There is no denying that times are changing.
Everything from how we shop to how we work is being revolutionized, as such, transparency requirements concerning wages have been making headlines lately.
In an effort to level the playing field, governments are requiring companies to reveal their compensation models in order to determine whether salaries are skill-based or a product of discrimination or unconscious bias.
In this article we will examine how HR leaders and Department Managers can prepare for these new requirements.
First, Choose an Assessment Tool
In theory, employees of the same department and similar work responsibilities should be paid equally. In practice, this is far from true. There are many factors that go into a pay discrepancy such as, negotiation skills, and or experience at a company.
In preparation for the new law, HR leaders and department managers should evaluate employee performance levels by defining the standard parameters for each role.
A 9-grid box can be helpful for assessing this task, as shown in the example below:
Check for Organizational Justice
The next step is to assess organizational justice, by conducting internal benchmarking and making sure people who were classified as high performers are compensated higher than the low performers.
In the example below, Amy should be compensated higher than Kris.
Compare to Industry Benchmarks
Adjusting your numbers according to the internal benchmarking model is important . However, comparing your benchmarked roles with industry standards is the most critical part of the process.
You’ll be surprised to learn where your company stands 🙂
By gaining a 360 view of the industry, companies can boost growth by effectively matching employees to positions, foster employee development, increase productivity and retention!
Fair is the New Competitive Advantage
Speaking about compensation is one of the hardest conversations to have, but it’s an important topic for companies and employees alike.
By providing employees with a clear understanding of the factors considered when creating their compensation package, companies can establish a reputation as fair employers and, most importantly, form a relationship of trust with their workforce.
Don’t wait for the new law to come into effect. Download our 4-Step Guide on How to Stay Compliant While Competitive and gain access to our TIED model for internal and external benchmarking analysis.