Preparing for Pay Transparency: 6 Key Insights From Our Webinar

April 12, 2024
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EU countries now have just over two years to transpose the rules set out in the new pay transparency directive into national law. That means that, for businesses operating in those countries, the best time to start preparing for pay transparency is right now. 

But where to start? Our CEO and Founder Virgile Raingeard recently teamed up with Andrea Fort, Talent Acquisition Team Lead at Factorial, to host a webinar on how businesses can prepare for the pay transparency era. 

Read on for some key highlights from the event. 

6 learnings from our pay transparency webinar 

Ready? Here are six things we learned from our pay transparency webinar: 

1. Gender inequality is not ‘fixed’

Pay transparency and gender inequality are intrinsically linked together. The whole purpose of the EU pay transparency directive is to reduce (or even eliminate) the gender pay gap in Europe. And our own research shows that more transparent companies tend to have smaller gender pay gaps (and vice versa).

But it’s also true that, outside of compensation circles, there’s a tendency to think about gender inequality as a thing of the past. After all, EU law makes it illegal to pay men and women different salaries for the same role. So isn’t this problem already solved? 

In short, no — as Andrea was keen to highlight. Specifically, here are some of the stats that she brought to our attention during the webinar, showing that gender inequality is very much not already ‘fixed’: 

So yes, there’s still a lot of work to do if we want to close the gender pay gap in Europe — and pay transparency is key to achieving that goal.

2. Pay transparency will mean more work for HR teams 

The EU pay transparency directive will radically change how businesses across Europe handle compensation — and that’s going to mean a bunch more work for HR teams. 

We’ve talked about the directive pretty extensively on this blog, but in case you need a refresher, here’s what’s set to change: 

  • Companies will be banned from asking candidates about their salary history. 
  • Companies will be required to share salary information on their job ads. 
  • Companies will face new reporting requirements related to their gender pay gap and will have to be transparent about the criteria they use to determine pay. 
  • Employees will have the right to request information about how their pay compares to colleagues doing the same or similar work. 
  • The burden of proof in pay discrimination cases will rest with the employer instead of the employee. 

All of this sets the path for a fairer, more equitable compensation landscape — which we’re pretty excited about here at Figures. But there’s also no denying that a lot of the elements listed above will add a lot of work for HR teams — who are already under pressure. 

The good news? There are still two years until these rules will come into play in most countries, which means there’s still time to prepare. HR leaders should start thinking now about the extra resources their teams will need once the directive is in force, and make plans to provide them. 

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3. When it comes to talent attraction, sometimes less is more

Say what you like about the benefits of pay transparency… some companies just feel queasy about the idea of including salary information in their job ads. Specifically, they worry that including this information will put off qualified candidates from applying, leaving them with a much smaller applicant pool. 

But according to Andrea, this is not necessarily a problem — because the candidates you do attract will be much more aligned with you as an organisation. In other words, by giving candidates this information upfront, you can ensure that they know what to expect and won’t be disappointed when it comes to the offer stage. 

If you’re a regular reader of this blog, it will come as no surprise that we 100% agree with Andrea. As we’ve talked about before, we’re strong believers that including salary in your job ads is not only the right thing to do but a logical business decision too. 

But there’s another side to this story too: so far, most studies seem to say that job ads that include salary information get more applications than those that don’t. That’s likely because sharing this information shows candidates that you’re willing to be open and upfront — building trust from day one. 

4. Structured career paths are key to fair compensation 

The pay transparency directive will bring every EU company’s pay practices out into the open, so it’s more important than ever to ensure your processes are fair and consistent. 

And, according to Andrea, the best way to do that is by developing a clear career path structure for your organisation and assigning a salary range to each position. This gives candidates and employees a clear vision of how they’ll be able to progress within your company, and what that progression will mean in terms of salary. 

Crucially, this structure should be publicly available within your organisation, so that everyone knows where they stand. It should also be made available to candidates, giving them a full understanding of what pay will look like if they choose to work for you. 

5. For pay transparency to work, everyone needs to be on board

Pay transparency is not just an HR problem. And it’s not the sole responsibility of comp & ben, talent acquisition or company leaders either. In fact, for pay transparency to work, you need all major stakeholders on board. 

For example, Virgile pointed out that once companies have transparent pay policies in place, managers and team leaders will be the ones on the front line, fielding questions from employees. That means that businesses will need to provide those people with the appropriate training before rolling out any new policies — or face problems with employee relations. 

It’s also crucial to get full buy-in from your company’s leadership. For best results, HR should start building the business case for transparency now so that leaders understand its importance once the directive rolls around. 

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6. There are big benefits to getting ahead of the pay transparency directive (but there’s an expiration date) 

As we’ve mentioned, the rules set out in the pay transparency directive won’t be in force in most countries until 2026. But there are some huge advantages to getting ahead of the curve and introducing more transparency into your operations now

Here are some of the benefits that Andrea and Virgile talked about during the webinar: 

  • Higher employee retention rate
  • Higher candidate acceptance rates and lower time-to-hire
  • Higher quality candidates 

Also, candidates talk. As do your employees, past employees… and anyone who’s come into contact with you as an employer. Promoting transparency can have a big impact on your employer brand, and help to position you as an employer of choice. 

But there’s a catch: none of this will apply once the directive is in force, because every company will be doing the same thing. Sure, there will be one or two bad eggs that break the rules (and there will be sanctions for that) — but pay transparency will be the new norm. 

That means that if you want to reap the rewards of pay transparency in terms of stronger employee relations and more efficient recruitment processes, you have to start now.

Learn more about pay transparency in Europe 

Preparing for pay transparency is a big topic — and we’ve only scratched the surface here. If you want to learn more about what you can do to get ready, watch our full webinar.

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