In recent years, discussions (and actions!) around pay equity have gained momentum. Since the adoption of Quebec’s Pay Equity Act in 1997, significant progress has been made in reducing the wage gap between men and women. However, while pay equity aims to guarantee fair remuneration between jobs of equivalent value, the question remains: how can we ensure sufficient pay transparency to avoid unjustified disparities in all respects?
Pay transparency is therefore an issue that complements pay equity. Once a taboo subject, it is now at the heart of discussions in companies and in public policy. Although not as legally binding as pay equity, transparency has a direct influence on employee trust and commitment, as well as on the perception of organizational justice.
But why this sudden craze? Because expectations are changing! More and more employees are demanding greater visibility of their remuneration structure. And while some companies are still reluctant to take this step, others have already realized the many benefits it can bring.
Pay transparency in Quebec and elsewhere
In Quebec, all collective agreements have been public and accessible for several decades. This was the first step towards wage transparency in our province. However, we still have a long way to go, particularly in the private sector, to make pay transparency a widespread HR practice.
New legislation is emerging around the world, forcing employers to review their compensation policies. Just think of Europe, the United States and even other Canadian provinces such as British Columbia and Ontario.
What are the positive impacts of salary transparency?
Adopting a more open approach to compensation can positively transform an organization’s internal dynamics. Here are the main benefits observed:
1. Building employee confidence
When employees understand the criteria that determine their salary, they feel more confident in their managers, and by extension, in the company as a whole. Greater transparency reduces feelings of opacity and promotes a healthy organizational culture.
2. Increased perception of fairness and organizational justice
Unjustified pay discrepancies can lead to frustration and a tense working environment. By clearly communicating compensation criteria, companies can minimize these tensions and encourage a sense of fairness.
3. Eliminating pay inequities
Greater transparency makes it easier to identify unjustified pay discrepancies, particularly those linked to gender disparities. In a job market where pay equity is a priority, it becomes essential to align compensation policy with the values of inclusion and diversity.
4. Increased mobilization and productivity
An employee who understands and accepts his or her salary will be more committed. Transparency reduces anxiety and fosters a work climate where everyone can focus on their objectives without accumulating frustrations related to their salary situation.
5. Enhanced brand image and appeal
Talent today is looking for companies where openness and fairness prevail. Displaying a transparent salary policy can become a major competitive advantage in attracting and retaining top talent.
What are the challenges to successful implementation?
While the benefits of pay transparency are numerous, its application must be thoughtful and progressive. Here are some of the challenges employers need to be aware of:
1. Increased pressure on management and HR teams
Salary decisions must be rigorously justified, which requires a great deal of analysis and communication on the part of managers and human resources staff.
2. Potential for internal conflicts
Comparing salaries between employees can sometimes cause tension. To avoid this uncomfortable situation, it is essential to accompany salary transparency with training and clear explanations.
3. A rigorous salary structure
A policy of transparency can only be effective if the company has a solid and coherent pay scale. It is therefore essential to establish objective, uniform criteria for determining remuneration.
How do you set up a transparent pay policy?
Adopting salary transparency doesn’t mean immediately disclosing all salaries, but rather moving forward step by step. Here are a few recommendations for a successful transition:
1. Assess the current situation
Before opting for greater transparency, it’s crucial to assess the current state of your pay policy. Ask yourself the right questions:
- Are salaries defined according to clear criteria?
- Is there a formal salary structure and/or salary increase process?
Are managers trained to discuss wages with their teams?
2. Establish a structured pay scale
A well-defined salary structure is the basis of successful transparency. It is important to take several factors into account when establishing this grid:
- Objective job evaluation using a proven and certified method
- Pay equity and your legal obligations
- Employee experience and seniority
- Progression in the job
- Positioning in relation to employees in the same position
- Positioning a job in relation to other jobs in the company
- Remuneration standards in the sector or field of employment
3. Train managers in salary communication
It is essential that managers are equipped to talk confidently and transparently with every member of their team about pay. Training in effective compensation management and equity principles can be of great benefit.
4. Gradually disclose salary information
Rather than making all salaries public immediately, we recommend that you do so gradually. Start by communicating elements of your salary-setting methodology (salary policy) to your team members.
Then, once you’ve structured your salary scales properly and made sure there’s no longer any inequity, you could, for example, display part of the salary scale in your job ad descriptions.
5. Open and transparent dialogue
We suggest that you first open a dialogue with each employee, on an individual basis, by explaining the salary policy and salary-setting methodology.
Subsequently, group discussion sessions on the benefits offered will ensure a common understanding of these benefits, while answering employees’ questions.
This honest and transparent dialogue will help to promote support for your salary policy and defuse any tensions.
There are also other concrete ways of increasing transparency, such as integrating clear guidelines into salary review processes or disseminating internal equity indicators. At Flexia, we can help you identify and implement these levers, tailored to your organizational reality.
To remember
Pay transparency is much more than just a trend: it represents a powerful lever for building trust, improving fairness and fostering a positive working climate. However, it requires thoughtful, structured implementation to maximize its benefits and minimize the risk of internal tensions.
Companies that make this shift benefit from a better image of their employer brand, greater mobilization of their teams and an enhanced ability to attract and retain talent.
So why not take the plunge (big or small!) right now?
Anthony Langlois, CHRP
HR Consultant
Sources :
- Compensation: transparency is an opportunityMélissa Pilon, CHRP, Carrefour RH, January 23, 2020.
- Trend towards transparency: British Columbia passes wage transparency legislationKelly O’Ferrall, Partner, Labour and Employment Law, Osler, June 14, 2023.
- Canadian jurisdictions enacting pay transparency legislation, but more work to be doneJulius Melnitzer, Benefits Canada, November 21, 2023.
