It’s a good indication of how talking about pay has moved from taboo topic to colleague conversation starter when the New York Times writes about it — not in the Business section, but in the Style section.
Research shows that sharing salary information is no longer something done anonymously on websites — 37% of professionals say talking about pay now is more acceptable than five years ago, a recent Korn Ferry survey found. But as such transparency, once unheard of, emerges as a corporate cultural, everyone from corporate leaders to human resource professionals to hiring managers face a slew of issues.
“If organizations don’t seize the opportunity to communicate about pay practices, their employees will own the narrative and the organization will lose control,” says Tom McMullen, a senior client partner at Korn Ferry and leader of the firm’s North America Total Rewards expertise group.
Indeed, three quarters of HR professionals surveyed by Korn Ferry say transparency on pay and rewards will become even more important in the coming year. HR and pay teams are strategizing on how to create equitable pay programs, more clearly articulate the principles behind those programs, and help managers communicate with employees who may feel they are undercompensated. McMullen says that organizations that are more transparent about their pay practices often have higher degrees of trust in leadership among their employees. “If a company has a good pay story to tell, they should tell that story,” he says.
To be sure, Dan Kaplan, a senior client partner with Korn Ferry’s CHRO practice, says organizations need to be proactive if for no other reason than to counteract the potential circulation of misinformation. He says, for instance, that it is human nature for people to exaggerate their pay or share some but not all of the details of their compensation, such as stock awards or other incentive-based pay. “There are so many factors that go into what someone is making that sharing without context is dangerous,” says Kaplan.
While that is certainly true, as society overall moves towards more transparency, pay equality conversations are likely to get louder and more frequent. More than 80 countries have passed equal-pay-for-equal-work legislation, for example. At the same time, several U.S. states have enacted laws preventing employers from asking for a job candidate’s salary history in an effort to level the playing field. Taken together, the paradigm is shifting in employees’ favor, with them freely disclosing what they make to each other but not to potential employers.
In this new reality, some organizations are limiting individual manager discretion and placing more structure in establishing hiring ranges for base salary. McMullen says the best way organizations can address the trend is by aligning on what leaders feel comfortable disclosing about pay and how the process works. “And if a gap exists, develop a plan to get them to where they want to be in the future,” says McMullen.