Pay transparency is critical in a fast-paced, global startup environment. Yet, many organizations lack the proper structure (i.e., manager training) to successfully utilize it as a strategy to attract, retain and develop the best talent. 

For a company to have a transparent compensation program, it must ensure its compensation philosophy aligns with its business needs. How a company approaches pay transparency is unique based on its values and leadership or employee readiness. For example, one company might value empowering all leaders with various data points and budget authority to make their own salary increase decisions for their team vs. another company that may have very ‘green’ managers and wants to use a phased approach to communicating broadly about how pay decisions are made. 

Wherever on the readiness scale a company may be for pay transparency, every company should start somewhere to make strides over time. We'll unpack why and how HR leaders and executives should build a foundation for pay transparency and how Remote (a leader in global payroll, benefits, & compliance solutions) leverages Kamsa for pay transparency. 

Nadia Vatalidis, former VP of People at Remote, explains that “compensation is naturally highly complex; sharing how pay transparency works creates trust from the onset and reduces the back-and-forth during the offer stage, making the process way more efficient and impactful when going through a hyper-growth phase.”

“It's inclusive for applicants and employees to know how a company thinks about compensation philosophy (including stock options and benefits) when applying for a role at a new company or working for a startup that is evolving and changing as the company grows. This not only empowers your employees to understand why you pay in a specific way, but it also ensures your total rewards team is 100% supported by leadership and in clear alignment with company goals,” Nadia Vatalidis describes. 

Successful, transparent compensation programs equip managers to answer employee questions about job leveling, compensation philosophy, how salary ranges are established, and what factors go into salary increase decisions. 

Communicating with Employees

Companies should share the key components of a compensation philosophy with employees; these components include:

• Where the market compensation data used by the company is from (e.g., why is it reliable);
• Job level structure and career paths; and
• How compensation ranges are created and how it aligns with the company's philosophy.

A clear compensation philosophy helps employees understand that the company has a strategy to ensure they offer competitive and fair compensation. Employees will see the potential growth within the company based on the established career paths via the job level structure, and they'll make the connection between business needs and individual development.

“At Remote, we use Kamsa's compensation data to level all positions and use a tiered approach to our compensation ranges. We combine this with compa-ratios to guide us during compensation review cycles. We tie performance, values alignment, team contributions, and contributions to Remote to our compensation review cycle. We also closely monitor market data to ensure pay is refreshed if a specific market has dropped below our minimum global compensation, or the economy is negatively impacting someone.”

When communicating with employees during one-on-one meetings, leaders should explain the compensation philosophy and where the employee falls within the competitive pay range. We suggest using a straight-forward approach to defining salary ranges:

• Within competitive range: employees/candidates who are fully competent in their role and job level and consistently meet performance expectations over time.
• Above competitive:experienced employees/candidates with a unique skill set and/or top performers. Employee brings value to the role, which puts them above the competitive range.
• Below competitive: the company/employee is aware there's work to be done - the expectation is that they will learn it.

Accessible information for everyone is extremely important. Spending time documenting the compensation philosophy and total rewards strategy is worthwhile. This allows employees to understand why you pay how you do, resulting in less frustration, and ensures leaders align with company goals.

About Kamsa

Kamsa's consultative approach to providing market data, budgeting, and forecasting was created to equip HR leaders and executives to make data-driven pay decisions that align with each company’s unique values. Features like our compensation review tool save a bunch of time because it removes companies' heavy lifting and needs for managing a sh*t load of spreadsheets by automating routine compensation processes.

About Remote

Talent is everywhere — opportunity is not. Remote closes the gap by enabling employers to hire anyone from anywhere, providing access to opportunity so people everywhere can build better lives. Remote helps companies become global powerhouses by expanding their access to talent beyond their borders. Thousands of businesses rely on Remote’s modern platform and legal, financial, and cultural expertise to onboard, pay, and manage employees and contractors in 150+ countries.