There are three words every business has to consider as they plan for the future – mobile, global and social. That does not mean that every business must embrace any or all of these trends but most are, and the millennial generation certainly is. Mobile, global and social will continue to grow.
These trends are showing up in expected and unexpected ways. One of the most game-changing trends is pay transparency. Millennials expect to know everything. They grew up getting answers to everything on the Internet, so it comes naturally to them to ask for information including what everyone is paid.
Pay transparency is a change in the culture of business. I can hear you gasp, but that change is coming. You can get there kicking and screaming. You can be late to the party, or you can embrace change and become leaders in the movement.
President Obama showed his support for pay transparency by his executive order that companies with 100 or more employees under contract with the federal government report salaries by age, gender and job group. The Equal Employment Opportunity Commission, as well as individual states, are enacting regulations to support pay transparency efforts. Don’t faint. Welcome to the new millennium of transparency whether you are in the US or another country, transparency in many forms is coming. Pay equity is being driven by long-standing pay discrepancies for women and out of proportion CEO compensations highlighted by the media during the economic downturn.
Transitioning to pay transparency takes time and planning so don’t post everyone’s salary and benefits just yet. Posting salary information is not the goal either. Pay transparency requires planning, communication and clear understanding. Many companies already have pay transparency, typically smaller, trend-setting businesses that want to change the culture of business. They may be the first, but all will follow as the trend continues.
Pay transparency changes everything in a company. The gender gap is exposed and resolved. It eliminates the petty speculation about what the other person is paid. It makes companies honest in their assessment of their talent. It’s all transparent.
Before making pay information available, there is a lot of work by management to take a good hard look at their pay structure, to understand it, make it understandable for others and fix mistakes in the current practice. Develop a plan for grades and raises so that when staff finds pay information they also see the plan.
Once management has a clear way to explain their salary and benefits plan and to account for the formula so that each person can see their path to growth in the company, then you are ready to share information not by posting it but by explaining it with your staff. Inevitably there will be plans for adjustments. The goal is that no one feels bad about his or her pay and benefits. They know where they are and why. In this way, they know what they need to do to improve their position in the company.
The toughest part may be for the CEO and management to own up to their pay if it is way out of line with the staff. There have been many stories of CEOs making 100s of times more than anyone else. It is hard to justify that when you share staff pay as well.
There is no argument that pay transparency is a rough road for some companies and not so difficult for others but in any case, it is coming for everyone so beginning to think in those terms will serve your business.