3 compensation issues topping HR’s priority list

HR leaders are increasingly facing sleepless nights over rapid changes in the world of compensation—as pay transparency laws sweep the country, illuminating pay equity issues and their own need to develop data-crunching skills and savvy.

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These three issues—pay transparency, pay equity and data analytics skills—were cited as top concerns among HR leaders at the WorldatWork conference last week in San Diego.

“Pay transparency has become a hot topic. It’s the next step in the Great Resignation, where you can see the cause and effect,” says Anthony Kapp, senior compensation analyst with the Federal Reserve Bank of Dallas and conference attendee.

At least 10 states already have pay transparency laws on the books and other states are considering them, reports GovDocs. With these laws, employers are required to disclose compensation ranges to external and internal job applicants at various stages of the hiring process. In some cases, however, employers have chosen to post exceptionally wide ranges.

With the posting of pay ranges, employers and employees can notice pay equity discrepancies more easily. And that is driving further angst among HR leaders, who must develop new communication strategies for navigating employee frustrations.

One compensation executive from Belgium noted her colleagues in Asia are particularly fearful of addressing pay equity, as their employees tend to be culturally more private; however, the organization is moving toward pay transparency, given a new EU law.

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See also: 9 best practices to improve your pay equity now

Experts say diving into pay equity issues is best way to prepare

To be prepared to have tough conversations with both candidates and employees about evolving approaches to compensation, experts advised HR leaders to first do a deep dive into potential pay equity issues. And that means a deep dive into their data.

Pay equity looks at whether groups of people, such as women, LGBTQ or BIPOC, are earning similar pay and rewards as other demographic groups. 

“HR leaders are getting asked for data of all kinds,” says Scott Cawood, CEO of WorldatWork and author of The New Work Exchange: Embracing the Future by Putting Employees First.

See also: Tracking the remote work trend

To be able to adequately crunch the numbers and analyze the results, HR leaders need to increasingly think like financial analysts: They can point to the potential impact on the business of various people-related actions, says Cawood. He suggests that CHROs think of themselves also as chief human financial officers, or CHFOs. Armed with data, HR leaders are in a stronger position to back up their concerns and calls to action, he notes.

As a result of improving their analytics skills related to compensation, CHROs in the next five years will boost their chances of moving up into the CEO spot, says Cawood.

But currently, Cawood notes, only 30% of CHROs are embracing the use of data.

“There’s still a lot of evolution that’s needed,” he says. “Many CHROs are still using Excel spreadsheets and their people analytics and business impact still lacks tracking.”

Dawn Kawamoto, Human Resource Executive
Dawn Kawamoto
Dawn Kawamoto is HR Editor of Human Resource Executive. She is an award-winning journalist who has covered technology business news for such publications as CNET and has covered the HR and careers industry for such organizations as Dice and Built In prior to joining HRE. She can be reached at [email protected] and below on social media.