So, the CEO Pay Ratio disclosures were a bust. I admit it―I really believed that a good number of people would start making waves with their employers about their own pay after learning the median employee’s compensation. I was sorely mistaken. Even my own survey data proved me wrong. More than 90% of respondents said they are not getting questions from their workforce about the CEO Pay Ratio. What’s a communication consultant to do?
Well, this communication consultant isn’t letting the issue go. Just because people didn’t react immediately to the median employee compensation information, doesn’t mean we don’t have a big problem. Phrases like “pay transparency,” “gender pay gap,” and “equal pay” are common these days and that’s because these are real issues that companies need to be prepared to address. But stepping back, how can we expect employees to understand these complex issues (for example, the gender pay gap and equal pay are two very different concepts), when most people still don’t have a handle on the basics of compensation plans? When looking at our survey results, only 21% of respondents believe employees can appropriately compare their compensation to that of their internal colleagues. Furthermore only 22% believe they can appropriately compare compensation to similar positions in other organizations. Never mind appropriately comparing pay to someone of the opposite gender. And, to exacerbate the problem, managers lack solid skills in having these conversations with their direct reports. We learned that about two-thirds are trained in this area; however, a majority of survey respondents don’t think the discussions are effective. What’s a company to do?
Many companies say they are preparing to address issues around gender pay equity, making this a good time for management and boards to reinforce with HR that they should be covering the basics of pay with the entire workforce, too. Explaining the concepts of competitive pay positioning (benchmarking), pay mix (total direct compensation components), governance (pay policies and administration), and pay for performance (incentive pay, shareholder alignment) should be ingrained your company’s compensation messaging strategy. And, your company should make certain that those who are trained to have discussions about compensation can do so with confidence and comfort.
PS: I’m still not convinced that median employee pay won’t rear its controversial head at some point in the future. Any gamblers out there?
