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Market Insights Salary trends 8 Steps to Cultivate a Culture of Salary Transparency
8 Steps to Cultivate a Culture of Salary Transparency

8 Steps to Cultivate a Culture of Salary Transparency

Salary offers are always top of mind for jobseekers. In fact, 49% of Malaysian jobseekers want full salary transparency before considering a job opening! But while being open about pay is becoming a growing trend, not every company seems ready for it. If, however, you decide to hop on the bandwagon, we advise you to err on the side of caution — especially if you run a conservative organisation.

Here’s how to navigate the complex path to salary transparency, one step at a time.

Steps to create a culture of salary transparency

1. Assess your current salary structure

Before making any changes, you must understand how you currently pay your employees. Look at your salary ranges, performance-based pay, and bonuses.

Then, see if your current salary structure is still efficient today. Are your employees in similar positions paid similarly, regardless of gender, race, or other protected characteristics? Are your salary ranges competitive with other organisations in your industry and location? Is your salary structure flexible enough to accommodate changes in the market?

If you have not set a salary structure yet, now is the time to do so. Determine the pay ranges for different positions within an organisation. This is an important part of compensation management, and it can significantly impact employee morale, productivity, and retention.

How to set a salary structure

1. Determine your compensation philosophy What is your overall approach to compensation? Do you want to be a market leader, a market follower, or somewhere in between? Your compensation philosophy will guide your decisions about salary ranges.

2. Conduct a job analysis What are the duties, responsibilities, and skills required for each position? This will help you determine each position’s value and set appropriate salary ranges.

3. Conduct market research What are the salaries for similar positions in your industry and location? Use the JobStreet Malaysia Salary Guide 2023 to get the latest nationwide data and insights on salaries.

4. Create employee grades Group similar positions together into job grades. This will make it easier to manage salary ranges.

5. Set salary ranges Set a minimum, midpoint, and maximum salary for each employee grade. The minimum salary should be the starting salary for the position, the midpoint should be the average salary, and the maximum salary should be the highest salary that can be paid for the position.

6. Review and update your salary structure regularly As market conditions change, you may need to adjust your salary structure to remain competitive.

2. Develop a salary policy

Develop a salary policy if you do not have one yet. A salary policy clarifies your approach to setting and managing wages. This way, employees avoid confusion or ambiguity about the process. It also encourages employees to discuss their pay with one another and their managers.

Salary policy sample

  • Purpose: This policy outlines the company’s approach to setting and managing salaries.

  • Scope: This policy applies to all employees of the company, regardless of their position or level of seniority.

  • Definitions:

    • Salary: The regular amount of pay that an employee receives for their work.

    • Salary range: The minimum and maximum salary that an employee can earn in a particular position.

    • Performance review: A formal assessment of an employee’s job performance.

  • Policy:

    • The company will set salaries based on a number of factors, including the employee’s experience, skills, education, and performance.

    • The company will maintain salary ranges for each position. These ranges will be reviewed and updated on a regular basis.

    • Employees will be given a salary range when they are hired.

    • Employees’ salaries will be reviewed and adjusted on a regular basis, in accordance with their performance and the company’s financial performance.

    • Employees will be given a written explanation of any salary adjustment.

    • The company will not discriminate in setting or adjusting salaries on the basis of race, colour, religion, sex, national origin, age, disability, or any other protected characteristic.

3. Set clear goals for salary transparency

Why do you want to make your pay practices more transparent? Do you want to attract and retain top talent? Reduce pay discrimination? Improve employee morale? Once you know your goals, you can start to develop a plan to achieve them.

Do not wait for employees to come to you. Always monitor and plan for improvement. Consider conducting internal surveys regularly to get a feel of employee engagement and the perceptions of compensation.

4. Communicate with your employees

Paying your employees more than their market value will not guarantee that they will stay. The key here is transparency.

Foster a strong bond of trust by practising good communication from the start. You would be surprised at how much impact it can make on employee satisfaction and retention if you are willing to have open conversations with your employees and educate them accordingly.

Help your employees understand their salary ranges, the job nature, and why it is crucial to compare job descriptions instead of job titles. For example, anyone can hold a ‘Manager’ position. However, each manager would possess different sets of responsibilities. You can also encourage them to explore ways to improve themselves in their jobs, such as learning new skills, training, or pursuing certifications that can boost their growth within the company.

5. Be transparent about the reasons for pay differences

There are legitimate reasons why some employees may be paid more than others. However, it is important to be transparent about these reasons and to make sure that they are fair and equitable.

It is also essential to discuss salary policies and other related issues with your employees. Explain how your policies will benefit everyone. Be open to answering questions and addressing concerns.

6. Encourage open communication about pay

Do you want to create a culture of salary transparency? Then it would help if you encouraged your employees to talk about their pay with each other. Provide anonymous feedback channels or create a forum where employees can discuss their salaries openly.

Be approachable! Encourage a culture of open communication where employees can feel comfortable approaching you with enquiries about their salaries. When employees are used to voicing out, you will have an easier time identifying underlying problems lurking in the workplace. It makes a difference when the company consistently addresses the concerns of employees — especially regarding pay fairness, work performance, or promotion.

7. Consider making salary ranges public in job postings

If you genuinely want to cultivate a culture of salary transparency, start from the very beginning: make your salary offer public in job postings. Doing so saves time for both you and potential candidates. You let jobseekers quickly decide if the proposed role fits their financial needs. You will also likely attract qualified talent, prevent discrimination, and promote pay equity.

You may be hesitant to make your salary offer public. Remember that salary rangers are just a starting point for negotiations. The employer and the applicant will still determine the final paycheck.

Tips for making salary ranges public in job postings

1. Do your research. Make sure you know the market rate for the position you are hiring for. Use the JobStreet Salary Tool and practise salary benchmarking.

2. Be flexible. Be willing to negotiate with the applicant. The final salary may be different from the salary range you initially posted.

3. Be prepared to answer questions. Applicants may have questions about the salary range. Be prepared to answer them honestly and openly.

8. Provide performance reviews

Provide regular performance reviews and feedback to employees, so that they understand how their pay is determined. Make sure that your performance reviews will be constructive and will help your employee improve their performance. Be fair and treat all employees consistently. Make sure that these performance reviews will clarify any questions regarding employee grade and salary structure.

Navigate the path towards salary transparency! Download the JobStreet Malaysia Salary Guide 2023 today,

Ready to hire? Use our Talent Search to find the best talent in Malaysia. Our database of over 5 million resumes allows you to search for candidates by skills, experience, and location. For more tips like this, visit our Employer Insights page.

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