One of the big ones is access to pay information, which requires that employers advertise salaries in job postings, among other requirements.
This undoubtedly will change recruiting in both good and bad ways.
A good change: it more than likely will discourage candidates from applying who don’t think you’re paying them enough. Fewer unqualified candidates will result, meaning your recruiting team won’t have to spend as much time culling the unqualified.
A bad change: It could well discourage great people from applying because they feel the salary is too low for what the position entails. Yet we all know that many a hiring manager has raised a starting salary when he/she didn’t want a great candidate to disappear.
Some other potential outcomes when employers are upfront about how much they pay all employees:
- Openly sharing their methods of determining salaries for different positions, companies may assume more responsibility for creating equitable pay practices. Requiring that businesses share compensation with candidates and current employees will make it difficult to overlook wage discrepancies. In fact, research has shown that pay transparency actually contributes to pay equity: Denmark enacted a pay transparency law in 2006. The result? The gender pay gap declined by about 13 percent, relative to the mean before the law was enacted. What’s more, the law did not affect business profitability.
- New employees may leave rather quickly (within six months) if their employer hasn’t adopted pay transparency. If follows then, that retention should increase if it is.
- However… should current employees find that a new hire is being paid more than they are, the fallout probably will land in their direct manager’s lap when a direct report comes to complain. (See link, above.) Managers often have no say in company-wide pay policies, particularly before pay transparency was adopted. This actually could result in “pay compression.” Here’s why: It’s time-consuming and mentally draining for managers to handle employee complaints when it comes to salaries, particularly if the employee asks for a salary “fix” to make their pay more equitable to someone just hired. Managers then may make performance-based incentives more similar – compressing them. For example, one study found that when California’s government made city managers’ pay transparent back in 2010, average compensation fell by about 7 percent by 2012.
- Secrecy and rumors about how much all employees at all levels receive in compensation likely fall. Jealousy of higher-paid employees also could rise among lower-paid employees once pay transparency is instigated. It’s therefore smart to come up with plans, including those that will help lower-paid employees reach pay equity with higher-paid employees working the same positions, before launching a pay transparency program. You may want to consider holding meetings such as “office hours” and/or question-answer sessions company-wide to help employees understand your reasonings and the plans you have to raise compensation for lower-paid employees, etc.
- Also, as you become more transparent and before you’re able to put compensation-raising plans into place, understand that your competitors could start poaching long-term, highly effective employees to their roster.
A short checklist to ready your recruiters and hiring managers as you inaugurate pay transparency.
- Train team members on how to handle current employee concerns/resentment when pay transparency policies “hit.”
- Review and ensure that your pay transparency policies truly are fair and transparent before their launch. You may want to do this at least twice before announcing them.
- With your internal communications team, come up with a communications plan. It should explain your reasons for adopting a transparent pay policy, its benefits to everyone, as well as how you plan to “fix” current pay inequities. Make sure you’re plan includes openness to receiving – and acting upon – employee feedback and concerns. After all, your hiring managers/recruiters may receive many complaints from current employees as they learn that new hires possibly are being hired at higher rates than they currently receive.
Debbie’s Staffing absolutely knows the going, competitive pay for a wide variety of positions in your city. We can help you ascertain what the most competitive salaries are for the positions you need to fill.
Learn more by contacting the Debbie’s Staffing location nearest you.