If pay transparency isn’t yet a hot topic in your organization, it soon will be. Recently, several states have passed pay transparency laws, and others are planning similar legislation. These laws require employers to post salary ranges in job listings. As a result, many employers are taking steps to get ahead of these changes — often disclosing pay range information before it’s required by law.
Sharing pay ranges externally has its own challenges. But it’s also likely to mean employees will start evaluating where they fit within the organization. Is their compensation at the top or bottom of the scale? How does their pay compare with others? Is it time to ask for a raise or search elsewhere for a better-paying job?
Benefits of Pay Transparency
For employers, this new focus on pay transparency may seem like a Pandora’s Box. Naturally, this kind of openness can cause some trepidation.
However, this is also a perfect opportunity to refresh how you share pay information with employees. Choosing to be more open about compensation can actually help your organization in multiple ways. For example, with thoughtful communication, you can:
- Attract top candidates
- Build internal trust and retain high-performing employees
- Create a more inclusive culture
- Support compliance with pay transparency laws
3 Steps for a Strong Internal Communication Plan
Before you jump into tactical action, it’s wise to take some time to be sure you’re thinking about this challenge from an employee’s perspective. Here are three steps to consider as you create your pay transparency communication plan:
1. Assess Your Situation
Compensation can be complicated. Many employees may not have a clear understanding of how pay works at your company. Baseline data about awareness and knowledge across your organization will provide powerful insights as you set objectives and create your internal communications plan. If you don’t have existing research to analyze, here are several suggestions:
- Conduct a Brief Audit: Review your communication channels to understand how pay and compensation topics are currently communicated. Focus on tone, details, level of transparency, audiences (such as department managers), and frequency. Does information need to be more accessible? More coherent? More consistent? Do people managers have access to resources that can help them answer questions effectively? Use this as a jumping-off point when developing your objectives. This audit will also help you uncover communication priorities. For example, if pay-related information is not communicated regularly, you may need to build foundational knowledge into your plan.
- Initiate “Reality Check” Interviews: Start with the HR team — your compensation specialists. What are they hoping to accomplish with their policies and programs? What changes are they planning, if any? Next, reach out to a few employees from various areas of your organization and ask high-level questions. Quick, casual interviews like these are an easy way to confirm how your workforce views compensation. You may even uncover issues that aren’t yet on your radar.
- Research Other Companies: Because pay transparency is a trending topic, it’s easy to find examples of organizations that are effectively tackling the issue. Case studies from other organizations can be a great source of inspiration as you develop communication tactics and messaging.
2. Craft Your Compensation Story
Pay transparency isn’t just about the “what” (actually dollar amounts). It’s also about the “how” and “why” behind those numbers. Therefore it’s essential to help employees understand big-picture ideas about pay at your company. This is where a narrative helps. You’ll want to build a story or a set of key messages that:
- Clearly explain your organization’s approach to pay — your philosophy and policies
- Inform and focus communication so employees clearly understand your approach
- Provide a roadmap for people who are responsible for communication, so they deliver consistent messaging
When creating your organization’s compensation story, start with these three questions:
- What is our pay philosophy? This should describe your company’s decision framework for compensation. It should outline the pay structure and components, including overall cash compensation, benefits, and rewards. Consider how this approach aligns with company values and articulate the level of transparency you’re committed to when communicating about pay.
- What are the benefits of pay transparency? Whether it’s attracting quality candidates or driving a more inclusive culture, find a way to weave in your value proposition. This will help stakeholders understand the “why” behind sharing pay information.
- What actions (if any) do you want people to take? This is where you explain how employees can learn more about compensation, such as process changes, or new ways to access information. Note: Actions may differ by audience (for example, managers versus general employees).
Remember, this isn’t one-and-done. Your compensation story should be an ongoing part of communication about compensation and rewards. Consider embedding messages into onboarding, benefits discussions, performance management processes, and more.
3. Prepare Leaders and Managers
Once you’ve established your pay philosophy and developed a set of key messages, it’s time to put it in the hands of your spokespeople: leaders and managers. Employees often turn to them first with pay-related questions. Tools, resources, and guidance will not only help them deliver the message, but also prepare them to deal with potentially tough conversations.
Set up your leaders and managers for success with the support they need:
- Provide answers: Everyone who fields questions from employees needs to understand their communication role. They also need to know how compensation works in your company: how base salary is set, how ranges are determined, and other factors that influence these decisions (including location, role, and experience). Create topline messages, FAQs, and detailed guides to provide answers that address a wide range of scenarios and concerns. Also, be prepared to update these resources on an ongoing basis. By empowering leaders and managers to discuss pay confidently with their employees whenever the need arises, you’ll ensure those conversations are informative, accurate, and productive.
- Provide training: Host a workshop to help leaders and managers understand how to conduct effective compensation conversations. This also provides a forum for leaders and managers to discuss issues with their peers and expand their knowledge about this important topic.
A Final Note on Pay Transparency
Pay transparency is a powerful trend that can lead to a more equitable workplace, overall. But, as new external reporting requirements become a reality, employers should expect to hear many questions and concerns from employees. Organizations that prepare to address pay questions with more open and transparent internal communication are positioning themselves for success. Are you ready?