Salary transparency in the workplace: 4 steps to a successful implementation
With the #BalanceTonSalaire movement that developed at the end of 2022 on social networks, the debate on salary transparency has returned to the forefront. Convinced by its benefits, more and more companies are choosing to take the bull by the horns and take action.
What does "salary transparency" actually mean? What are the issues to be aware of before taking the plunge? And what are the key steps involved in implementing pay transparency?
Pay transparency: what exactly are we talking about?
The two levels of pay transparency in the workplace
There are two levels of salary transparency:
Total transparency of all company salaries. In this case, everyone can consult the salaries of all employees.
Transparency of salary grids and variables. Here, an employee can situate himself or herself in relation to a given job family, seniority level, but also aspects of personal life (dependent children or place of residence). This is the method used by Shine .
Une directive européenne qui ne laisse plus le choix aux entreprises
Le Parlement européen a frappé fort en adoptant la directive sur la transparence salariale le 10 mai 2023. Cette mesure entend notamment obliger les employeurs des secteurs public et privé de plus de 50 personnes à produire un rapport sur les données relatives à l’écart de rémunération entre les femmes et les hommes y compris sur ses « composantes variables ou complémentaires ».
Pour cela, le Parlement laisse un délai de 3 ans aux États membres pour transposer la directive. Si un écart de plus de 2.5% est relevé entre les hommes et les femmes, les employeurs devront mettre en place un plan d’action.
What are the challenges associated with salary transparency?
Beyond the legal aspect, a commitment to salary transparency is part of a corporate desire to respond to current HR challenges. Let's take a closer look.
Issue no. 1: reducing pay inequalities between men and women
Despite progress, the pay gap between men and women is struggling to narrow. For example, in France in 2019, men earned 19% more on average than women. Choosing transparency means choosing to reduce the existing pay gap and pushing companies to objectify salaries on neutral criteria such as skills or seniority.
And the initiative is bearing fruit. According to a study cited by Harvard Business Review, pay transparency has reduced the gender pay gap in Denmark from 18.9% to 17.5%.
Issue no. 2: improving the attractiveness of the company
Organizations are experiencing historic difficulties in recruiting. In France, 61% of recruitments will be considered difficult by organizations in 2022. This is 3 points more than in 2021 (2023 Pôle Emploi study).
Although money is no guarantee of happiness, for 77% of French people, it remains the primary criterion for joining a company (Robert Half study, March 2022). Conclusion? A job offer that mentions salary will be more attractive. It also saves candidates a considerable amount of time, and enables them to compare their salary expectations with the remuneration on offer.
Issue no. 3: Strengthen employee commitment and loyalty
The salary grid is a tool enabling employees to situate themselves on their company's pay scale. They know the skills, prerequisites and expectations for career development and salary. In other words, it's a way of promoting pay equity. Promotion decisions are neutral and objective, rather than arbitrary or biased!
Salary transparency makes it easier for employees to plan ahead.
4 steps to salary transparency
1 - Take the time to benchmark internally and externally
Buffer, Microsoft, Alan, OpenClassrooms, Shine, Lucca... All these companies have implemented salary transparency. As they point out in various interviews, this approach is the fruit of months of work and documentation! For Shine and OpenClassrooms, it's essential to go and see what's being done elsewhere, and to meet companies that have taken the plunge.
This approach provides inspiration, confronts concrete difficulties and assesses whether the company is capable of tackling them. It's also vital to make this approach part of a broader project than just the question of remuneration. In concrete terms, the transparency policy must fit in with the corporate culture, otherwise the initiative will fail. This means starting with the organization's values and operating rules - and redefining them if necessary.
Similarly, you need to be aware of your own limitations. A young start-up company will find it easier to implement salary transparency than a large group whose corporate culture has not evolved for decades.
2-Identify objective remuneration criteria
While business skills are self-evident, you are free to set other criteria according to your corporate culture and your employees' expectations. For example, it's entirely possible to look at the issue from the angle of work value (what is valued? On the basis of what criteria?) and employee potential (which talents should be retained? Which have the greatest potential for development?)
For example, Shine has built its grid around three criteria:
job classification (functions and levels for each profession)
a seniority bonus (not just within the company)
a fixed bonus of €2,500 per dependent (child or dependent relative).
3-Who will be involved in the decision-making process?
How will compensation decisions be made? Is it a decision to be made by management and HR? Will you choose to include managers and employees in the decision-making process?
It goes without saying that the second choice is an ambitious one, requiring clear, thorough and precise formalization and communication of remuneration criteria. Otherwise, transparency can make compensation policy more complex, leading to more questions, misunderstandings and misunderstandings among employees.
Lucca, a provider of SaaS HR solutions, has taken this collaboration a step further. After 3 years' seniority, employees set their own salary. He defends his choice in front of his manager, employees with more than 3 years' seniority and the management committee. It's an audacious gamble that empowers talented employees and motivates them over the long term.
4-What level of transparency should you choose?
You have two choices: transparency of salary scales and variables, or absolute transparency of all salaries. This is what Fasterize does, exposing employee salaries to all employees. Whatever your choice, the important thing is to be able to objectively justify salary differences.
As you can see, salary transparency takes time and vigilance. But the benefits are worth the effort! Finally, keep in mind that your salary policy needs to live and evolve over time, as your company changes.
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