Today’s employees expect the companies they work for to deliver openness and transparency in, essentially, all of their business practices. This includes everything from communicating leadership changes, making adjustments to the business model, revealing news around potential acquisitions and, most of all, providing access to corporate-wide salary data.
The 2018 Compensation and Culture Report by beqom reveals that employees are already discussing pay amongst themselves, with 45% of U.S. workers admitting they already know how much their colleagues make and another 46% claiming to have shared or discussed their salary with colleagues. What’s more, over half (60%) of U.S. workers want to know their CEOs salary, primarily because they believe pay transparency creates a better company culture (28%).
That said, employees (54%) are reticent when it comes to discussing pay (e.g., asking for raises or additional benefits) with managers. This communication gap could prove to be detrimental to companies in 2019 when it comes to productivity and worker retention, as nearly one in three (29%) U.S. workers are planning to get a new job within the year because they’re unhappy with their salary.
Here are three ways that businesses can bust the salary taboo and meet employees expectations when it comes to fair and equitable pay, with the goal of creating a more open and transparent workplace culture in 2019 and beyond.
Enlist the Help of Younger Employees to Break the Ice
The Compensation and Culture Report shows that Gen Z employees (61%) are the most likely to share salary information with colleagues compared to Millennials (55%) and Baby Boomers (27%), but Millennials are actually the most “in-the-know,” with over half (52%) claiming to know how much their colleagues make.
Given their willingness to discuss their salary with each other, HR leaders should consider running an internal survey to identify employees who might be open to engaging in conversations with HR and managers about their feelings on pay. This strategy could provide unmatched insight into how compensation contributes to employee happiness and engagement within specific companies, and clear paths for leaders to pursue in order to increase worker satisfaction and, inherently, retention, loyalty and productivity. Following these initial conversations, leaders might consider positioning the employees they’ve identified as leaders in “compensation workshops.” These meetings would offer safe spaces to openly discuss pay with colleagues, while providing employees with the tools and resources they need to feel empowered to engage in talks with managers about pay.
Connect the Dots Between Performance and Pay
One in three (34%) U.S. workers don’t believe their pay is based on their performance, experience or skill set, but on what their manager or supervisors feels they deserve to make. For companies that want to commit to more transparent practices around pay, investing in digital tools—like compensation software powered by AI and predictive analytics—will help show employees how their performance contributes to their pay and what their financial growth trajectory looks like long-term. Reason being, AI makes compensation more transparent because it removes personal bias from the analysis of compensation data and will only forecast an employee’s growth and close pay gaps based purely on the employee’s work performance and not a manager’s feelings. By connecting the dots between pay and performance, workers will be incentivized to work harder to meet the required benchmarks to earn the next boost in pay.
Deliver on the Benefits that Matter
The modern workforce demands more from the companies that employ them (even if they are reserved when it comes to discussing pay). The good news is that the various needs of today’s multi-generational workforce provide an unprecedented opportunity for companies to start an open dialogue with employees around pay from the onboarding stage. This will not only increase employees’ perceptions of their employer when it comes to transparent pay practices, but also help HR and managers create personalized packages that extend beyond salary.
Consider the fact that 39% of women and 36% of men rank flexible work or remote work options as the most important workplace benefit., while two in five (41%) Millennial women rank holiday or year-end bonuses as the most important workplace benefit—compared to Baby Boomer men (35%), Baby Boomer women (24%) and Millennial men (28%). These findings underline the importance of creating a total compensation management strategy that intersects employees’ personal preferences with data-driven insights, in order to create a more engaged workplace culture.
The bottom line is that employers can make a big impact with a few small steps when it comes to increasing transparency and boosting employee happiness around pay. To create and sustain a motivated workplace, companies need to take charge in initiating conversations around pay, because the data shows employees aren’t willing to do it and it’s costing businesses big bucks in terms of talent and productivity loss. In 2019, make compensation transparency a given, not an exception, to ensure long-term employee loyalty and retention.
Fabio Ronga is the CEO of beqom.