Increasing Transparency in Compensation Communication
Is your company practicing good compensation communication? You know that making employees aware of the value of their total compensation is important. However, there is one area where many companies are leery about being fully open. That’s when it comes to discussing actual salary amounts.
The idea that an entire workforce may revolt if they discover how much money their coworkers are making is a specter that has long haunted U.S. employers. Even if a company uses an equitable system to calculate pay, there is no telling how fair it would seem to people who have been kept in the dark all their working lives.
This has led to a high level of secrecy surrounding salary data. Typically this is considered highly privileged information. Some companies will even terminate employees who discuss the specifics of their compensation with others.
Pitfalls of This Approach
Unfortunately, this has also led to a lack of transparency when communicating with individual employees about how their pay grade is determined. This can lead to confusion and dissatisfaction since your workers have no clear idea of their potential for future earnings. They cross their fingers and hope for a raise and feel let down when it isn’t forthcoming. Or, they negotiate aggressively for an increase with no idea if what they are asking for is feasible.
It is time for employers to lift the veil and start really communicating one-on-one with employees about the various considerations that impact their compensation. Workers need to have a good grasp of how pay is determined for their position. That way, they can be appropriately motivated to increase their value to your organization. Here are some of the questions they need answers to:
What (in general) are the lower and higher ranges of payment for my type of job?
Is my current education level impacting my ability to make more money in this position?
How does the company’s evaluation process affect my pay raises?
Are there any pay-for-performance based components in my total compensation?
What can I do to increase my earning potential with this company?
As you can see, this is a far cry from posting everyone’s paystub on the company website. However, it does go a long way toward giving employees more insight into how their salary is determined. If workers feel the process is fair as it is applied to them, they are less likely to worry about if their pay is measuring up to that of the person in the next cubicle.
