Beyond The Pay Gap

Pay transparency has been the centre of many debates in the business world; is it an invasion of privacy, or on the contrary, is it a way to safeguard that you’re being properly compensated for your work? At its core, pay transparency is the practice of openly disclosing information regarding salaries and benefits with both employees and prospective job candidates. With an overall goal to maximise fairness, equity, and informed decision-making, this implementation is one that will affect anyone who encounters your organisation! 

Several jurisdictions have enacted laws to promote pay transparency in the past year. Specifically, in March 2021, the EU published a proposal for a directive to address gender-based pay gaps and promote gender equality in the workplace, while also strengthening the principle of equal pay for equal work through pay transparency. With this directive potentially coming into place in 2024, as an employer, you would be required to provide information regarding salary range, even prior to one applying for the role. 

Now that we’ve gained a solid understanding of pay transparency, let’s explore its impact…

By promoting fairness and pay equity, pay transparency is vital in addressing the gender pay gap. Transparency practices will also attract top talented candidates who are seeking to align their personal values with those of the organisation. 

Additionally, it aids career planning and encourages productivity, linking pay to performance. However, if salary bands and pay structures are rigidly defined, employees may have limited room to negotiate for higher pay. To ensure that pay transparency is beneficial, it needs to be implemented and integrated into the organisation’s culture with a strategic approach and clear communication. Without proper policy, pay transparency may cause internal conflict amongst colleagues and increase the risk of employee poaching from rival companies. 

Pay transparency is here to stay, whether you’re ready for it or not. But maybe this is a good thing. According to the Korn Ferry survey, 51% of global HR professionals believe that pay transparency is the stepping stone for higher salaries. With any new change in an organisation, it’s important to start small and ensure that everyone in the business is on board. 

At Mdina Partners, we have years of experience in undertaking job evaluations, and we believe that this is the first step in assessing how fairly employees are being paid for their job, experience and accountability.