A Discussion on Pay Equity, Pay Transparency, and Employee Retention
Pay Equity and Pay Transparency Policies Can Impact Employee Retention Rate
Many years ago, a senior employee from a major international company was called to a private meeting in the office of his supervisor; as part of that discussion, the employee was informed that the company was experiencing some difficult financial times, and that very few people would be receiving pay increases that year.
Having set the stage to deliver some disappointing news, it came as a surprise when the supervisor stated that the senior employee was one of the fortunate few, and that out of respect for his many years of valued service, he was getting a raise of $5.00 per month. The supervisor then felt obligated to ask the employee not to share this information with anyone in the company – to which the employee agreed because, as he indicated at that time, he was just as embarrassed as the supervisor about the dollar amount.
All humour aside, this was a prevailing mentality about compensation in previous times; pay was to be kept a secret, and any attempt to share and compare salary information with colleagues was considered to be taboo. This clandestineness was often rationalized under the guise of confidentiality, when in fact it was primarily meant to conceal the gap in pay between men and women.
Thankfully, this pay disparity has been addressed via the Pay Equity Act, which requires employers to identify and correct gender discrimination in their respective compensation packages and to adjust the wages of employees in female job classes (where 60% of the incumbents are female) and male job classes (where 70% of the incumbents are male). In essence, this is the practice of equal pay for work of equal value; and since salary is a primary motivating factor for people to come to work, employers who pay fairly (practice pay equity) tend to have higher rates of employee retention.
But how does one know whether they are being duly compensated for their contributions if pay is supposed to be kept confidential? Well, due to the combination of technological advances and a transition toward openness in social norms about the sharing of personal information, people today can more easily know/learn about what others make, including those who have similar jobs in their own company and with their competitors; moreover, people are using this type of information to decide where they might want/like to work, and it may have an adverse effect on employee retention in some organizations, notably those who are tight-lipped about how much they pay the members of their workforce.
Consequently, companies are becoming more willing with respect to communicating their pay philosophies, strategies, and processes with their employees; this concept is known as pay transparency, and it can include the sharing of such information as:
- How salary increases are decided upon and awarded
- The salary range for various positions within the company
- The market(s) in which the employer is looking for new talent
- How the company positions itself in terms of pay versus its competitors
- Compensation data sources that the company uses to evaluate its market
An emphasis on pay transparency aids in establishing more trusting employee-employer relationships and a stronger sense of employee engagement in their work; in turn, it can strengthen job satisfaction within and throughout the company, thereby again leading to higher employee retention rates.
While embracing the concept of pay transparency can have a significantly positive impact on employee morale and retention, it must be appropriately integrated and implemented within an organization; this includes the training of company leadership and supervisors on how to engage in open dialogue about pay such that their employees feel valued and choose to stay rather than look elsewhere for job fulfillment.
High Employee Retention Rates Start with Recruiting High-Potential Candidates
Of course, high employee retention rates are more meaningful, and more beneficial to an employer, if those being retained are highly proficient in their roles and they are making substantial contributions to the organization. This endorses the importance of recruiting top candidates in the first place, a service that can be provided by the professionals from Winters Technical Staffing in Toronto.
For more than 40 years, Winters Technical Staffing has been connecting highly-qualified personnel with reputable employers in several business sectors, including:
- Supply Chain
To learn more about the comprehensive range of human resources services offered by the specialists from Winters Technical Staffing, including the recruiting of high-potential candidates across varied experience levels, Please see our staffing services section.
Contact Winters Today
For recruiting support of your efforts to attract and ultimately retain high-level prospects for your business, call the specialists from Winters Technical Staffing at 416-495-7422 today or contact us to schedule a no-obligation discussion with a member of our team.