Employers adopt transparent approach to pay

Most businesses openly disclose information to employees about how pay and benefits are calculated, according to research.

A study of 715 organisations by the Chartered Institute of Personnel and Development (CIPD) found that 70% favoured 'medium' or 'great' transparency about their process for calculating base pay and increases.

Pay rises were for the most part determined by:

  • individual performance (74%) 
  • competencies (61%) 
  • skills (57%)
  • employee potential (53%).

In comparison, length of service was only cited by 26% of employers.

With new regulations on gender pay gap reporting in force since April 2017, the survey suggests that employers are becoming increasingly open about their pay decisions.

The majority of organisations were optimistic about the effects of gender pay gap reporting, as 70% believed it would be beneficial in reducing the difference between male and female earnings.

Charles Cotton, senior adviser for performance and reward at CIPD, said:

"There's not much point using pay to incentivise certain employee behaviours if you're not going to be open about the potential outcome and the process.

"Pay disclosure also reflects societal concerns: employees increasingly expect openness and transparency in most aspects of their life, and expect their employer, within reason, to also be transparent."

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