Transparency about reward is fine … so long as it applies to others.
Organisations often ask me, “How much should we share with employees regarding remuneration?”
At lectures and conferences where I have unfettered access to delegates or students, I try not to miss the opportunity to do a “snap survey” of how transparent organisations are.
Over the many years, I have asked the question, “Who here believes in more transparency as a principle when it comes to remuneration matters in an organisation?”
Inevitably, 95% of the hands go up. I then say, “Each of you please tell the person next to you three things:
– What your salary is;
– What your last performance score was; and
– What percentage pay increase you got.”
After much laughter and debate, the point is clear. We like transparency as long as it is us knowing what the top brass earn. When it comes to our own salaries, a modicum of secrecy is just fine. This illustrates the difference between theory and practice. In theory, we are all for complete transparency when it comes to remuneration matters. In practice, we are a little more circumspect.
This article covers some of the research we have done over the past few years and an article by Tess Taylor (2014), PHR, entitled “The HR Writer”.
In the last few years, employers have begun to see the value of reporting total reward to their workforce. For many, this is a strong retention tool that helps employees understand how much the company is vested in their success. Total reward statements can give employees a clearer picture of how much the company has spent on health and wellness benefits, retirement savings, educational costs, and all the other perks of employment in addition to regular salaries. This effort is an important part of corporate communications that gives employees a greater insight into their contribution to the success of the company.
Trends in open total reward communication
While businesses are not required by law to provide employees with total reward reports, workforce surveys indicate that employers benefit from being transparent about their contributions. Not having a policy to communicate total reward can work against a business in some unexpected ways.
Jellyvision, a Chicago interactive marketing agency, released the results of their survey of benefits-eligible employees. In this survey, it was revealed that:
93 percent of employees indicated that they responded well to live benefit presentations, but less than 21 percent of companies use them to communicate total compensation;
– A little more than 62 percent of employees use email alone to explain compensation and benefit information, but employees prefer in-person communication; and
– One-third of all employees know when they are allowed to make important benefit changes but less than 20 percent know if their employer covers them for catastrophic illness care.
– Our own research suggests that we share more with the bargaining unit (unionised employees) than we do with salaried staff. Job grades and pay scales for these levels are known by all employees. One can work out where one lies in the pay scale and it affords the opportunity to ask questions like, “What do I need to do to move through the pay scale?”
Salaried staff often know their own grade and may be shown the pay scale that they are in. But it is much more secretive. Arguably, this creates curiosity about what everyone else earns and this leads to corridor conversations on who earns what. Most organisations in their letter of appointment forbid these discussions, but we all know that they occur. Our own policies around secrecy drives this conversation underground. Perhaps it is time to consider a better strategy. One that is more transparent.
It’s shocking to think that a good number of employers forget how critical it is to communicate the complete picture of compensation and benefits to their workforce. The best results from sharing total reward come when a company focuses on helping employees understand how their individual needs are met.
The truth is that when an employer effectively shares this information with employees, the average employee will respond positively in kind. Having access to above average remuneration options makes for a happier, healthier, and more productive work environment for all.
Be more transparent about total reward
There are several ways that any employer can begin to open the doors of communicating total compensation for the benefit of the workplace. Here are some suggestions for making total reward more transparent.
– Provide on-demand access to total reward statements. Instead of a once-per-year total reward statement being mailed out, why not make this data accessible via a secure cloud-based product? Employees can be provided with more frequent total reward reports;
– Make total reward more personal. By giving employees direct access to benefit information and taking the time to meet one-on-one with each employee during enrollment and onboarding periods, total reward becomes something they relate to personally; and
– Go social with total reward data. Your social media efforts as a company can and should include educating employees about the unique perks they get as part of your corporate team. Your culture is built around the salary and benefits you can offer to your workforce, so why not let it shine? Use your company social network platform to share important benefit and payroll updates and improvements on a regular basis. Gather feedback directly from your employees here too.
Use the above tips to improve transparency in total reward communication and your company will reap the rewards. My suggestion is to start slowly with less sensitive information and work up towards the more sensitive, but high impact, high transparency and ultimately high employee commitment items. At this point we need to give kudos to the SA National Government who make their grades and pay scales publicly available. This can be seen in the national newspapers. Well done!
Mark Bussin is the Executive Chairperson at 21st Century Pay Solutions Group, www.21century.co.za, a Professor at University of University of Johannesburg, Professor Extraordinaire at North West University, Chairperson and member of various boards and remuneration committees, immediate past President and EXCO member of South African Reward Association, and a former Commissioner in the Office of the Presidency.
This article appeared in the June 2015 issue of HR Future magazine.