by Liz Alton
Communicating compensation to employees strategically and managing access to real-time compensation data around your organization can yield significant business benefits.
Communicating compensation to employees is an important component of managing your hiring and employee retention goals.
Having these “comp-versations” can grant you an important advantage in today’s labour market, where top candidates are considering multiple offers and even your best employees may be eyeing other Possibilités. These conversations can help HR leaders empower managers to communicate compensation information effectively to employees.
Find Real-Time Trend Data
Understanding what’s happening in your market is crucial to enabling transparent compensation. Do you pay less, more or as much as your competitors? Are there gaps, such as compensation equality issues related to gender, that you’re not addressing? Compensation transparency is a complex issue that can, for instance, directly inform how you’re addressing issues such as gender pay parity, equal-pay-for-equal-work, and pay equity obligations.
There are numerous data sources out there to consider, including ADP Research Institute’s® (ADPRI), the compensation benchmarking feature within ADP Workforce Now Comprehensive Services, Workforce Vitality Report, Pew Internet’s wage studies, Glassdoor and Statistics Canada, that can help you determine whether you’re offering competitive and appropriate compensation to your employees.
Share Information Across Your Team
Another area of consideration for HR leaders is how well they understand the demographics of their teams. How many employees are on-site vs. remote? Do they work in teams or are they individual contributors? How many hold multiple jobs? Organizations should develop a plan to gather demographic information and share it with HR teams and managers.
These same individuals should have access to the organization’s compensation rates to compare them to the industry standard. Understanding and appropriately communicating the facts about whether your compensation is competitive can enable more informed decision-making for your business.
Transparency in the Job Search
Transparency around compensation is valued by most job candidates in the current market, but many organizations shy away from including compensation information in their job listings. In an interview with the Los Angeles Times, one Glassdoor executive stated that “less than 10 percent of employers include pay information in job listings, yet 98 percent of job seekers want pay data before applying to jobs, so there is still a disconnect.”
Ontario recently passed the Pay Transparency Act in 2018 (which has not yet come into effect). This Act, if brought into force as initially passed, would forbid employers from asking the job candidate about prior compensation, as well as providing an expected salary range in all publicly advertised job postings. The Act also outlines that for companies with over 100 employees, employers must collect information to prepare a pay transparency report outlining difference in compensation in the employer’s workforce with respect to gender and other attributes. As the Act currently reads, employers with 250 or more employees would need to submit their first report by May 15, 2020, and employers with 100-249 by May 15, 2021- but again, there is currently uncertainty about the nature of the reporting requirements and the date that the Act will be proclaimed into force.
In today’s tight job market, organizations can look to gain an advantage by publishing salary details. One common concern is that postings with low compensation could scare off a perfect candidate who might otherwise be brought in with some negotiation. Consider publishing a salary range instead of a specific number, if you’re worried about this.
Be Aware of Important Issues, like Gender Equality
Most people care about working for businesses that pay their talent fairly. Gather real-time data from sources such as ADP Canada’s recent survey, completed with Leger Research, and ADPRI’s “Rethinking Gender Pay Inequity” survey to better understand issues around gender equality and compensation. The survey reveals key trends, including the fact that incentive bonuses for women were only two-thirds the amount that their male counterparts receive. As the report notes, “Considering all exempt employees who received bonuses during the six years under study, the differences in average annual base, bonus, and total earnings between genders are all statistically significant and also across industries.” In Canada, there were more females at the lower end of the pay spectrum, and women also earn nearly one-third less than men for compensation that includes bonuses or profit sharing. Lastly, 62% of women surveyed felt that compensation was equal at their workplace, compared to 80% of men.
There were many dimensions that showed a difference between the pay of men and women, including base pay, incentives, benefits and more. Organizations that tackle this issue head-on by conducting an audit, communicating with employees and fixing inequities are likely to enjoy more opportunities to attract and retain top employees.
How to Train Your Managers to Discuss Compensation
Transparency in compensation can be a huge selling point, and it’s vital that you help managers understand the best ways to handle the necessary compensation discussions.
Best practices include:
- Working the data: Leverage the data that you’ve put together on market trends and your workforce. Educate managers on what’s happening, and give them data points to speak to.
- Incorporating legislative awareness: Increasingly, provinces and territories, as well the federal jurisdiction, are introducing legislation that affects whether you can ask a colleague or candidate about their salaries, such as the Pay Transparency Act passed in Ontario in 2018 (which is not yet in force). Create a quick reference guide that provides tips and guidelines on what can be discussed and what cannot, including ensuring that your teams understand they cannot ask candidates for their compensation history!
- Educating managers on what matters: Transparent compensation has cultural implications. It can open organizations to difficult conversations when, for example, a gender pay disparity is uncovered- which would also implicate equal-pay-for-equal work and anti-discrimination obligations across Canada, as well as pay equity- that is, equal pay for work of equal value- obligations in some jurisdictions. Provide talking points about what the data shows, what steps are being taken to fix the issue and how to respond to frequently asked questions.
Communicating compensation to employees strategically and managing access to real-time compensation data around your organization can yield significant business benefits. You can help your HR team make more effective strategic recommendations, employment offers and plays to retain employees, by taking the time to understand market trends. From there, you’ll be able to better track performance and determine what steps are needed to make compensation sufficiently transparent throughout your business.
Want to learn more? Listen to ADP’s webinar, “1, 2, 3, 4; Let’s Avoid a Comp War!” — available on demand.