5 Pay Transparency Challenges for Managers (And How to Overcome Them)

In many organisations, managers are caught between a rock and a hard place. They don’t set the rules around compensation, but they’re expected to explain and defend them. 

When pay conversations get personal or emotional, managers are usually in the firing line. And if transparency exposes inequities and inconsistencies, they’re the ones who are left to deal with the fallout. 

In this article, we’ll explore five key obstacles managers will face in the pay transparency era — and how employers can help them rise to the challenge. 

Why pay transparency matters now 

Thanks to the EU Pay Transparency Directive, pay transparency is no longer optional for employers in Europe. The directive introduces new obligations for employers and stronger rights for employees — and it will come into effect across the EU by June 2026 at the latest.

If you haven’t started preparing for pay transparency, there’s still time — but only just. Getting your managers ready to handle pay conversations in a more transparent workplace will be a crucial part of that preparation.

5 key pay transparency challenges for managers

Ready to jump in? Here are five key challenges that managers will face in the pay transparency era — keep reading to learn how HR can support managers in overcoming each one.

1. Understanding the company’s stance on pay 

Managers are often the first point of contact when employees have questions about pay. They’re expected to explain decisions and provide clear answers — but they’re not always given the context or information they need.

For example, managers may not fully understand the company’s compensation philosophy or the context behind key pay decisions — especially legacy decisions made before their time. This can put managers in a tricky position as they try to answer employees honestly and openly with limited information.

2. Balancing transparency and privacy 

In the pay transparency era, every company will have to determine the right level of openness for their organisation. Preparing managers for this shift means helping them understand not only what they should share — but also what they must keep confidential.

As employers grow more accustomed to pay transparency, managers may face pressure to share information or speculate about colleagues’ pay — which is rarely appropriate. At the same time, they may need to address privacy concerns, especially from older employees who may be less comfortable with increased transparency.

3. Discussing pay confidently and openly 

Many managers aren’t used to discussing pay openly and transparently. Some find these conversations awkward or uncomfortable, while others simply lack confidence in their ability to accurately respond to employee questions.

This is especially true in organisations where employees are promoted to management based on technical skills or job performance — and not necessarily strong communication or leadership abilities. These managers may lack the experience to discuss pay clearly and effectively and struggle to explain complex compensation decisions or handle follow-up questions.

4. Handling emotional conversations 

Pay discussions are both deeply personal and important to employees, so it’s natural for emotions to run high — especially when managers have to deliver difficult news. Employees may express disappointment, frustration and even anger, and managers often find themselves in the firing line.

One of the biggest challenges for managers is keeping the conversation constructive while acknowledging employees’ feelings. It’s important to show empathy without letting emotions derail the conversation — which doesn’t come naturally to everyone. Of course, managers also need to be careful not to speak negatively about the company or make promises they can’t keep even in the face of strong feelings.

5. Navigating inconsistencies and inequities 

The whole point of pay transparency is to shine a light on pay gaps and inconsistencies, whether they’re due to past decisions or policies, market shifts or even unconscious bias. And when these issues arise, managers are often the ones tasked with resolving them. 

Part of this involves making pay adjustments where possible and escalating concerns when needed to ensure inequities are swiftly addressed. But managers also need to be adept at communicating with employees about these issues. This means striking a tricky balance between acknowledging unfairness and acting as an advocate for the company and its policies. 

How to set managers up for success in pay transparency conversations: 7 steps to follow

As the pay transparency era approaches, managers need the skills and knowledge to lead open, confident and constructive conversations about pay. Preparing for transparency means investing in education and training so your managers feel informed, supported and ready. Here are seven practical tips to help you equip your management team for success:

1. Start with education on legislation and policies: Start with the basics: managers need a clear understanding of both the legal requirements that apply to your business and your company’s internal approach to pay transparency. This knowledge will give them the confidence to engage in clear, positive and compliant conversations with employees. 
2. Emphasise active listening: One of the most important skills in pay conversations isn’t about sharing information at all, but giving employees space to express concerns without reacting defensively or instinctively. We’re talking about active listening — training managers in this skill can make a real difference to trust and engagement.
3. Provide a consistent messaging framework: Equipping managers with clear, aligned messaging that reflects your compensation philosophy and explains how pay decisions are made can help build credibility and trust. Having a simple framework and approved talking points can help managers feel more confident and ensure messaging is consistent across the organisation. 
4. Use scenario-based training: Not every manager is a natural communicator — and that’s OK. To help them build their skills and gain confidence, try using scenario-based training. This lets managers practice discussing sensitive information and answering difficult questions in a safe environment through role-playing exercises. Practice makes perfect, after all!  
5. Provide ongoing support and guidance: Pay transparency isn’t a one-time initiative — it’s an ongoing process. As policies and laws evolve, managers will need continuous access to support and updated resources. Things like FAQs, decision trees and clear escalation paths act as a safety net for managers and ensure employees get accurate and consistent answers to their questions. 
6. Balance numbers and empathy: Managers should be able to back up decisions with solid data, including benchmarks, surveys and internal pay ranges. But effective pay conversations are not just about numbers — they’re also about people. Training managers to balance data with empathy will be a key success factor in the pay transparency era. 
7. Create feedback loops and keep adjusting: Adjusting to pay transparency won’t happen overnight. Encourage regular feedback from managers on what’s working and what they’re struggling with in pay conversations. Then, use that info to update your resources and adapt your approach over time. 

Other ways to prepare for pay transparency 

Training your managers is a crucial part of preparing for pay transparency — but it’s only one piece of the puzzle. To get your organisation ready, you should also consider:

• Refining your compensation philosophy and policies. 
• Establishing a clear job categorisation framework (if you haven’t already)
• Running a pay equity audit to identify and address discrepancies. 
• Choosing the right compensation tools (like Figures) to guide pay decisions. 
• Rethinking your hiring process to build in transparency for jobseekers. 
• Building a communication plan to clearly explain your approach to employees. 

Need help getting started? Explore more tips and resources right here on the blog — or check out our full pay transparency checklist for a step-by-step guide.