The Future of Pay Transparency
Timmy Lundin
I help clients becoming compliant with the EU Pay Transparency Directive ??
I had a hard time sleeping yesterday and I started to think about the future of pay transparency (and pay equity).???A very fascinating topic with many opinions, so please give me your thoughts and reflections in the comments.
Here are my mid night thoughts, unfiltered and from my personal reflections.???
This might be a stretch but I think most companies underestimates the power of pay equity. I picked one example (Sorry Tesco??) but Tesco for example faces a 2.9B Euro gender pay settlement in the UK that will create a string of claims in the industry estimated a whopping 11,5B Euros according to Forbes (only in UK). And this is only covering the fines. Imagine the total cost in loss in brand, sales, employee turnover, employer branding, etc. It’s multiple billions in cost and I’m not sure all companies have those margins now with a recession and bad marco economics. Doing bad business has never ever been more riskier
Pay equity and transparency by gender is the first step (since its the easiest to get into local law). I think though we will see a movement for transparency in ethnicity and LGBTQ the next 5-10 years.?Whats your thought?
Modern software and AI will very shortly be way more precise in creating dynamic and agile job architectures, pay bands, career paths and job descriptions. Imagine setting up an integration to a AI powered platform that takes your data from Workday and scraps all you job ads and populates it from data online in just a minute and creates beautiful visualizations on your organizations pay structures, challenges and road to pay equity and pay compliance. All of this for a fraction in price compared to expensive consultants. Since compensation will be much more public available (see what level.fyi are doing in the US), benchmark in Europe will be much more reliable shortly.
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Europe and USA are currently leading the way followed by Australia, New Zealand, Canada, etc but we will shortly see also Africa, Asia, South America.
In the next 3-5 years will public Pay Equity Scores (similar to ESG-scores) be a central KPI when you are evaluating companies. You will find it on Nasdaq looking for stock investments, in job ads, when looking for clients, etc. You will also monthly read in the news and on social platforms lists saying “These are the top 10 best places to work for in terms of Pay Equity”.?
Certifications are on the rise. Fair Pay Innovation Lab in Berlin are currently one of the rising stars in this field with clients such as BMW, Puma, Allianz, etc. My best guess is that this industry/vertical will become huge and a central piece in all employeer branding strategies.
Hope you enjoyed my mid-night hard to sleep reflections and that they gave some food for thought.
Have a amazing week! ??
/Timmy
CoFounder at Revealera
1 年Can you expand on how you think Mercer, Aon/Radford, WTW and Korn Ferry will loose their monopoly to AI? I understand they all do salary surveys and that's how they help companies with compensation benchmarking. How exactly will AI replace this or make this less important, or less needed? And is this the case for Europe only, or for US and all countries?
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1 年Interesting insights, thanks Timmy. I think the ability of companies to use ai/machine learning to grade jobs will be a fame changer. I worked for a UK utility company where one day a week was dedicated to grading. Anything which reduces the cost, time and potential biases in grading is great.