Monday, September 25, 2023

Payment transparency: a business survival strategy

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Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

Thanh Nguyen is co-founder and CEO of OpenCompthat late-growth companies use to save money, retain talent, and comply with wage laws.

Dramatic economic and legal changes have stormed the corporate market this year.

For months, investment dollars poured into private companies at an unprecedented rate, and those organizations did crazy things to compete for talent that, in today’s light, was not fundamentally sound. But inflation has nipped the hiring wave and the salary bubble in the bud.

New legislation and workers’ demands have also identified pay transparency and pay scales as a top priority for business. Companies can’t have a reward strategy (or reward philosophy) without salary scales, both of which underpin every workforce plan and budget.

Payment transparency is now law in 17 states, and it’s coming to others soon. Starting next year, for example, it will be possible for employers in California must contain salary bands in all vacancies and publicly report how much certain groups of employees are paid.

I led global compensation at a well-known software company from inception through IPO, then co-lead a consulting firm for over 15 years before co-founding my current company, an information platform that brings clarity to any compensation decision. In this article, I’ll explore the often-overlooked but necessary relationship between payroll transparency and a company’s survival, highlighting three areas where payroll transparency should emerge in—if not the construction of—business strategy and operations.

The relationship between wage transparency and firm survival

I notice that many professionals miss the integral relationship between wage transparency and business survival. On a technical level, having reliable payroll is the foundation of any reliable financial plan. (Payments groups influence the workforce plan, which is the largest spending area for almost any company.) In addition, the practice influences positive, productive cultures and teams, which I’ve often seen attracting and retaining top talent.

To be transparent about pay, a company must have the following.

• Up-to-date compensation data relevant to exact size, stage, industry and location.

• Defined salary scales based on competitive market analysis.

• A personnel plan based on those salary scales.

• A budget in which the personnel plan is incorporated.

In other words, without payroll transparency, no budget can be built – or if it does, it cannot be trusted.

Three mission-critical payroll transparency applications

Pay transparency can be applied to three areas of any business: compensation planning, the interview and offer process, and earnings cycles and adjustments. Better yet, payroll transparency can shape the strategy, infrastructure, and operations of each.

1. Compensation Scheduling

Compensation is the largest spending area of ​​any company and affects how employees live each day. But until now, compensation has lived in a black box that few people understand — not even the HR professionals responsible for compensation planning. In addition, compensation data is old, siled and dangerously manual.

But I see that employers and employees are going to deal with rewards differently. They optimize the effectiveness of compensation programs with predictive intelligent benchmarking and design tools that can provide insights, suggestions and guidance with every compensation planning decision. These innovative professionals are also beginning to empower managers, recruiters, employees, and candidates to get the most up-to-date information when making compensation decisions about offers, adjustments, earnings cycles, and more.

Take action by finding a resource that offers:

• Data not older than a quarter.

• Benchmarks that compare jobs based on similar responsibilities, not similar titles.

• The ability to analyze data by company size, financing, industry and location.

2. The interview and offer process

In my opinion, top talent is impervious to recessions, so times of economic volatility are perfect for opportunistic companies. By law, vacancies must contain a salary scale. And pay should be discussed in the initial interview, as well as the salary range of the position, the source of the pay data, the company’s pay philosophy, and potential career paths. From there, creating offers manually can cause recruiters and managers to inadvertently go off-policy or out of budget, unwittingly creating wage differentials and jeopardizing the cash runway.

Automated workflows and approvals can guide compensation decisions in the field to ensure compensation planning is intelligently applied. Look for integrated systems that:

• Are built on solid data.

• Enable scenario modeling and workforce scheduling.

• Link selected workforce plans directly to the ability to create offers.

• Optimize offer letters for acceptance – within your policy and budget.

• Automate approvals and workflows.

• Deliver quotations directly to candidates.

After you’ve chosen a solution, perform a pay equality audit. Develop a reward philosophy and assess cash/equity scenarios to apply in your organization. After selecting a scenario, share your philosophy and pay the audit results to your entire company, explaining that you will make adjustments as needed. Train managers to follow up on team members in group and one-on-one formats. Leave plenty of time for questions and answers and explain how to proceed with payroll audits. Make sure you handle the customizations individually with the necessary team members. Update payroll and make adjustments once a year within a earnings cycle that leverages payroll transparency best practices.

3. Earning Cycles and Adjustments

When companies don’t hire heads aggressively, the focus turns to retention. Dollars, time and attention must be reallocated to ensure that all the hard work put into the battle for talent is used to ensure that they actually stay on board successfully. Inflation and market volatility can make many employees want to stay put and can put pressure on HR professionals to respond strategically with a well-run earnings cycle.

Consider making market adjustments, especially for high performers. Communicate often about career development programs, especially to top talent. Spot bonuses can also be considered, although they should be done in the context of cash runway.

Pay transparency is more than a competitive advantage for talent. It is more than a competitive business advantage. It is core to the survival of businesses in today’s market. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

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