Preparing a Transparency Communication Planperformance
Benjamin Franklin may not have said, “If you fail to plan, you’re planning to fail,” but that doesn’t mean the adage isn’t true.
Implementing transparency changes within an organization without a communication plan and a compensation philosophy to match is a plan for disaster. Many credit unions believe they have fair pay and few pay gaps, but employees may not always agree. The last thing any organization wants when implementing transparency is to cause their workforce to look elsewhere for employment under the belief they’re underpaid.
Managers, and sometimes even the executive team, often have difficulty communicating the compensation process. It’s true that both employees and managers need more education and preparation when it comes to compensation matters in order to reach a place where employees feel the company has adequately explained the process and believe it’s fair. Many organizations place the burden of transparency entirely on the shoulders of HR and compensation specialists, but much of the legwork must be handled by managers.
What to consider before implementing any kind of change:
- Create a communication plan
- The goal of transparency is to remove obscurity in compensation practices and culture. Compensation can be an emotional topic. Not only are salaries one of the most important work-related issues for many employees, but many see it as a sign of their worth. Suddenly releasing the pay ranges (or actual pay) of everyone in the company can result in shock if employees are unprepared for it. Get ahead of this by providing a clear, concise explanation of the compensation process and any possible pay gaps. Keep in mind that increasing transparency may also increase tensions, both from underpaid and overpaid employees.
- Prepare the managers
- Managers are ultimately the keyholders for much of the compensation process. Even in organizations that stick closely to market salary ranges, managers have a large influence on the salary, bonus and merit increase of their direct reports. However, surveys have found that managers profess difficulty in communicating in regards to compensation. Organizations need to ensure that this difficulty is not from a lack of preparation. HR and compensation specialists should work with managers and train them to have difficult, but necessary, conversations.
- Managers need to be trained on:
- How the organization’s compensation structure works and what determines individual salaries.
- How to correct misconceptions that employees may have.
- How to determine pay grades or salary ranges.
- Having practice conversations.
- How to discuss compensation with their direct reports.
- Does the company have the technology to make this possible?
- The kind of technology an organization uses may determine how easy it is to shift to a more transparent process. Some organizations have yet to adopt compensation-related software, instead relying on pen-and-paper methods. Others have software with functionality that allow not only HR and managers to be active in compensation, but employees as well.
The right tools make all the difference
Having the right tools to support an organization’s compensation philosophy is invaluable. Not only does software make it easier for an organization to handle the day-to-day work of their compensation process, but in many ways its tools provide structure and insight and keep the organization competitive with the market.
What organizations should look for in modern compensation software:
- With the wide availability of automation technology, there’s no reason to rely on manual processes. Cloud-based compensation software not only keep an organization updated, but also ensure accuracy.
- Market competitiveness
- Building a market-based pay structure from the ground up can be a monumental project. Which salary surveys are most relevant to their industry and region? Which ones are the most accurate and up-to-date? Should the organization purchase one or commission a salary survey? How do we age or adjust these surveys? Does the survey account for size category, industry and location?
- By adopting a software suite with built-in competitive salary survey data, organizations can save a lot of legwork.
- Market adjustments
- By the same token, software that evaluates and structures an organization’s pay based on internal salary parity and external data can not only be efficient and time-saving, but can also allow for simplified benchmarking and job matching.
- Generates insight through analytics
- The importance of analytics and gaining actionable, accurate insights from them is growing. Software that can use performance metrics to identify high-performers or flight risks is a benefit that should not go underrated.
Having a clear communication plan and the right tools in place will ease the transition into a more transparent compensation culture—for managers, new hires, and seasoned employees alike. Smaller organizations—like many credit unions—can use their size to their advantage. Namely by enabling managers and/or HR leadership to meet with employees and answer any questions they may have about the new information available to them about others’ compensation in relation to their own.
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