In addition to gaining a more comprehensive
understanding of prevailing market wages, greater
transparency should also influence an organiza-tion’s
compensation philosophy. That can often
mean adding critical objectivity to compensa-tion
decisions to help remove or limit personal
biases and properly assess roles and their value
to the organization. In the end, taking the subjec-tivity
out of the compensation process will allow
HR teams to create more effective job descrip-tions,
cut costly employee turnover and help
minimize disengagement.
RECRUITMENT
Another potential advantage is the ability to attract
a wider and more diverse pool of candidates by
developing an equitable screening process. Salary
history queries tend to lead to pay inequities.
Women who are asked about their salary history
and decline to disclose earn less than women who
do disclose, while men who disclose salary history
earn more than those who do not disclose. Updated screen-ing
questionnaires, interview guides or reference-checking forms
will help to eliminate biased questions about salary history. The
long-term goal is to ensure a more even wage playing field among
candidates to help maximize engagement and foster more effective
ideation and innovation across the company. Of course, this is no
longer merely a best practice, it’s a requirement of the Act, so com-pliance
is no longer an option.
MANAGER TRAINING
As the saying goes, employees don’t leave companies, they leave
managers. Indeed, management dissatisfaction is one of the lead-ing
causes of staff turnover. Ensuring compliance with the Act will
require additional management training to avoid running afoul of
new compliance rules and exposing the organization to costly legal
risk. But it’s also an opportunity to help managers gain expertise
at properly assessing prospective recruits, managing conflict that
may arise when pay discrepancies become apparent and sensitively
communicating the finer details of the employer’s pay practices,
remembering that the Act requires employees to be paid fairly, not
equally. Properly trained managers will not only be able to nav-igate
candidate interviews in a way that avoids running afoul of
the Act, but also answer questions about wages and address per-ceived
inequities. At a time when savvy employees are becoming
more fluid in their approach to employment and are less afraid to
ask tough questions, effective manager training can create a bet-ter
employee experience by creating an environment of trust and
engagement across the workplace.
COMMUNICATION
Many employers are caught off-guard after being out-bid for top
talent, or when their best and brightest are poached by competi-tors
(often with the help of professional head hunters). They often
wonder why their employees jumped ship, and what they can do
in the future to prevent that costly turnover. One answer is to be
feature
more transparent about compensation policies; having a merit-based
reward system and using the new requirements set out in
the Act to rethink their compensation structure entirely. Perhaps
it’s time, for example, to develop a more coherent and equitable pay
scale, while adding in benefits such as a career learning and devel-opment
allowance to enable ongoing employee education (always
a popular feature especially for Millennial employees). Maybe that
new compensation package includes improved health benefits or
even measures to improve work-life balance such as greater tele-commuting
opportunities. In some cases, it could make sense to
facilitate community giving programs by providing employees a
paid day to volunteer with a charity of their choice.
The specific initiatives will vary by organization, but improv-ing
retention rates means effectively communicating the benefits
of a compensation strategy and the merits of the entire employee
experience. Being transparent and honest about pay practices will
help reinforce the organization’s reputation as an employer of
choice – including on social media channels and employer-rating
websites where so many candidates research their prospective
employers – and boost retention. That enhanced communication
could mean tapping technology to proactively share compensation
information, while also providing total compensation statements
to employees.
The key takeaway is that organizations that take efforts to com-ply
with the Act, and go a step beyond, will have greater success in
attracting and retaining the kind of individuals that drive innova-tion,
productivity and revenue growth. Gone are the days when
employers could keep salaries under wraps and employees, out of
politeness or fear of recriminations, avoided wage discussions at
all costs. The Act will undoubtedly impact how business owners,
managers and HR professionals recruit and interact with staff in
the workplace, but savvy employers can embrace that change – and
even turn it to their advantage. n
Laura Williams is principal at Williams HR Law.
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