Coming Clean About Transparency
Kim Walter, CTCBA1.20.2010
Is It Possible or Has It Become Just Another “Dirty” Word?
Originally printed in the Central Texas Compensation & Benefits Association Newsletter, 11/30/09
Transparency is one of the latest business buzzwords to affect total rewards professionals. The Compensation Roundtable published a report in 2006 indicating that 100% of respondents expected to become more transparent about their compensation programs in the next three years.
So here we are three years later and we all want to assess what impact more transparency has had on our organizations. . .but can we really assess if we have become more transparent before we even assess what more transparency means? That’s the unfortunate aspect of a buzz‐word—it becomes a word that is sufficiently vague enough to have multiple meanings assigned to it yet doesn’t really explain anything (think of “value‐add” and “leverage”).
I’d like to propose a different concept: that instead of aiming for transparency, we aim for clarity; and that by aiming for clarity, we will be better to able to assess that impact on our organizations. Now, I’m not the first to make the distinction that transparency is not as good as clarity. (See Ann Bares’s thought‐provoking blog about this at Compensation Force:
In summary of her blog, transparency is problematic for total rewards professionals for a number of reasons:
If full transparency is access to all the facts, then full transparency is neither appropriate nor is it likely in the cards for your organization's reward program. This is because the facts which legitimately impact compensation include not only pay program details and not only employee salaries themselves, but also information on each individual's education, certifications, work experience and performance appraisal results and ratings.
and that we should be trying instead to achieve clarity:
Nor would full possession of all this information necessarily lead to understanding because of … the wide gulf that exists between having access to the facts and truly understanding what they mean.
I completely agree with this, especially the idea that there is a disparity between having access to facts and actually understanding what said facts mean. This is where we as total rewards professionals make a difference to our organizations. The more clarity we bring to our programs, the more our employees and managers will have full understanding of the facts. I’ve found that helping managers and employees understand the decision making process answers their questions, making them less likely to want or need “full transparency”. My experience is similar to respondents in the 2006 Compensation Roundtable report – the vast majority (82%) were more worried about the resources needed to effectively communicate compensation information than about the increase in employees asking questions about their pay (36%).
I’ve found the following questions to be helpful in assessing the clarity of your total rewards programs:
- What total rewards information do you currently communicate to employees and managers? (i.e. if you have salary ranges, then do you share those ranges with employees and on what basis?)
- What total rewards information have you communicated in the past and how have you communicated changes to your programs?
- How do you communicate this information and have you assessed whether those forms of communication are effective in promoting understanding? (i.e. if your company culture is to announce important information at all‐hands meetings, don’t send out changes to your bonus programs in a mass email.)
In many ways, understanding where your organization is in the process of communicating HR or comp programs allows you to design a strategy for both increasing the understanding of your population and implementing changes to your programs effectively. At one company where I implemented salary ranges for the first time in the company’s history, the initial presentation to the employee population gave them the background on how we compared ourselves to the market, what kinds of companies were considered “competitors” for talent, and how we built the career progression that the salary ranges were based on. When each individual’s salary range was eventually shared with them, there were very few surprises to people because they understood how the process worked and how we got to the range they were being shown.
In closing, I would say that a lot of clarity comes from giving context – the parameters or variables involved in the decision, the pros and cons you encounter during the process, and the goals you hope to achieve with the program. Salary ranges, variable incentive programs, stock options ‐ these are all tools…tools we use to attract, motive, and retain our employees. And you don’t provide a tool to someone without first teaching them how to use it.
Article reprinted with permission from the author and the Central Texas Compensation and Benefits Association (CTBCA). Learn more about the CTBCA via http://www.ctcba.org/.
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