Pay Transparency Consulting

What is Pay Transparency?

Broadly speaking, pay transparency refers to any effort to make compensation (or remuneration) information more accessible for employees and the public. Pay transparency actions can vary widely—from sharing salary ranges in job postings to disclosing pay data for individual employees to publishing statistics on gender pay gaps—and importantly, pay transparency can be mandated by law or voluntary depending on an organization’s jurisdiction and pay philosophy.

For lawmakers and workers’ advocates, the primary goal of pay transparency is to reduce wage gaps and empower employees with data so they can seek fairer pay and benefits packages. However, employers also have an opportunity to embrace pay transparency to improve their organization’s ability to attract, retain and motivate talent. This is especially true for younger workers, who tend to value openness, equity and socially minded organizations. Ultimately, when a strong pay transparency mindset is embedded into day-to-day total rewards practices, organizations can streamline compliance efforts, minimize the risk of pay-related lawsuits and boost their competitiveness.

Why is Pay Transparency an Ongoing Challenge for Companies?

Moving the needle on pay transparency can benefit employees and employers alike. However, meeting pay transparency requirements and expectations is challenging for organizations that do not have the right total rewards strategy, infrastructure and governance in place. Common barriers to adopting an effective pay transparency strategy include:

• Regulatory Complexity – Given the multitude of pay transparency laws that exist across Asia Pacific, Europe, the U.S., and other markets, there is currently no universal standard for pay transparency disclosures. This creates extra burdens for multinational companies as they try to navigate and comply with different rules and expectations. For example, in the U.S., some states require job postings to include salary ranges or minimum salaries, while others do not. Similarly, the European Union’s new Directive on Pay Transparency, which is intended to reinforce the principle of equal pay for equal work between men and women, will likely produce different rules across 25-plus member states.
• Inconsistent Pay Practices – From an absence of data-driven job evaluation systems to aging job architecture frameworks to differences in how managers level jobs and make pay decisions, many organizations do not have well-defined pay practices. In these cases, pay equity and pay transparency actions quickly expose discrepancies and flaws in the system. Before making pay transparency a reality, organizations often discover they need to re-examine and reinforce their total rewards fundamentals.
• Employee Fear and Resistance – Many employees and managers worry that sharing compensation information might infringe on their personal privacy or create conflict among coworkers. These are valid concerns, and companies need to ensure they set the right boundaries and expectations with employees before beginning to share sensitive information more widely.
• Communication and Training – Building on the previous point, organizations need to develop a compelling narrative around how pay transparency helps employees and managers make better pay decisions. Without proper guidance, training and support, especially for people managers, employees can easily misinterpret or misuse data, leading to confusion and frustration, or potentially open the door to pay-related lawsuits.

How Aon Can Help

Every organization is unique, and at Aon, we stand ready to guide clients through a variety of actions designed to help them build sustainable pay transparency practices. Taken together, or in part, these steps will directly and proactively address the challenges cited above.

Often, our work begins with a Pay Transparency Readiness Assessment. This diagnostic process will identify the specific steps your organization needs to take to prepare for pay transparency regulations, including understanding where your people are located and which regulations apply to your firm, documenting stakeholder goals, defining a general pay transparency philosophy for your firm, and determining which elements of your current total rewards infrastructure create the most risk for your organization.

Depending on the maturity of your pay equity strategy, we can also conduct a comprehensive Pay Equity Assessment for your firm, including a multivariable regression analysis across numerous dimensions (not only gender), to identify pay gaps in your organization and the key drivers behind them. It is important to remember that pay equity and pay transparency are intimately connected, so this phase of work can take several weeks to complete in a correct and methodical fashion. To learn more about our complete approach in this area, visit our pay equity consulting page.

Once you understand where your organization stands in terms of pay equity and basic pay transparency requirements, we can begin to address structural issues in your Job Architecture and Career Framework that could impede your ability to fulfill pay transparency goals.

Typically, this work involves using proven tools like the Radford McLagan Compensation Database and JobLink^TM, Aon’s job evaluation methodology, to help your team consistently benchmark, grade and define jobs around the world. During this phase of work, we will also explore skills frameworks and wider total rewards strategies that can be used to boost competitiveness and support your internal and external communications approach to pay transparency.

Ultimately, our goal is to provide your team with a sustainable Pay Transparency Strategy, plus leave-behind tools, that effectively link your job architecture, career framework, skills taxonomy, total rewards strategy and employee value proposition together in a coherent manner to help you meet disclosure requirements with confidence. We will also look for ways to help you meet broader corporate governance requirements, including human capital disclosures and ESG reporting.

Who Do We Partner With?

We partner with a wide range of functions at client organizations—including the board of directors, business leaders, and human resources, investor relations, risk management, communications and legal teams—to build sustainable pay transparency practices. We can also work with external counsel if needed to ensure client privacy is protected.