactive disclosure makes sense for your business. For example, are your competitors disclosing salary ranges? Do leaders think it will be beneficial for talent acquisition efforts to have this level of pay transparency?
Visit the resources in our “Gender & Racial Pay Equity” Practice Area for more guidance on navigating pay audits, shareholder proposals and disclosures.
— Liz Dunshee, CompensationStandards.com, December 23, 2022