The question of whether or not to share salary grades and ranges with employees continues to be debated. Some companies provide their salary structure to all employees, some provide portions of the structure on a need to know basis, while others hold the information in the strictest of confidence. Non-disclosure of salary ranges can create confusion and even suspicion and distrust among employees. Alternatively, companies that share information about pay ranges tend to have more committed employees and higher retention rates. Salary Ranges are also an effective tool for recruitment.
There are many advantages to disclosing pay ranges to your employees. Full transparency can help cultivate a culture of fairness and provide employees with a greater understanding of how their role impacts company goals. The salary ranges are a useful tool for managers to align employee expectations with market realities and to manage pay progression within their departments. They are also helpful to employees when making decisions about their next career move.
A well-defined compensation strategy can help you communicate your salary structure, and handle questions and potentially difficult conversations with greater success. Employees can still disagree, but communicating honestly about pay at least provides a better understanding.
For salary range communications to be effective, you need to ensure your structure grew out of current and competitive market data that was carefully matched to your jobs and that a thorough and accurate market analysis produced the resulting salary ranges. You will need to be able to define and defend your labor markets, survey sources, how pay ranges were determined and how jobs were assigned to grades and corresponding pay ranges. If you have done the job properly, explaining and defending the salary ranges should be easy. Be prepared to respond to questions regarding employee’s compa-ratio or position in the salary range and/or market point.
Salary ranges can help with communications during the merit increase process, especially if pay increases are based on performance and/or position in range. Some information does not need to be shared. For example, executive salaries (typically above the Director level) are normally not disclosed and actual salaries of employees do not need to be disclosed except under a union bargaining agreement. Be selective and discreet about the information that you share as well as how it is presented.
Employee complaints about salary usually stem from a few core issues, including perceiving salary decisions as unfair, confusion regarding the compensation system and disputes regarding their performance evaluations. If jobs have been fairly and objectively evaluated and priced against both internal and external factors and there is nothing to hide, if you can defend and explain your decisions, then why not consider full disclosure of your salary structure?
At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit surveys, salary surveys and pay practices data that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.