Guest post by RealHR

There was a time when compensation discussions were reserved for offer letters and annual performance reviews, but as with so many other aspects of the employer-employee relationship, things have changed. Today, pay transparency is top of mind for both employers and employees.

Legislative mandates have driven some of this focus, but a growing number of employers across all industries are recognizing that openly discussing their compensation practices can benefit their organizations—building more meaningful connections with their workforces and improving bottom lines. 

Nonprofit organizations are not exempt from this sea of change, and in this article, we’ll introduce three concepts to jumpstart your thinking about pay transparency:

• Defining Pay Transparency and the Law

• The Benefits of Pay Transparency in the Absence of Legislation

• Things to Consider When Implementing a Pay Transparency Strategy

With these themes in mind, you will be able to begin the process of determining how and to what extent pay transparency will work in your organization.

Defining Pay Transparency and the Law 

Pay transparency is the idea of sharing compensation policies, practices, and strategies with job applicants, your existing workforce, and, to some extent, the public. This can be accomplished in various ways, but the most common way is to include such information in job postings. 

Several states and municipalities have enacted legislation requiring employers to provide pay ranges in job postings. The details vary from jurisdiction to jurisdiction, but every law focuses on making pay data available during the hiring process. 

Determining if one of these laws applies to your nonprofit is more complex than identifying your business headquarters. For example, employers with five or more workers in Jersey City must comply with the city’s pay transparency law, even if this location is not their primary place of business. 

Other localities do not require an employer to have a physical presence in their state or city, extending their law’s reach to remote workers (e.g., Colorado and Washington state). If an organization meets the requisite number of employees working in these states (and the number may be as low as one), the employer must disclose its pay ranges. 

Also, some of these legal schemes encompass an employer’s existing workforce. In these locales, employers must provide pay scale information if an employee requests it for their current position.

Pay transparency is rapidly developing, with new laws being introduced regularly. For example, both the U.S. Congress and the state of New Jersey have bills pending on this very subject. So, it is important to consult with legal counsel or other HR professionals with expertise in this area to stay up to date.

The Benefits of Pay Transparency in the Absence of Legislation

Aside from any legal requirements, being straightforward about your compensation package is a best practice that garners several organizational benefits. By embracing a pay transparency model, you will:

• Build trust with your prospective and current employee populations

• Identify pay gaps

• Erode barriers by addressing inequities

• Foster a positive, inclusive culture 

• Improve your public and employer brand

• Engage in more effective recruiting by attracting salary appropriate candidates 

• Improve retention rates 

By sharing pay practices, employers and nonprofit leaders provide candidates and current employees with an accurate picture of their compensation. Empowered with this knowledge, individuals will make better employment decisions based on accurate information. 

Pay transparency also engenders trust and a commitment to your organization and its mission. People want to associate with, work for, and support forward-thinking nonprofits.

Things to Consider When Implementing a Pay Transparency Strategy

Entering the world of pay transparency is more than just publishing pay ranges in job postings. Proper preparation and planning are necessary for a successful implementation, so it is important to invest the time to think through the process.

Key steps to take before rolling out a pay transparency program include:

• Defining your pay philosophy and strategy

• Comparing your pay structure to the competition and adjusting as appropriate

• Reviewing current salaries to ensure they are fair, equitable and defensible

• Identifying and remedying disparities

• Communicating effectively and often

• Share pay data in a manner and to an extent that fits your culture and moves your objectives forward

• Formalize communications for your existing workforce about what pay information you will release and the timing

• Establish channels for employees to access supervisors so they may ask questions, express concerns, and receive prompt answers

Nonprofits often struggle to compete with for-profit employers solely based on compensation, and revealing pay ranges may generate additional conversations or negotiations regarding the right salary level for given individuals. To effectively respond, it is critical to focus compensation discussions and communications—to both candidates and employees—on a total rewards approach. 

In addition to stating pay scales, highlight the value-added benefits you provide. As a nonprofit, emphasize your culture and the work you do for the community. For many seeking nonprofit employment, the mission is a key consideration. When they can connect that mission to your pay strategy, the attraction to join your team and stay with the organization is reinforced. 

Pay transparency can be something imposed on you or something you champion as a guiding principle. If you accept it as a best practice, developing your strategy will result in an improved compensation philosophy, better connections with candidates, and increased workforce satisfaction.