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The importance of pay transparency in days of heightened data security

Total Rewards|Cyber Risk Management
Beyond Data

By Jasbir Singh and Sambhav Rakyan | October 23, 2018

Why is the relationship between pay transparency and data security so important?

Employers across the world now see how influential future skills potential, pay equity, and pay transparency will become in base pay decisions. Traditional factors such as individual performance and prior year’s final performance rating could become less important over the next three years.1 A huge part of this change is due to a growing demand for pay parity and transparency in the workplace.

Only 19% of organisations globally have implemented a pay transparency policy, while 48% are still drawing out their plans.1 In the meantime, more and more employees are freely volunteering information in online public spaces – not only about their pay, but also about their bosses, benefits, company culture, and almost everything else in between. On the one hand, easy access to these first-hand details are helping to independently inform the decisions of jobseekers, as well as embolden employees during performance appraisals and salary negotiations. But on the other hand, this culture of transparency and accessibility further complicates the already complex matter of data security.

We now live in an era where information – whether it be fact or ‘fake news’ – has a quantifiable impact on the pillars of society. We recently learned that false information can be ‘weaponised’ through the targeted use of personal data, much of which is obtained through massive data breaches and leaks. Information has become so powerful that governments have deemed it essential to implement extensive data security policies, causing organisations of all sizes around the world to re-examine how and why they obtain, use and store data.

Amidst this new reality, we as individuals also need to re-examine how we handle our own personal information. Something seemingly trivial as your email address, age or gender – when obtained without your consent, for vague reasons or unclear purposes – can result in serious sanctions for data collectors. Now consider the possible implications when the type of information involved has the power to shape global job markets and business models? Such is the value of pay information. Sharing our personal pay data freely on cdsourcing platforms renders it vulnerable to inappropriate, unauthorised and even malicious intentions in extreme cases.

Help employees secure their pay data

A scientific approach to compensation benchmarking comprises various factors to ensure it is accurate and reliable for creating a competitive pay design. Among these factors are market research and commercial survey data, which is built using a consistent methodology, then vetted and secured through robust and rigorous processes to maintain data integrity and credibility. Thus, beyond helping employers determine appropriate compensation for employees, compensation benchmarking holds key insights into employee engagement, motivation and potential.

But of course, most employees do not know these finite details. What they do know for sure, is the number they see on their pay checks and how this affects their sense of self-worth. For as long as employees do not feel ‘heard’ on this point, they will keep seeking answers from public forums and cdsourced pay data services.

Only around 50% of employees globally understand their total compensation plan, and less than half understand how their salary is compared within their organisation and against the market.2 With this level of misinformation and misunderstanding, it is highly probable for cdsourced pay data to be tainted with incomplete or out-of-context responses.

Complying with data security policies and practising pay transparency at the same time may seem paradoxical. However, these two opposing concepts can be ingrained in one place – employee culture.

Data security policies and pay transparency can be integrated in one place — employee culture. Here are four essential actions:

Four essential actions that can help motivate your employees to secure their personal pay data

These four essential actions can help motivate your employees to secure their personal pay data:

  • Prioritise achieving internal pay equity in your organisation
    Only about half of employees around the world believe their pay to be fair.2 This is unsurprising as less than of half of employers globally consider internal pay equity to be a priority factor when making base pay decisions.1

    Keep in mind, a large percentage of the workforce would be highly aware of unfair pay practices around the world and within their own organisation. Employees have added their voice to the global call for equality in the workplace. When these red flags are raised, employers should respond with urgency and empathy.

    Start by acknowledging that unfair practices may exist. And if the claims are verified following internal analysis, it’s important to thoughtfully examine the factors that opened those gaps. Immediately review your pay matrix with the guidance of legal counsel. Strive to create inclusive policies and contribute to a long-term behavioural and social shift within your organisation.3 4 Today, only 23% of employers around the world have formal programmes to promote inclusivity and diversity.1

  • Strengthen the communication plan for your pay transparency policy
    The office grapevine is an extensive, high-speed network. And although it may be a constant source of gossip and speculations, it is ‘information’ nonetheless. Employees will continue subscribing to it, particularly in the absence of objective communication. Allowing a culture of misinformation to pervade can only worsen the frustration of employees who feel undervalued or unheard.

    Leadership need to take ownership of the conversation by constantly reaffirming their trustworthiness and willingness to communicate openly. Ensure that managers are capable of clearly and competently explaining pay decisions – even at inconvenient times – as it demonstrates a readiness to empathise and enlighten.5

  • Help employees grasp the approach to driving benchmark salaries
    Employees are not privy to the intricacies involved in compensation design. This should inspire employers to close the information gap by carefully crafting an educational strategy to help their workforce understand how their pay is determined, how the salary budget is distributed and how they can g – both their career and salary – within your organisation.

    Many employers are now leveraging pay data for insights to help address areas of inequity, improve diversity and inclusivity, and enhance their total rewards programme. You might consider making employees more aware of this shift, as it could help them to better grasp the value of their personal pay data.

  • Build a data security-savvy workforce
    Sixty-six percent of cyber insurance claims are the direct result of employee negligence.6 A cybersecurity programme’s success can often lie in the hands of people above anything else. Organisational cyber resilience begins with propagating awareness among employees, through constant training to recognise cyber threats at any given moment.7

    But beyond awareness, employers must ensure that employees can consistently apply their cyber risk training. Leaders should strive to be the first to display and sustain cyber hygiene behaviours. This would greatly help to embed a security-focused mind-set among employees, and establish a sense of vigilance against cyber threats as well as mindfulness in the event of a cyber risk incident.7 8

    The cross-border nature of data, and the international reach of statutory data security policies, means that data breaches within businesses cannot be dealt with quietly and privately. For instance, in cases involving potential GDPR-related violations, companies must submit a complete report to authorities within only 72 hours – a frantic process that would involve several internal investigations and data gathering around the incident. Severe penalties await those that fail to comply, as we have witnessed in recent cyber security scandals. Aside from penalties, external investigations by authorities would also disrupt regular business operations and result in financial losses and permanent damage to business reputation.9

Sources:
1 2018 Getting Compensation Right Survey Findings: Five keys to getting compensation right
2 2016 Global Workforce Study
3 The merits of pay transparency
4 Mind the gap – achieving gender pay equity in Asia Pacific
5 A fresh perspective on cdsourced pay data
6 Cyber risk: it’s a people problem, too
7 4 steps for building a cyber-savvy workforce
8 Want to create a cyber-resilient organization? Start with your board of directors
9 The EU’s GDPR – Key changes to European data protection

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