Canadian HR Reporter

CANADIAN HR REPORTER NOVEMBER 2019 16 FEATURES COMPENSATION Telling your pay story Compensation data that was once shielded from public scrutiny is facing greater transparency as employees look for more answers By Philip Johnson I t used to be that pay was not a topic for open discussion. Generations of managers steered clear of the topic fearing a negative reaction and general discomfort around the topic. In fact, in some organizations, it was viewed as a firing offence to disclose such confidential information. Employees were also reluctant to share information with their co-workers and some, particularly women, may have been reluctant to raise the topic with their boss. But those days are long gone, and millennials have very different expectations. Today, employers need to face the reality that, in this age of increasing transparency, social media and the so-called sharing economy, what they pay people is fair play for discussion. Even if people are not sharing their ac- tual pay, they are likely discuss- ing their salary ranges, salary increases or bonus targets. In July 2019, Korn Ferry sur- veyed almost 2,000 people to re- search the issue of pay transpar- ency and found that: • 24 per cent said it is appropriate to share compensation informa- tion with co-workers, and 16 per cent said that they do so • while only 16 per cent admit- ted that they tell colleagues how much they make, a quarter (25 per cent) said their co-workers tell them how much they make • 94 per cent of respondents said younger employees are more open to sharing details of their compensation with co-workers than are older employees • 70 per cent said they would act on information received from co-workers if it suggests that they are not being paid fairly (but 55 per cent would not identify the source of the information) • 32 per cent said that they would leave if their employer refused to match the salary of a comparably situated co-worker, and 43 per cent said they would become less engaged, without physically leaving • 37 per cent said that pay trans- parency is more important today than it was five years ago. "If an organization has a good pay story to tell, they should tell it. If they don't, they should act to change the story before somebody else tells their bad story for them," says Tom McMullen, a senior client partner specializing in compensation at Korn Ferry in Chicago. e social, political and regula- tory landscape is changing with respect to transparency in com- pensation communication, says Bob Wesselkamper, global head of rewards and benefits solutions at Korn Ferry in Chicago. "is topic will likely intensify in the next several years as Europe and North America continue to move towards increased trans- parency in reporting compensa- tion data that was once shielded from public scrutiny. Employers need to be ready." e concern has been that infor- mation is power and can serve as a distraction for the business. Or, as Denise Rousseau, professor of or- ganizational behaviour at the Tep- per School of Business at Carnegie Mellon University in Pittsburgh, Penn. puts it: "Openness gives employees a bargaining position." Employers need to clearly define and stand ready to explain their pay policies and ensure that they meet employees' test of fairness. Fair and equitable But transparent and equitable pay practices are more than sim- ply avoiding embarrassment at the bargaining table. It has been said that the most sensitive part of the human anatomy is the wallet. A lack of fair and equitable treat- ment results in substantial direct and indirect costs to a business — talented people leave or lose their motivation and engagement, both of which hit the bottom line. Handled correctly, everyone can gain from transparency. Ef- fective communications around pay can have a strong impact on whether employees are satisfied with their compensation. At the societal level, there is an even more compelling reason to encourage transparency. e gen- der pay gap is a hot button issue around the world. While much of this gap is a result of women not being as prevalent in the higher- paying jobs in organizations, there is often still a gap between what men and women operating at the same level in the same organiza- tion are paid. If this gap is to be removed it must first be recognized and ac- knowledged. And this gap still ex- ists, even where employers pub- lish pay scales. It is only around the water cooler or at the side of the soccer pitch that these differ- ences become clear and employ- ees start to connect the dots with respect to the actual pay practices of their organization. It is the reality of the actual pay practices that matters. An employ- er may publish its pay structure and have a credible job evaluation system in place and believe that it is on solid ground because the pay opportunity is "equal for jobs of equal value." But when recent recruits in the same job start talking about pay and find out that they were hired at different starting salaries, and it appears that male hires tend to have been brought in a little higher up the pay scale than female col- leagues, then that employer will be treading in quicksand. It is in these discretionary areas of pay practices, such as deter- mining salary increases or award- ing bonuses, where the potential for unintentional bias creeps in. Own the conversation The call to action? Employers should own the conversation. ey should tell their story if it is positive, and if it isn't, do some- thing about it so that managers and employees can feel comfort- able when the topic comes up. Organizations need to ensure that compensation is commensu- rate with the value that employees bring by putting in place the right compensation strategy, structure, design and benchmarking pro- cesses across the organization — supported by robust job evalu- ation methodology — in order to secure fairness and equity in the treatment of employees. ey need to audit to ensure that their deeds match their in- tentions, and they need to tell employees all about what they are doing. Philip Johnson is a senior client part- ner at Korn Ferry in Ottawa. For more information, visit www.kornferry.com. ipm The Professional Recruiter Full Accreditation Program on Mixed Media USB Flash Drive Institute of Professional Management 2210-1081 Ambleside Drive, Ottawa, ON, K2B 8C8 Tel: (613) 721-5957 Toll Free: 1-888-441-0000 This mixed media package includes a text-based USB Flash Drive with participant workbook and exam. Works on Mac and PC. valid until December 16, 2019 Details at : www.workplace.ca/HR-Reporter.html $745 regular $945 ... save $200 This program covers a set of key recruitment and selection skills. The goal is to help you reduce recruitment costs, lower the risk of bad hiring decisions and avoid needless litigation. Successful completion of all 3 Modules makes you eligible for membership in the Association of Professional Recruiters of Canada, APRC, with the RPR (Registered Professional Recruiter) designation. Credit: fizkes (shutterstock) Companies need to ensure that compensation is commensurate with the value employees bring using the right strategy and methodology.

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