Fostering a Culture of Pay Transparency

Openly discussing individual salaries is slowly becoming less taboo as younger generations enter the workforce, but it does not mean an employer has to go “all in” to embrace pay transparency in pay administration.

Transparency in compensation practices can positively impact workplace culture. Pay is a sensitive and personal subject for many, so when staff are comfortable and feel trusting in this area, it can translate to overall trust in the organization.

Trust and Transparency

A 2021 Society for Human Resource Management (SHRM) survey found that pay equity audits and transparency foster trust within organizations. The findings support best practices, such as employers proactively conducting self-evaluations of pay and correcting improper disparities in compensation, as well as discussing pay expectations with staff and being transparent regarding how pay decisions are made.

One of the more interesting findings is that 91 percent of surveyed employees who believe their organization is transparent about pay decisions also said they trust that their organization pays people equally for the same work regardless of race, gender, or ethnicity. Of those who believe their organization lacks transparency, only 49 percent believe that employees are paid equally for the same work.

But the research found that while 94 percent of HR professionals think it is important for organizations to exhibit transparency, only 47 percent reported that their organization actually is transparent regarding pay.

Board Policies

An educational entity’s DEA, DEAA, and DEAB Legal and Local policies contain a wealth of information regarding local policies and state and federal regulations governing employee pay practices. Policy DEA(LOCAL) specifically describes the process by which a compensation plan is adopted within a district, community college, or education service center (ESC).

Standard policy language indicates the head of the organization (e.g., superintendent, president, executive director) shall recommend an annual compensation plan for all employees, and the plan may include wage and salary structures, stipends, benefits, and incentives. Importantly, the plan should be reviewed and adopted annually by the board of trustees in conjunction with the budget adoption process. Additionally, the superintendent and designee(s) should administer the compensation plan consistent with board policies, the annual board approved budget, and administrative guidelines.

Resources

Compensation plan templates for districts, region service centers, and colleges, available in the HR Library (member login required), can be used to format and organize compensation plan information. The templates provide sample information organized into the following sections:

• Pay structures
• Stipends and extracurricular duty pay
• Incentives and performance pay
• Summer school and supplemental pay
• Other compensation information

A procedures document should be used by entities to document and manage pay procedures. All areas of the procedures should be reviewed to ensure content is aligned with the processes established or intended. An editable pay procedures template, available in the HR Library, details administrative procedures for placing new hires, calculating pay increases, and other compensation administration guidelines. The locally developed procedures should be maintained and updated regularly by HR and used in conjunction with the compensation plan adopted by the board.

Putting It Together

Creating a culture that promotes clarity and understanding in pay practices will yield benefits throughout the employee life cycle. To maintain a culture of openness and transparency, it is important that employees have confidence in the information received. For this reason, entities should ensure that staff members who take employee questions about compensation have a thorough understanding of the practices in place and are effective in communicating them to staff.

Additionally, it is worth noting that while employee pay records for educational entities are subject to public information requests, this should not be the mechanism employees feel they need to use to verify pay fairness. Such requests could indicate a lack of a feeling of transparency in compensation practices among employees.

Below are suggestions to achieve a culture of clear compensation practices:

• Include starting pay or pay ranges with job postings.
• Make pay plans and structures available on the entity website.
• Discuss compensation at the first stage of interviews.
• Document pay practices in a compensation manual and make it available upon request.
• Provide employees with an annual total compensation statement (model available in the HR Library).
• Communicate how employees can inquire about their pay.