This week, CEO and Founder of Juno, Ally Fekaiki, sat down with Virgile Raingeard (CEO at Figures), Theo Margolius (Co-Founder at Otta), and Mariabrisa Olivares (Chief People Officer at Owkin), to discuss pay transparency.
Taking the insights from these industry experts and founders, we’re going to explore the topic of pay transparency - an increasingly popular concept in the workplace that refers to the open sharing of information related to employee compensation.
In a transparent pay system, all employees have access to information about the pay ranges and structures within the organisation, and they can see how their own salaries and benefits compare to those of their colleagues.
This level of transparency can be a powerful tool for promoting fairness, reducing discrimination, and increasing employee satisfaction and engagement. However, it also poses some challenges and raises questions about privacy, confidentiality, and how to communicate pay information effectively.
In this article, we will explore what pay transparency is, why it matters, and some of the potential benefits and drawbacks of implementing it in your organisation.
Is Pay Transparency Just About Sharing Salaries?
Pay transparency is not just about sharing individual salaries, but rather involves a broader approach to communicating information about compensation within an organization.
While sharing individual salaries may be part of a transparent pay system, it is not the only or necessarily the most effective way to promote fairness and openness around pay.
Pay transparency can also include sharing information about pay structures, ranges, and policies, as well as providing employees with tools and resources to help them understand how their pay is determined and what they can do to negotiate for fair compensation.
Additionally, companies can be transparent about other aspects of the business’s money, without directly having salary transparency - it really depends on what works correctly for the type of culture the business has and of course, what the employees do and don’t want in terms of transparency.
“Transparency is super important in the sense that everybody knows at all times how much money the company has in the bank, how much burn we have left, how much runway we have left, etc. We know if there's feedback about me that's positive or negative and I share it, and we try and be as transparent as possible and communicate very effectively. It's good leadership to do that.”
Ally Fekaiki, CEO and Founder of Juno
What Are The Benefits of Pay Transparency?
Pay transparency offers a range of potential benefits for both employees and organizations.
For employees, it can help to promote a sense of fairness and equity, as they have greater visibility into how their pay compares to that of their colleagues and how it is determined.
This can help to reduce the likelihood of pay discrimination and increase trust and engagement among employees.
Pay transparency can also help employees to better understand their compensation and make informed decisions about their career paths and negotiations.
For organizations, pay transparency can support recruitment and retention efforts by demonstrating a commitment to fairness and transparency.
It can also help to identify and address disparities or inconsistencies in pay practices, which can ultimately reduce legal risks and improve overall organizational performance.
Additionally, pay transparency can foster a more collaborative and trusting workplace culture, which can lead to improved communication, innovation, and productivity.
“I think one of the things about pay transparency is that there's a considerable network effect - if everybody does it, it's going to make the world a much better place, right?"
Ally Fekaiki, CEO and Founder of Juno
“You get 66% more applications if you hav a sub-transparent salary range on your job, regardless of what the salary is. Even if you're not super competitive, it still helps you attract people at the right level. So if you're not being transparent, that you're kind of shooting yourself in the foot.”
Theo Margolius, Co-Founder and COO, Otta
What Are The Challenges of Pay Transparency?
While pay transparency offers many potential benefits, there are also several challenges that organizations may face when implementing this approach.
One key challenge is the need to balance transparency with privacy and confidentiality concerns, particularly around individual salaries and compensation packages.
Organizations must carefully consider how to share pay information without violating employee privacy rights or creating unnecessary tension or conflict among colleagues.
Additionally, pay transparency may require the creation of clear and effective communication strategies to ensure that employees understand the information being shared and can use it to make informed decisions about their careers and compensation, which can be time-consuming to implement if a company hasn’t already built clear communication into their company culture.
“There’s an emotional part of this. You want to be transparent with what everyone's making, but then you have to ask a question of, “do you want other people and colleagues knowing what you make?”. Is it up to the opinion of somebody else to decide whether you’re overpaid? What does this then create, culturally?”
Ally Fekaiki, CEO and Founder of Juno
“Getting that buy-in [from leaders first] and then going down to employees and candidates [is important]. If you don't have those solid foundations in place, it's very hard to do [pay transparency] well without creating a mess.
Theo Margolius, Co-Founder and COO, Otta
How To Become More Transparent As A Business
There are several ways in which companies can practice pay transparency. One approach is to establish clear and consistent pay structures and policies that are communicated openly to all employees.
This can include providing information about pay ranges, benefits, and bonuses, as well as outlining how pay is determined and what factors are taken into consideration.
Another strategy is to provide employees with access to salary information and tools that allow them to compare their pay to that of their colleagues and peers in similar roles.
This can help employees to understand how their pay fits within the larger context of the organization and identify any potential disparities or areas for negotiation.
Additionally, companies can encourage open communication and dialogue around pay, such as by providing regular opportunities for employees to discuss their compensation with managers or HR representatives.
Finally, companies can promote a culture of transparency and fairness by emphasizing the importance of openness and collaboration, and by ensuring that pay practices align with organizational values and goals.
"Salary transparency should become an important part of your internal culture around compensation for managers and external discussions with candidates around pay. Listen to what your employees are saying - are they comfortable with the level of transparency? Do they want more or less? What else can you do better around this? And lastly, listen to what the market is saying as well."
Theo Margolius, Co-Founder and COO, Otta
"The journey to salary transparency starts with structuring pay, not transparency itself. Start by thinking about structuring your pay, removing the bias, removing the current inequalities, etc. Start [discussing pay transparency] with leadership, then spread out to managers and onboard them into the decision, getting them to have some of these conversations to extended to the employees and then extended to the candidates. Don't instantly go "boom" and open up transparency everywhere."
Virgile Raingeard, CEO, Figures
Dive Into The Full Conversation
Want to know more about pay transparency and how your company can get started on the journey towards being more transparent?
Watch the full conversation from the Otta, Figures, Owkin, and Juno webinar, here.
