“Are You Underpaid?” That’s the question in a high-profile Wall Street Journal article this week. It’s likely to be a question many in the US workforce who are not CEOs will be asking themselves in the coming weeks. And they may take the question to their company’s HR department.
Among those of us who have been in the CEO Pay Ratio trenches since the rule was announced, the media hype has been predicted from the beginning. While many, especially in the HR profession, are still hoping that this inaugural year of disclosures will fly under the radar, we cannot underestimate the potential workforce confusion that might lay ahead. Even more important is avoiding adding to the confusion by reacting to employee questions with data and details that do not keep individuals focused on what matters most here—comparing yourself to the median employee and/or the CEO is unproductive.
We have offered a number of guidelines to help companies prepare for their own ratio disclosure and the time for action is now. Make sure your organization is ready internally, even if you believe the chance for upheaval is low. With the potential for unnecessary angst and a loss in productivity, this really is a case of “better safe than sorry.”
Whether you have already filed your disclosure or are preparing to do so sometime this Spring, it is a wise idea to prepare a select internal constituency (for example, HR business partners or senior-level HR managers, front-line managers, office heads, etc.) with basic background on the ratio, such as what the CEO pay ratio is and where the disclosure information is located. Provide guidance on the company’s position, its compensation philosophy, and its formal decision-making process and let them know how to respond if they start to receive questions.
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