Each month we post highlights from the speakers at NJ Compensation Association monthly meetings. Here’s our take from the April 3, 2018 meeting:
Topic: Transparency and Compensation Speakers: Jarret Sues, Managing Director, FTI Consulting
At this month’s NJ Compensation Association meeting, Sues discussed the current state and trends in compensation transparency. He defined pay transparency overall by stating that it meant different things to different individuals and could vary greatly between employees and employers.
He noted that how an employer determines pay can be just as important as dollar amounts, if not more so, when rationalizing pay fairness. In addition, employers are seeking to establish the correct level of transparency to fit their culture, workforce, talent, strategy and business objectives.
Sues reviewed the differences in the perception of employees versus employers when it comes to transparency. He noted that creating a compensation strategy requires a multitude of factors including who makes that decision, understanding employee trust issues and the inability of managers to explain pay increase rationale to their employees.
California passed a new salary history law on October 12, 2017. The law is now branching out to additional U.S. states. It signifies a potential shift in thought when hiring – “Pricing the job, not the person.” The law prohibits an employer from relying on an applicant’s salary history information as a factor in determining whether to offer them employment or determine what salary to offer. Sues discussed the law in detail and what ramifications it has on both employers and new hires with regards to previous salary disclosures.
Sues concluded with a discussion on trends in transparency and disclosure, in particular the CEO Pay Ratio. He cited transparency pros and cons including increased productivity, but on the other hand, higher turnover as well as decreased productivity due to dissatisfaction with pay.
Sues also cited numerous industry statistics and graphics to make for a valuable and informative session.