A study by software provider Lattice found a stark lack of transparency around employee compensation, with only 25% of global employees having knowledge of the pay band for their job level.
This continues even as pay transparency regulation gains momentum, with the New York City’s pay transparency law acting as the latest example.A new study by @LatticeHQ found only 25% of employees are aware of the pay band for their job level. #HR Click To Tweet
Lattice released its 2023 State of People Report based on an online survey of over 800 HR leaders from around the world. The survey included firms from the U.S., Canada, England, Ireland, Germany and the Netherlands, among other countries.
Low Pay Transparency
According to Lattice, HR leaders said their current levels of compensation transparency are low. The company said more than half – about 54% – of the surveyed leaders confessed that pay bands are known only by their finance and HR teams. The report also noted employees scarcely know the pay band for the next level of their job, if they get promoted.
As a result, workers are demanding more openness on pay ranges from their employers. A recent study by Lattice found that over half of the employees across both the U.S. and the UK want to know how much everyone in their organization is paid. “There will be increasing pressure on companies to change this, and quickly,” Lattice said.
Another key finding of Lattice’s survey is that a majority (83%) of HR leaders believe that compensation should be linked to performance. Moreover, 72% of them believe they are underperforming in this regard, and agreed they could improve their efforts to link the two in their employee evaluations. Over a quarter (27%) also admitted that they need to do more in this regard.
“With pay transparency on the rise and financial security top-of-mind for employees, clearly linking employee performance to their compensation has never been more important. HR leaders agree but admit they aren’t doing enough,” Lattice said.
Two-thirds of the companies that reported “a good or great connection” between performance and compensation had more engaged workforces. Only 11% of firms with a weak or no compensation-performance connection reported the same.
Bias in Pay and the Need for DEI
In addition, the survey highlighted the need to address bias in performance and compensation reviews.
The need for DEI also increased in priority, rising from its sixth place to fourth on HR leaders’ priority list after initially dropping in 2021. Another recent study — again by by Lattice — found that more than half of workers in the U.S. and the UK either agreed or strongly agreed that bias influences pay decisions.
Employers seem aware of this and a significant number of them – around 66% – have said they had plans to address pay equity in 2022.