Hot topic: Greater pay transparency

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What issues does greater pay transparency throw up for organisations, and how can they address these?

The BBC revealed the salaries of staff earning more than £150,000 in its annual report for the first time, potentially representing a key point in the journey to greater pay transparency in general.

Helen Giles, executive director of people and governance at St Mungo’s, says:

"If you can’t confidently articulate in a couple of sentences why any one person in your organisation is paid more than another then you need to rethink your whole pay system.

"My advice is to bin complex pay systems and structures and look very carefully at the evidence – or the lack of it – around the benefits of contributions-related pay. Beware of the amount of discretion managers are given over pay at the point of hiring or in determining pay rises. Remember that pay is not a motivator, but if it is perceived to be unfair it can be a massive demotivator.

"These days incremental pay scales are scorned as being out of the ark, inflexible and ‘rewarding people just for sticking around’. Personally I have found them a blessing for main grade roles in terms of their simplicity and transparency; motivating people with a sense of progression in return for relatively modest annual increases. For senior and professional roles we pay market-tested spot rates. With this blended approach we attract and keep high performers, we don’t have a gender pay gap problem, and we never get grievances about pay differentials.

Nikki Duncan, an employment solicitor at Michelmores, says:

"The much-publicised gender pay gap among senior BBC presenters is just one example of hidden risks for employers around gender pay differentials.

"Employers with 250 or more staff will need to publish specific gender pay stats by next April. Unexplained pay gaps could then affect staff recruitment and retention. Therefore businesses need to make good use of the scope to publish an explanation of their stats, and the steps being taken to close the gap.

"Stats are likely to be used in sexual discrimination tribunal claims and they may also feature in specific equal pay claims. Employers should therefore use the next few months to review those stats and do some strategic planning on how they aim to reduce the pay gap, so that they have a positive message to tell when they publish their data next April."

Check back tomorrow for part two of this Hot Topic, with Frank Douglas and Stefan Stern

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