New study shows low state of current awareness
LONDON, 14 August 2024 – Aon plc (NYSE: AON), a leading global professional services firm, has said in a new study that as companies prepare for the European Union (EU) Pay Transparency Directive, nearly 50 percent of UK headquartered businesses have a low level of readiness to meet its requirements.
Aon’s Pay Transparency Study of over 200 businesses found that only 9 percent of respondents stated that they are “ready” for pay transparency. More common among responses at 51 percent was “getting ready”, with 40 percent of all businesses stating they were not ready. Only 38 percent of businesses in the study said their HR teams are fully aware of the requirements and only 3 percent confirmed that all staff in their business had been made aware of the requirements.
Anthony Poole, partner in Talent Solutions at Aon, said:
“The UK may no longer be within the EU, but this is a situation where many UK-based companies are still very much affected and influenced by EU legislation – in this case the EU Pay Transparency Directive. This is particularly so for the many businesses with operations in the EU. While many companies are realising that they cannot ignore the change this wave of legislation is bringing, our study shows that few have measures or planning in place to deal with it.
“But this goes beyond legislation and where it is and isn’t applicable. Many companies globally are reporting changing attitudes and expectations of greater pay transparency among employees and job candidates – and that embracing a pay disclosure strategy can bring benefits in attracting and retaining talent.”
Anthony Poole continued:
“This is new ground, so it’s not surprising that companies are hesitating or simply don’t know where to start. The level of change facing them in addressing the issue of pay transparency cannot be under-estimated – it will be a major cultural shift in the workplace. But – as with most things – just making a start on the process is vital to enable critical decisions to be made and for all stakeholders to be comfortable with the changes and their effects.”
Aon has outlined five key tips for companies preparing for pay transparency:
- ASSESS your level of readiness – Is your business ready to respond to the directive or to implement pay transparency proactively? Proactively assessing your current state and gaps, will help you get ahead and to be able to change and update what you need to.
- ANALYSE your current structures and pay gap – Do you have the building blocks in place to address the regulations? Where are your gaps? Reward fundamentals require you to have a well-defined salary structure, underpinned by a robust job evaluation framework.
- ALIGNMENT to your people and rewards strategy - Decide how your approach to pay transparency links to your overall total reward philosophy. The EU Directive is extensive in that it also requires reporting on other elements of pay, including benefits and pension contributions. How can you optimise your total reward offering and articulate your Employer Value Proposition to your employees and candidates?
- EDUCATE your stakeholders – Multiple stakeholders need to be aware, involved and bought-in to implement a successful pay transparency strategy - so identify and educate your stakeholders and have clear roles and responsibilities.
- GOVERNANCE and COMMUNICATION - Having a solid, defendable job evaluation mechanism on its own is not enough. What is also important is how readily you can extract the necessary data and evidence from your systems - as and when you need it - to respond to employees’ requests or to meet reporting requirements. Can you articulate to managers and employees how salary structures and pay decisions are made - at the point of recruitment, promotion, or at pay review?
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues in over 120 countries provide our clients with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.
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