4 Steps to Successful Pay Transparency

Today, retaining top performers and attracting talent requires more than just a competitive salary. Transparency around compensation is increasingly becoming a key differentiator for companies, however, launching a successful pay transparency initiative can feel daunting. Where do you even begin?

Many organizations need more structure to implement a sustainable and impactful pay transparency strategy. With a well-defined approach, companies can make the most of what pay transparency can offer and not only recruit top talent but also foster trust with employees.

4 Steps to Pay Transparency:

1. Standardize Job Levels & Titles: Inconsistent job titles and levels create a breeding ground for employee frustration and a sense of unfairness. By clearly defining job levels and aligning everyone to standardized market-based titles, you lay the groundwork for a transparent compensation structure.
2. Refine Your Compensation Philosophy: Take a look at the current market percentile you target for your salary ranges by job family. Does it reflect a good mix of market competitiveness and the company's goals? Fine-tuning your compensation philosophy regularly ensures you're offering fair and competitive pay and aligned with the latest business and talent objectives.
3. Invest in Leader Training: Transparency is as successful as the clarity around it. Prepare your leaders for pay transparency. Share with them the compensation philosophy, what market data is used to establish and update salary ranges, as well as the process and timeline of events (i.e., when compensation reviews and promotions happen). Kamsa offers comprehensive resources and training materials to help you navigate this crucial step.
4. Employee Communication: Equip leaders to proactively communicate your compensation program and timeline with employees. Communicating the company‘s approach to compensation fosters trust, reduces attrition, and allows employees to feel comfortable asking questions (versus making assumptions about how pay decisions are made and leaving your company because they’re frustrated).

Once you've established a foundation with job levels and defined the company’s compensation philosophy, pay transparency becomes easier to implement. Here's a gradual roll-out approach to build a sustainable pay transparency culture:

A Phased Approach for Pay Transparency Success

Implementing pay transparency effectively often requires a phased approach. Here's a suggested 3-year roadmap to guide you. For each year, below are the ideal state and goals for an organization.?

Year 1: Foundation Building for Pay Transparency

In the first year, an organization has aligned with leaders on their compensation philosophy and executives are using various data points to make good pay decisions:

• Alignment on Compensation with Top Leaders: Ensure top leaders know the company's compensation philosophy, approach, and process. Then, provide them with resources to communicate this effectively to their managers.
• Executives Make Pay Decisions: Executives make pay decisions for employees under their organization using various data points, and factor in feedback from the managers who roll up to them.?

Year 2: Expand Transparency to Managers

In the second year, roll out communications and training to the leaders who report to the top executive team:

• Alignment on Compensation with Managers: All managers within the company gain a thorough understanding of the compensation philosophy, approach, and process.
• Directors & Above Make Pay Decisions: Directors and above gain access to various data points to make informed pay decisions. They are also responsible for trickling down to their managers on how pay decisions are made.

Year 3: Full Transparency & Empowerment

Now that all managers within the organization are familiar with the company’s compensation approach, in the third year, they are ready to have compensation conversations with their employees:?

• Empower Managers with Data: All managers have access to and utilize various data points (e.g., market salary data, performance rating, budget) to make informed pay decisions.
• Promotions Calibration: Promotions are reviewed, calibrated, and approved by directors and above.
• Communications by Managers: Managers share with their direct reports how their pay compares to market data (at a high level) and how pay decisions were made.

Kamsa: Your Partner in Pay Transparency

Kamsa empowers companies to embark on their pay transparency journey confidently. Our software goes beyond just data – it leverages the power of proprietary machine learning (developed in-house), combined with the expertise of our compensation specialists. This unique combination ensures data accuracy and provides the human touch essential for successful implementation.

Considering a commitment to pay transparency? Kamsa acts as an extension of your team for your pay transparency journey.?

Book a demo with Kamsa to find out how we can help build a transparent and competitive workplace.?