Should Your Company Embrace Pay Transparency?


The gender pay gap is still alive and well. Despite the strides we’ve made in pay equity, current projections don’t show the pay gap bridged until 2106 — 86 years in the future. These projections are dire, but we have the power to change the future.

Companies can take steps today to minimize their own pay gaps. How? Pay transparency, which involves making your employees’ salary information available across your organization, holds the company accountable for pay equity and protects employees from unfair pay structures.

But pay transparency is much more than just a policy: it’s a paradigm that fuels a healthy work culture. Here’s why you should consider implementing pay transparency at your startup or small business.

Streamlines Salary Negotiations

When you make pay transparent, you have to prepare to defend the numbers. “Pay transparency really requires people to come up with objective criteria for paying people,” says gender bias consultant, speaker and researcher Kim Elsessor. The best criteria are based on the value the employee contributes to the company. “You have to be able to show employees that pay is based on the market value of their function and the scope of their duties,” she says.

Pay negotiations are much simpler when pay is based on objective criteria. Under this system pay raises would be based solely on increasing the scope of an employee’s duties or moving them into a different role, Elsessor notes. This supports fair treatment and helps employees think critically about their position at your organization.

Mitigates Unconscious Bias

When it comes to gender and other arbitrary factors that often affect pay, a transparent culture adds a layer of accountability to your pay structure and makes objectivity an imperative. For example, if two employees held the same position in your organization, but a male employee earned higher pay than his female counterpart, pay transparency would reveal the discrepancy.

Unconscious biases affect how we perceive each other and evaluate performance. “Performance reviews are very subjective,” Elsessor points out. “Women and minorities are frequently held back by subjective performance evaluation criteria.” Those criteria are often skewed towards favoring employees who are white and male, leading to pay imbalances and cultural inequity. Basing pay on objective criteria and being transparent about pay helps minimize the toxic effects of unconscious bias on your pay structure.

Encourages Internal Mobility

Another cultural benefit of pay transparency is talent mobility. When pay is tied to job duties and scope, employees will be more motivated to cross-train in other positions. “Pay transparency gives employees objective data on what they need to do to move up and around in the organization,” Elsessor says. “It motivates employees to learn new skills.”

This helps employees become mobile across your organization. And in the current talent crisis, employee mobility gives your business a competitive advantage, especially for small businesses. Mobile, cross-trained employees can also fill in for each other when needed, allowing employees to take advantage of breaks and vacations, helping to fuel a healthy work culture.

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