A Roadmap for Navigating Pay Transparency with Greenhouse Chief People Officer, Donald Knight

Pay transparency is a business imperative

Twenty-seven states already have some form of pay transparency legislation and by January 2023, more than half the U.S. workforce will be subject to pay transparency regulations. Whether you’re located in one of these states or not, pay transparency is fast-becoming a business imperative. 

Elevating the conversation from compliance to employee engagement

I spoke with Donald Knight, Chief People Officer at Greenhouse, to elevate the conversation from compliance to: 

• Leveraging pay transparency to improve employee engagement
• Defining a framework for change; and
• Embedding pay transparency into a people-first, transparent culture.
  

This is a summary of that webinar, the full recording of which can be found here.

Company performance starts at home

Donald talked about how improving employees’ home lives directly affects their performance in the workplace. And one major way he helps employees is by implementing a people-first culture in which pay transparency is front and center. Key questions he addresses:

• Am I being treated fairly?
• Am I paid equitably?
• Am I paid commensurate with my peers?

Employers should engage employees openly

Given that employees spend a third of their professional life working for compensation, Donald said that employers have a direct opportunity (perhaps responsibility) to engage employees openly and honestly about their pay in context with the market. When they do so, they create what I’ll call an “engagement continuum” that includes the following links: 

• Compensation
• Motivation
• Engagement
• Satisfaction/fulfillment; and
• Performance

The employer-employee social contract starts with the offer

At the moment an employer extends an offer to a prospect, it has the opportunity to introduce and reinforce the social contract. Part of this social contract includes closing the gender pay gap. 

‍Building a pay transparency roadmap for candidates and employees

Any pay transparency policy should cover both candidates and employees. Companies that are unwilling to “pay the loyalty tax” on employees whose compensation has been out of line risk:

• Being perceived as disingenuous right from the start
• Eroding trust; and 
• Defeating the very purpose of pay transparency.

Donald also noted that a policy-to-reality mismatch will cause a loss of trust, both with candidates and employees.

What a pay transparency roadmap might look like:

Look out for news articles comparing compensation models

As more companies implement pay transparency one can expect to see articles comparing compensation models by company. If those compensation models are lower than the market, people leaders will need to be prepared in advance to handle the inevitable questions and negative press. There will also be articles on which companies are actually meeting their compensation models. 

Turning pay conversations on their head

Both Donald and I agree that it’s critically important to have compensation discussions early and often with candidates, including conversations about benefits. Avoiding these topics early on doesn’t make good business sense. 

Keep pay transparency front and center

With respect to internal employees, Donald advised keeping compensation models front and center in communications, not allowing them to devolve into water cooler chit-chat. Being open means: 

• Being transparent
• Admitting what you know and what you don’t know
• Being willing to iterate over time; and 
• Continuing to build trust. 

It’s important to explain why you’re doing what you’re doing so you can continue to attract and retain the talent you need to succeed. Shifting from relatively opaque compensation models to open and transparent ones requires embracing fears to drive change. 

I invite you to listen to a recording of the full conversation here.