WorldatWork Survey Reveals Broad Pay Transparency, A Hallmark of Pay Equity, Remains Uncommon
February 19, 2019
February 19, 2019 — Scottsdale, Ariz. — The “Compensation Programs & Practices Survey” conducted by WorldatWork, with underwriting by Willis Towers Watson, reveals that broad pay transparency, a hallmark of pay equity, remains uncommon and has worsened since 2010 when the survey was first conducted. Other results indicate that while “internal equity adjustments” has been one of the top four factors in salary increases since 2010, its rate of use is consistent with 2010 results. The survey, conducted every two years, gathers information about trends in compensation programs and practices, focusing on the prevalence of base and variable pay programs, as well as common practices used to administer and communicate these programs in today’s workplace.
47% of organizations stated they provide employees minimal pay-related information, indicating more employers are now sharing less information about individual salaries than in 2010.
Promotional increases (98%), merit (95%), market adjustments (84%) and internal equity adjustments (71%) are the most common variables used to make salary adjustments. While market adjustments increased from 76% in 2010, the other variables – including those for internal equity adjustments -- have stayed consistent since 2010.
Formal assessments of performance and use of performance ratings are trending down, from 84% in 2016 to 74% in 2018.
Compensation philosophies are prevalent, with 53% of respondents indicating their employees having some understanding of them. This indicates there is an opportunity to improve employee understanding.
Since 2012, there have not been significant changes in job evaluation methods used; market pricing remains the dominant leader (90%).
Most organizations target median/50th percentile of the market for base and variable pay (87% and 78%, respectively).
Almost half (48%) of organizations market price annually.
“The results point to the need for much more transparency about how compensations programs work, especially when we see continued concerns about miscommunication, wage gaps, and pay inequities,” said Scott Cawood, President and CEO of WorldatWork. "This isn’t the time to retreat into sharing less information with your employees which, in fact, that could backfire. People want to know how to succeed in organizations and that starts with understanding how compensation programs are designed and administered.”
“At a time when employers are engaged in a hyper competitive environment for talent and open platforms are increasing the level of pay information available to current employees and recruits, the need to build a solid pay communication strategy has never been greater,” said Catherine Hartmann, North America Rewards practice leader at Willis Towers Watson. “While many employers recognize the important role their pay and performance management programs play in attraction and retention, the study demonstrates relatively few employers have moved to a deeper, more comprehensive and transparent approach to pay communications. We believe employers who have yet to expand and become more transparent in their pay communication with employees will need to do so as top talent will demand it.”