Are Your Leaders Ready For Pay Transparency?
- Stephen Parker
- Jun 10, 2024
- 2 min read
Updated: Jun 11, 2024
Are you prepared for pay transparency? You have probably started to look at your reward, benefits and performance management processes to make sure you comply with the coming demands, but as process owners you also need to inform and prepare your people leaders for practical implementation.
The EU pay transparency directive has been brought in to ensure equal pay for equal work with focus on differences between men and women. It allows employees to compare their pay with that of colleagues so they can identify and address any gaps. This hinders employers from discriminating against employees based on their gender.
According to paytransparency. com and EU Chief Negotiator Kira Marie Peter-Hansen, all companies operating within EU with over 100 employees will be required to disclose pay scales to potential new hires and publish pay information for current employees - to avoid punishment fines. This is the right for all employees to know how their pay compares.
As HR leaders and process owners, you need to know how the directive will play out and be applied locally in each of the countries where you operate. We are interested in how best you can support and train your leaders to professionally handle these significant changes.
Every leader has the opportunity to brand your company right as a great employer who takes employee pay and experience to the next level. Alternatively, every one of your leaders can potentially get into serious trouble if this is not handled and communicated carefully. Just think how your leaders might tackle the following:
Some Dilemmas For Your Leaders
Share information Inform and align with employees on new pay transparency demands incl. balancing privacy with equity within same roles - potential loss of motivation, people leaving?
Show pay to new hires Employers must show potential new hires the pay range for the job in the job ad or interview before asking about any pay expectations - not current pay/history.
Right to knowledge Current employees can ask for pay levels for "employees in a role as mine". Pay must be proved and reasoned by the leader - both at a specific job level and, if relevant, at company level for gender differences of 5% or more.
Unhealthy comparisons, conflict and legal challenges Leaders need to tackle unhealthy comparisons and interpersonal conflicts in teams. Employees may even instigate legal action incl. claiming a backlog of pay-to-date which could, potentially, be extremely costly.
New processes, extra ressources Process owners will implement new processes and reporting in order to to mitigate and benefit from pay transparency. Yet, how can all leaders be ready and compliant without it being too resource consuming for your organisation?
Benefits: We can play a role in supporting your leaders and teams as they navigate the complexities of pay transparency. Especially leadership of change and employee engagement will be challenged. Contact us now if you wish to hear more.
