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Coming clean on compensation Add to ...

Never ask how much a colleague makes. It wasn’t that long ago that conversations about pay were verboten in the workplace, mentioned only in whispers in the corners of offices or behind closed doors.

But information about pay is far easier to come by now, and younger generations don’t abide by the no-disclosure rule. That said, many employers are not keeping up with the pace of change, says Sharon Vanderwerff, a principal at Toronto-based human resources consulting firm Mercer LLC.

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“We need to set up rewards communication so people can access it easily,” she said, referring to an employee’s total compensation package, not just base salary.

“Rewards have always been this ‘black box,’” she added, and companies don’t always clearly communicate what their pay scales are or how each employee’s compensation compares.

“If you have a good story to tell, if you have your structure and your philosophy [about how workers will be compensated] and it’s positive, why wouldn’t you share that?”

As the competition for talent becomes more challenging, and newly hired staff are more likely to jump ship if they don’t think they are being paid what they are worth, it’s vital for employers to make sure employees know what they are actually getting as part of their compensation – from salary to benefits, to vacation, pensions and stock options.

The standard, once-a-year paper or e-mail statement, however, just doesn’t cut it in an age of on-demand mobile digital information, Ms. Vanderwerff said.

“How do we make total rewards an icon on the desktop?” she asked at a recent talk at the Toronto Board of Trade.

One way is to create a website or online program for employees that lets them see how much their total compensation package is worth.

“[Younger workers] are going to share the information, so why not make it easier to share and make it accurate?” she said. “If I’m comparing to my [work] neighbour and I’m doing really well and he’s not, that’s either going to make him perform better because he’s going to want the same sort of incentives that I’m getting, or maybe it is going to push him out of the organization and that’s not a bad thing if he’s not a high performer.”

Ms. Vanderwerff cited examples of websites or mobile tools that give employees all the compensation information they need at a glance. They can check to see what the company’s current stock price is, what their options are worth, how much vacation they have left, what their salary is, what health benefits they have and how much their pension is worth.

Such tools have the flexibility to let employees view the information in ways that they want, such as pie charts. They also offer features such as retirement planning.

“Transparency and privacy are very blurred with the younger generation compared to the older generation, so this is something I think employers are going to have to address,” she said.

“We can’t continue to not provide information because they [the younger generation] talk, they tell each other what their salaries are, they tell each other what their bonuses are. It’s not private as it would be with [an older] generation.

“The technology is there, so let’s use it. It’s making it easier to share information in a secure way. It’s making it more relevant for people; it’s at their fingertips.”

Such a tool this also lets companies view the “complete picture” of compensation for each of their employees. That means a better more accurate tally of how much they’re paying out in salary, bonuses and benefits and thus allowing them more flexibility to reward top performers and ensure staff in comparable roles are being compensated fairly.

“We want people to know that value that’s beyond the paycheque. We want you to think about your pension, we want you to think about your benefits, your rewards, all those things that combine to make up your whole deal,” Ms. Vanderwerff said. “If we’re going to invest all this money in those rewards, let’s make sure we get the return on that investment.

“This is a really powerful tool. We need to show employees that the greenest grass is right under their feet.”

Follow on Twitter: @gilllivingston

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