While the landscape of being a competitive employer has always fluctuated, the global shifts over the past few years has allowed employees to better understand and advocate for their priorities.

One growing element of this movement is pay transparency. While legally required in some provinces and states (the Pay Transparency Act), the practice has also been voluntarily adopted by businesses everywhere.

To share insight on the topic, we sat down with Sharlene Massie; Founder & CEO of About Staffing, Laura Gale; CEO of White and Gale Consulting (Compensation and Total Rewards), and Debbie Pearmain; Principal of One Stop HR—a consulting company specializing in leadership development, coaching, employee engagement, performance management, mental health & wellbeing, and culture.

They gave us their take on the advantages and disadvantages of pay transparency, how businesses can adopt the process, the best employee retention strategies, and so much more.

Two people shaking hands in office, others surrounding are applausing.

WHAT IS PAY TRANSPARENCY?

 
SHARLENE MASSIE

Created to address the “E” in “EDI” (equity, diversity, & inclusion), pay transparency is a policy where businesses provide pay-related information (wages or wage ranges) to their employees. Although many of us remember a time when employees were discouraged from sharing pay-related information, pay transparency can also include a communications policy that allows or encourages employees to share this information with each other.

While it is largely not legally required across Canada & the USA, it is in some, and it could be coming to more. This raises a lot of questions:

  • Do we want more government involvement in private businesses?
  • Will there be fines?
  • Should there be fines?
  • Is there a better way to advance and support equity?

Last year, the federal government passed the Pay Equity Act, which will eventually require all federally regulated workplaces with 100 employees or more to publicly disclose wage gap data for women, Indigenous people, persons with disabilities and members of visible minorities. And of course, public companies have always had to report to their stakeholders on pay rates.

 
DEBBIE PEARMAIN & LAURA GALE

Beyond simply showing pay ranges, pay transparency is about understanding the elements that make up a position, knowing which of those are compensable, helping employees understand how pay decisions are made, and providing equal opportunity of available promotions.

Globally, pay transparency is a hot topic. Not only are companies moving towards voluntarily providing pay-related information to employees, but legislation is also requiring organizations to share more around compensation.

While transparency is a powerful practice that builds trust with employees and can narrow the gender pay gap, it cannot exist well without a solid foundation of clear compensation philosophy and guidelines on how pay decisions are made.

Pay transparency isn’t about statistics, but rather the emotions around equal opportunity, transparency around pay practices, making equitable decisions, and inclusion.

Left image: woman interviewing someone. Left image: three people sitting in a row preparing for an interview

WHY ARE MORE COMPANIES DECIDING TO TAKE PART IN PAY TRANSPARENCY?


SHARLENE MASSIE

Many do it for the optics and the PR, because, of course, most of us do want to promote equity. While pay transparency can certainly help companies improve equity, it can also have unintended consequences, particularly for SMEs (small to medium sized enterprises).

For example, it could make it harder for them to compete, because it can eliminate communication before it happens. If a small business is offering wages between $25 to $35 an hour, and someone wants $36, they may not apply. As a result, the employer never gets to have a conversation with them about what makes their business a great choice as an employer. Also, it can make it much easier for bigger firms to headhunt from SMEs, as they will know exactly what to offer.

From our point of view as a staffing agency, it limits our ability to negotiate and educate. We have conversations with our clients (employers) all the time about fair and equitable pay. We suggest reasonable pay rates for a position, and then it’s up to them to negotiate with the potential employee.

 
DEBBIE PEARMAIN & LAURA GALE

Companies are taking part due to the shift in expectations of employees, the ability to retain top talent, and increased pressure from a legislative standpoint. The PTA legislation requires employers to disclose pay information in the hiring process and restricts the information you can ask prospective hires during the hiring process to eliminate forms of gender bias.

 

FROM YOUR EXPERIENCE, WHAT BENEFITS HAVE COMPANIES SEEN WHO ADOPT PAY TRANSPARENCY?

 
DEBBIE PEARMAIN & LAURA GALE

During the pandemic, more than half of people said they would switch jobs for more pay transparency and many CEOs I talk to say their biggest challenge is recruitment and retention.

Pay transparency:

  • Inspires a more thoughtful hiring process.
  • Helps candidates self-eliminate themselves from the running, saving businesses valuable time and energy in the hiring process.
  • Can make employers more attractive to potential hires.
  • Increases trust, openness, and honesty between employers and employees—according to Tara Jansen of Beqom, 36% of employees don’t trust that their company pays employees fairly.
  • Supports DEI.
  • Removes pay stress from the acquisition process.
  • Shows value in your workforce.

In addition, there are some concerns. Namely:

  • Some think it will lower wages overall as closing the gaps will be too economically hard for some employers.
  • Some feel they lose the bargaining power in the hiring process around salary negotiation.
  • Your competition can use your information against you to get a leg up on your candidates.
 
SHARLENE MASSIE

I haven’t seen a lot of benefits, especially for SMEs, but what I do recommend is undertaking internal wage audits every year. Look at what the market is paying, how your employees are performing, what value they are bringing, and make decisions based on that. Employers should always be re-evaluating wages to make sure they are fair and reasonable.

black and white image of two business people shaking hands

WHEN IMPLEMENTING PAY TRANSPARENCY, WHAT MUST EMPLOYERS CONSIDER IN REGARD TO WAGE & COMPENSATION?

DEBBIE PEARMAIN & LAURA GALE
  • Create a pay philosophy and roadmap—what does this look like in your organization?
  • Reflect on the impacts and potential reactions—uncover biases and being them to light ahead of time.
  • Communicate your pay equity plans honestly, consistently, and with full transparency.
  • Share market research and benchmarking information—a third party benchmarking service adds to your credibility.
  • Simplify pay structure data so employees can understand.
  • Be available and approachable to answer questions that arise.
SHARLENE MASSIE
  • There is a lot of work that goes into adopting pay transparency policies. Ensure you have a dedicated person or team to create, manage, and enforce the practice.
  • Pay transparency could create a glass ceiling as once someone is in a wage range, that’s often where they stay.
  • Consider how you will communicate these new policies and be prepared that not everyone might be happy about them or could have opinions on the pay ranges you implement. It can be a source of contention with both current and potential staff members.
three women looking at and signing a contract

 

IN ADDITION TO PAY TRANSPARENCY, WHAT OTHER NON-FINANCIAL INCENTIVES SHOULD EMPLOYERS OFFER TO REMAIN COMPETITIVE?

 
SHARLENE MASSIE
  1. Flexibility
  2. Educational opportunities.
  3. Mental health initiatives.
  4. Employees need to be appreciated for their individual work, cultural differences, values, and needs.
  5. Ask yourself: how can you, as an employer, offer stability in a world full of personal, professional, and global instability? This can be as simple as offering ongoing communication. Here at About Staffing, we have weekly Friday staff meetings where we communicate and find out what’s happening. We never miss them, and everyone can count on them.
 
DEBBIE PEARMAIN & LAURA GALE
  1. Flexibility (locations and hours).
  2. Trust in the company’s values.
  3. Fair and competitive pay.
  4. Diversity, equity and inclusion strategy.
  5. Positive brand reputation.
  6. Mental health initiatives. With half of Canadians saying their mental health has been impacted since the pandemic began and employee engagement rates at an all-time low, many employers need to go beyond traditional benefits and EAP programs. Think: proactive wellbeing supports, work-life integration supports, flexible work arrangements, and hybrid working. According to the exit interviews I do with clients and data on employee engagement, the #1 cause of people leaving work is lack of work life integration supports.
  7. Training and development. Beyond typical leadership development programs, the topics I have been asked to teach on the most are: understanding and supporting mental health for leaders & employees, developing resiliency skills, and coaching for leaders.

Thank you, Sharlene Massie, Debbie Pearmain, & Laura Gale for enlightening us on all things pay transparency. 

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