Who, and how, to prepare for the EU Pay Transparency Directive
With the EU Pay Transparency Directive coming into local legislation from mid-next year, many organizations have started engaging in critical planning to ensure they have a clear definition of work, equitable pay programmes and policies, and a methodology to deliver pay gap reporting. But with just over a year until transparency for employees on the average pay of their peers, many employers risk being caught on the back foot when it comes to communications planning.
In fact, the vast majority (81%) of companies are still establishing how they will provide pay information to employees, according to WTW's 2024 Pay Transparency Survey.
| Employee average pay requests | Pay range on hire |
|---|---|
| 12% on request | 18% job posting |
| 7% proactively provide | 9% during interview process |
| 81% not decided | 72% not decided |
01
Your business leaders will be signing off key decisions, approving investments in pay, and agreeing budgets for any necessary technology, advice and support. They are the people who are ultimately responsible for deciding pay at an organizational level, as well as setting the culture and attitudes around pay transparency. HR leaders need to keep this group informed, engaged and aware of the directive and the shift this will entail from the outset.
02
Stakeholders across HR and other support functions will have a key role to play in terms of reward management, data collection and analysis, IT infrastructure, works council engagement, policy/process changes and more. They need to have a vision of what you are looking to achieve, how their role fits within that vision, what you need from them and when.
03
Compensation/Hiring Managers and recruiters will be responsible for discussing pay with current or prospective employees.
Over half of the respondents to WTW's 2024 Pay Transparency Survey are most concerned about this group. Survey participants felt that managers' ability to explain pay is holding them back from increased transparency today.
Managers should be fully briefed and trained on their responsibilities. They will need to be able to articulate their organisation's pay philosophy and reward programme design, the factors which determine pay decisions and the objective reasons for difference. They need to be able to express these clearly so that employees can understand and feel confident in the company's pay management philosophy.
WTW provides talking points and conversation guides, training on how to have conversations in different scenarios and frequently asked questions.
04
Employees and candidates are the ultimate recipients of pay transparency. The information you provide has to meet the extensive disclosure requirements and be accessible. It also needs to be delivered sensitively; culturally many organizations are not used to detailed conversations on pay compared to benchmarks or to other colleagues.
To deliver this new information, organizations are
looking to technology to both make disclosure of large amounts of data
straightforward and help to explain information. Technology can also segment
messages to help explain positions relative to others and chatbots help cover
rational questions related to how pay is managed, or who is eligible for what.
Organizations are building confident, capable managers who can maintain engagement and manage reactions to this new data. They are also drip feeding education on pay between now and the disclosure date so that the data is received by well-informed employees.
The EU Pay Transparency Directive is poised to reshape how organisations handle and communicate pay. Proactive preparation is crucial and businesses should engage business leaders, equip managers and leverage technology to ensure effective and sensitive communication. Delaying communication planning can lead to significant challenges. To stay ahead, organizations should start now by defining their pay philosophy, training managers, and using technology to facilitate transparent and accessible pay discussions. Don't wait until the last minute; take action today to ensure compliance and build trust with your employees.
We can assist in this process by planning, creating and even delivering educational materials. We provide technology to make the disclosure of large amounts of data straightforward and to explain information. Take the first step today by partnering with us to navigate the EU Pay Transparency Directive successfully.
Our video showcases the latest strategic and practical advice for stakeholders preparation ahead of the EU Pay Transparency Directive.
