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Pay transparency: A crucial tool for equity

by Nakia James-Jenkins (She/Her)

The movement for increasing pay equity through pay transparency is gaining traction around the country. Beginning November 1, employers in New York City will be required to proactively share the compensation range of an open position with potential candidates. Colorado has had a similar rule on the books since 2021. 
These laws are a big win for job-hunters, employees, and equity-minded employers. Increased pay transparency will enable candidates to determine whether applying for a role and investing in an interview process is a good use of their time, give current employees more power in salary negotiations, and provide employers with more data points when coming up with a salary range. 

At On-Ramps, we fully support this wave of pay transparency laws and are striving to provide our clients—and ourselves—with the tools to go beyond the legal requirements to work toward compensation equity across the board. We recently reassessed our own policies and practices around pay equity. Based on our experience internally and with clients, here are five things equity-minded leaders should keep in mind: 

1. Establish an appropriate range. 

Equity-focused organizations that want to stay true to the law’s intentions need to be thoughtful about the size of the salary range they post. Posting overly broad ranges makes the information essentially useless. At the same time, listing a broad compensation is often necessary to ensure that a newly hired employee has the opportunity to receive pay increases as they acquire new skills, deliver excellent work, and gain experience. 

If an organization expects employees to be in a role for three to five years, the pay range should identify what increases would look like across that time period. 

2. Clearly define competencies and use them to determine compensation. 

Creating a functional compensation range requires that you not only define the position’s minimum and maximum pay, but you also clearly articulate what qualifications or experiences are necessary to move up within the range. When you map out competencies that correlate with different rungs within a pay scale, you’re creating a structure that minimizes the effect that unconscious biases have on employee salaries. 

Knowing the competencies that move a candidate up the pay scale is crucial to pay transparency. If a candidate was offered a salary at the lower end of the pay range, you can explain that to them, while also articulating exactly what qualifications or expertise they can develop to enable them to earn more. This transparency signals a commitment to equity and creates space to craft relevant professional development opportunities. The more information an employee has, the better they’ll be able to advance their career.
3. Include your team in designing competencies. 

Even when compensation is attached to competencies, there is still the potential to inadvertently undermine equity. While competencies are focused on the skills a person would need to complete the job, it is impossible to completely eliminate the possibility of bias. We all have biases and as much as we work to mitigate them, they still show up in how we view the world and what we value. 

To minimize bias, job competencies should not be determined by a single person in your organization. Instead, a diverse group of team members and leaders from a range of levels—especially those who will be most directly affected by the adoption of these core competencies—should be involved in the discussion. 

Again, it all comes down to transparency and accountability. The more these competencies are co-created by and shared with your organization, the more you mitigate the possibility of bias and build a comprehensive vision for the role.

4. Conduct a compensation audit—and commit to revisiting it regularly.

Pay transparency means that employees will be able to see the compensation range for open positions—and assess whether or not that pay range is in line with their own pay. Before the transparency law goes into effect, organizations need to figure out how they’re going to bring the compensation of the folks who are identified as making less than market value up to where it should be. 

From incremental pay increases to pay freezes, there are many ways to do that. The important thing is that organizations do their due diligence now before the law goes into effect (or a similar law is passed in your location). Instead of waiting for employees to come to you because they feel they’re being underpaid, be proactive. If you haven’t been conducting regular compensation audits, this is the time to start. 

Completing the initial audit, however, is just a starting point. Once complete, what really matters is what you do with the information. Prepare to have conversations with employees about their compensation. 

And, most importantly, your organization must be willing to financially adjust to rectify any inequity they find during the audit. Failing to do so could lead to employees losing trust in the organization and its leadership if they believe action will not be taken to achieve equity. Once that trust is broken, it is very difficult to get back.

While it’s important to conduct the first audit in advance of publishing compensation ranges, evaluating pay equity is an ongoing process. To meaningfully prioritize pay equity, an organization needs to re-evaluate its pay ranges every eighteen to twenty-four months, and then make the necessary adjustments. 

Even if you paid close attention to a relevant market value for a particular hire during the hiring process, chances are the market has changed—and the market will likely dictate the compensation of new hires.  Be sure to revisit the compensation of current employees who are at the same level as the position(s) you’re filling to maintain equitable compensation across your organization. 
In addition, your employee has likely gained new competencies while on the job. If so, their pay should be adjusted accordingly. 

5. Communicate with your staff. 

Making compensation transparent is a big deal. That said, chances are, your employees are already talking about their pay. It’s crucial that organizations take the time to develop an effective communication plan to show employees that they’re working toward pay transparency and equity not just for new hires, but for all staff. 

The first step is to be clear about what a compensation equity audit is and why it is being conducted. Once the data and research have been collected and the organization has come up with a plan to address any issues, you may want to hold a large staff meeting, a team meeting, or a departmental meeting. If you are breaking those meetings down by departments or teams, make sure that the messaging is consistent across all meetings. 

However you choose to do it, transparency is key. Share the findings of the compensation audit with your employees and all of the work that the organization has done to prepare for greater transparency. Crucially, leaders need to take ownership of pay discrepancies in the organization and show how they are working to rectify any issues. Employees should walk out of the room feeling respected, knowledgeable, and empowered. 

It is important that these conversations are facilitated by leaders, including a leader from your people and culture team, since compensation levels are important to every member of your organization. This is an important moment for leaders to model what it looks like to speak authentically and honestly about the shortcomings and action plans of the organization. 

This work isn’t easy but it’s critically important.

Change—even healthy change—can be challenging. Whether or not you are making compensation bands transparent because of a new law or because transparency is in line with your commitment to equity, you will find yourself facing difficult choices and uncomfortable conversations about how you determine pay bands and why they’re higher in some functional areas. The best way to manage these challenges is with care and authenticity. Solicit feedback, and acknowledge the feedback, even if you disagree. 

Regardless of location, every organization should start thinking about incorporating pay transparency into their practices—not just because it’s the law, but because it’s the right thing to do.

Need support instituting compensation transparency? On-Ramps is here to help. Email us with questions or to let us know how your organization is making pay transparency a priority at info@on-ramps.com