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Companies that aren’t transparent about pay will be ‘under fire’, says pay expert

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Companies that aren’t transparent about pay will be ‘under fire’, says pay expert

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According to a new report from the remuneration database, only 1 in 4 worker states that his employer is transparent on wages.

The December 2021 survey of 561 workers, ranging from executives to individual contributors, found that due to a lack of pay transparency, nearly half do not believe they are paid fairly compared to people in the same position in other companies. About 1 in 3 people don’t even think they are paid fairly compared to their colleagues.

The results aren’t shocking but are nonetheless disappointing, says Vice Chairman David Turetsky. With a growing number of online databases, networking groups and pay transparency laws taking effect nationwide, there has never been so much salary information available to employees. people who want to find them. But employers have a long way to go.

The pandemic labor market recovery will be a turning point, Turetsky told CNBC Make It, as in-demand employees push leaders to be more equitable and inclusive.

“We spent a lot of time saying the work couldn’t be done remotely,” Turetsky says, “and workers are now seeing, ‘Hey, this institution has fallen. What’s the next thing to fall?’ , like one-sided wage data, “are going to come under fire.”

Why companies are hesitant to be transparent about salaries

According to a separate Survey of the Fall 2021, only 35% of HR professionals say that their company has a transparent compensation policy.

Experts like Andrea Johnson, director of state policy at the National Women’s Law Center, say the aftermath of the 2008 financial crisis played a big role in employers’ pay secrecy: “Economic power dynamics in the job changed. Applicants had less power and employers could keep their cards close at hand.”

Employers could reduce operating costs by hiring people who are ready to work for less money. Since, Turetsky adds that some employers have said publishing salaries would lead competitors to poach their best candidates.

Open discussions about compensation, meanwhile, “give everyone a chance to criticize,” he says. The HR departments may not easily share salary data if they do not have a formalized compensation structure that can be explained and is impartial.

Another problem: if someone sees that they are paid the maximum for their role, they will probably want to know how to level up. If the company can not answer how it encourages and regularly promotes its employees, workers could be motivated.

Transparent remuneration goes beyond the publication of salary ranges

At least 10 states and cities have passed laws that require employers to state their salary ranges affirmatively, either in job descriptions or when a candidate requests it.

It’s a big step, but workers expect more, according to the survey. Workers say they want more transparency from their company about how they are paid compared to competitors, compared to co-workers, based on their skill level and ability to collaborate, achieve goals and solve problems. Only 15% of workers believe that the way their company organizes performance reviews fairly to structure salaries, raises and promotions.

“Transparency is not only how the salary is determined,” says Turetsky, “but also: what is my career potential here? How are they preparing to grow? Can I trust my boss to say if I’m in line for the next opportunity or not?”

He says organizations should invest more time in training managers on how their compensation structure is set and how to communicate that to their reports. Managers must also feel like they are being paid fairly and also have the opportunity to be promoted.

Workers want transparency to close the pay gap

Companies that aren’t transparent about pay will be ‘under fire’, says pay expert

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