How Should We Think About Fair Compensation In 2020?

Rethinking salary transparency before a lack of it hurts your brand

Like a glacier, only much faster moving, the demand for fair compensation is leveling the playing field for undervalued employees in most companies around the world. This is a good thing. But to ensure that HR professionals feel supported to ensure their systems for pay and promotions are perceived as fair, we all must offer our best thinking.

Humans come into the world with a fierce desire for fairness. Just watch young children playing or having a snack together. Within 5 minutes, you will see a scuffle break out about something “unfair.” Tempers will flare. There will be tears. Hands will clench, faces get red. The righteous demand for fair treatment is woven into our DNA. We’re born with it and grow up on the lookout for it. Even as adults with stronger impulse control, perceived unfairness can still derail our ability to work well with others.

Our ideas about fairness rise up from our values; core beliefs about the way people should behave with one another to build an ideal world. Of course, we all have different ideas about how an ideal world should look. But underneath, most of us could, push come to shove, align around a definition of “fair.”

Fair is when no one enjoys an advantage that others couldn’t also enjoy, if given the same opportunity.

Hiding unfairness of all kinds used to be a lot easier, including injustices in compensation. It’s no secret that the information sharing unleashed by the Internet has made it a lot harder for companies to harbor gross pay disparities. The drive toward transparency is forcing a lot of people to retool their behaviors and thinking. Companies – and even entire industries -- face upheaval, if they don’t ante up and align their public personas with behind-the-curtain decision making and data.

More than ever before, employees expect to be respected. 

And, there’s another trend forcing HR to reimagine “fair” treatment when it comes to pay. The rise of the gig economy is liberating skilled employees from traditional employment at a rate that’s unprecedented. Gone are the days when talented people waited patiently in the ranks until it was their “fair” turn to get promoted. Today, opportunities abound for key talent to get paid more for more meaningful work, all from the comfort of their own homes or cozy coworking space.

For a rapidly increasing number of desirable employees, dangling the carrot of “better pay, some day” doesn’t work anymore. They want compensation that fairly reflects their skills and experience, now. If that isn’t possible in your company – or you’re not willing to articulate and deliver upon clear leadership development pathways -- don’t expect to keep these folks for long.

So, how can you get ahead of the trends and build a compensation system that’s transparent, fair, and talent-attracting?

The first and most important step is for your company to commit to the value of fairness. This is a big step. If you’re not sure that your compensation and promotion practices are fair, you’ll need to do the work to embed fairness into your policies and systems -- before you publicly claim the value of fairness. In my experience, the worst thing a leadership team can do is tell a brand story that’s not actually being lived inside the organization.

An organizational constitution can serve as an effective tool to get your core leadership on the same page around each of your core values, including fairness. This is a collaboratively developed tool that clearly defines what your values mean and how they get lived through concrete, observable behaviors. Your values and valued behaviors are then linked to your company’s servant purpose, mission, vision, strategies, and goals. Once solidified, your organizational constitution becomes the new boss of your company. It directs all thinking, planning, and decision-making.

According to my research, companies that commit to values-driven leadership boost employee engagement by up to 40%. Engaged employees are less likely to spend time assessing whether or not they’re being treated fairly, both in terms of compensation as well as in every other touchpoint they have with your organization. 

You are entirely capable of liberating your people from perceptions of unfairness so they can focus on the work to be done -- not how much they’re getting paid to do it. In fact, the quality of your future workforce (and the business growth that workforce will empower) depends on it.