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Pay Transparency Will Grow as 2018 Unfolds

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With the new year here, employers in California now must comply with pay transparency laws. Mainly, this means employers need to adjust well-established but outdated hiring and pay management processes.

Specifically in the case of California Assembly Bill 168, “an employer, upon reasonable request, shall provide the pay scale for a position to an applicant applying for employment.” According to San Francisco-based Tauseef Rahman, principal in Mercer’s career business, transparency should not be confused with bans on asking salary history in the hiring process.

“Pay transparency is about communicating the pay range for a job position to applicants and employees,” he explained. “California’s Assembly Bill 168 is helping to shine a light on an area that HR has largely been able to keep behind the scenes.”

He added that organizations are realizing that just as fair pay and salary history-ban laws have been enacted across the country, some version of pay transparency laws will likely be legislated beyond California.

“Accordingly, some employers are working to implement changes nationally in 2018,” he said. “They need to ensure that they deliver their employee value proposition in a consistent manner, giving the same message to candidates and employees on pay. That’s in addition to benefits, careers, etc.”

Rahman offered three steps to pay transparency readiness:

  • Ensure pay range alignment in recruiting. Rahman said it’s essential to ensure that the candidate, recruiter, hiring manager and peer interviewers all are aligned on what the pay range is for a position. Organizations can do so by equipping recruiters with the right data and tools. This includes the pay range for the job and current incumbent information, enabling recruiters to think about internal pay equity.
  • Be pay transparent with employees. Educate employees about their own pay ranges, especially if they are involved in the recruiting process and interviewing candidates. Organizations will need to train managers and employees on what the pay range is for certain jobs and how to think about them.
  • Build and maintain pay ranges. If you don’t have pay ranges, start with broad bands. If you use market reference points, establish some percentage range on either side of what you're targeting. Set them in a way that meets your organization's objectives, and remember that you can reset ranges just as easily as you set them. Just do so in a methodical manner. Lastly, but perhaps most importantly, pay employees within range. 

“As salary transparency laws continue to take effect in various forms, the risk increases that candidates, recruiters, hiring managers and employees are misaligned on pay information,” he said. “With factors such as the introduction of artificial intelligence in recruiting and use of predictive analytics in workforce management, it is time for pay management to catch up.”


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