Vignette:

How to get further ahead on the pay fairness curve to gain a leading position in attracting and retaining the talent you need?

In this second article* in the series on fair pay, I provide my perspectives on how to elevate the equal pay and transparency debate to the next level - beyond mere compliance and competitiveness in local labor markets. In other words, being the employer offering a fair and attractive deal - NOT because you have to - but because it is what you want to do!

Why is this important, you might ask?

…because we have already seen in the US labor market that applicants are beginning to deselect employers that do not demonstrate a fair and transparent pay practice, and this trend is moving faster than any EU or country legislation. 1] The EU pay transparency directive is due to be implemented in member state legislation by June 2026, but most likely being delayed and when implemented the members states will likely allow companies 2-3 years to implement the legislation into own HR processes, salary structures and compliance reporting etc. Other countries like the UK, US and Australia are moving faster with implementing legislations forcing pay transparency structures implemented in own labor markets.

Organizations like Ius Laboris are providing an ongoing insight for employers to navigate pay Equity requirements around the world – have a look here.

So, from a legislative point of view, you might still have sufficient time to get your house in order and become a compliant employer regarding pay transparency and equity regulations in the countries where you operate. But what about current and future talent - individuals who may even demand transparency and fairness from you as a potential employer before considering applying for or staying in a role at your company?

How do you become - or remain - the preferred employer of choice when applicants are looking for their next career opportunity? Not just because of the attractiveness of the job alone or the size of the paycheck - but because your company shows the integrity of being the fair employer that can be trusted to offer, not only a fair reward package, but who pledge to do this throughout their full employment? And even beyond that, an ethical employer that avoids executive compensation scandals and even promises to actively work on good governance and disclose its pay practice for all levels?

Taking pay fairness to the highest denominator of ethical standards with a practice that draws headlines – is what I call ‘FAIR PLAY”.

Read more below on how to take the next leap on pay fairness and ethical engagement to become - or remain - an attractive employer for current and prospective employees.

The below article series is in three parts; first part will be looking at what’s happening today on the fairness and transparency frontier

In the following 2 weeks, I will be looking more in depth into:

-          So, what is the next thing to do? (Part II)

-          AND finally, where will this take you? (Part III)

Part I:

What’s happening today on the fairness and transparency frontier?

You have probably, like most of your peers and colleagues in the industry, heard about the pay transparency movement, as an initial directive for EU member states and country legislation in many (but mostly) western countries. If not, read my previous article series here and its references.

Most likely you have done your first thoughts about what to do about this pay transparency thing, maybe started to look into equity analysis and may have begun building the necessary structures and processes like a Job Architecture and designing pay ranges. If you have employees in EU countries, you have looked at the 6 requirements of the pay transparency directive and started to plan how to become compliant with these before June 2026.

The good news is that, for EU employment, the deadline is unlikely to be met, for these 2 reasons.

A. The 27 member states must ratify the directive into country legislation for the regulation to be a legal requirement for companies. This process takes years, and EU countries are not known to move fast, and missing deadlines does not have a real consequence. And in the past with similar legislation member states like Denmark have not met implementation deadlines either. Today’s status is that none of the member countries have implemented the EUPTD in their local legislation and only 7 countries have presented draft legislation for public consultation. So still a long way to go in 8 months’ time… 2]

B. From the time country legislation is made public for hearing with relevant stakeholders, adjusted and then passed by local parliaments, there will have to be sufficient time for companies to adjust current pay structures and people processes before they are required to comply with the new legislation. Of course, companies can stop asking candidates for their current pay level overnight, but they cannot simply resolve their pay inequities or job leveling practices in one go. These changes take time. Achieving pay equity typically takes three to five years when done appropriately and cost neutral to the company.

So, overall, the compliance requirements from the new pay transparency legislation in the EU are not right around the corner. So, no need to lose your sleep on that note.

For the time being (while waiting for the letter of the law to be announced across EU member states) many companies are focusing on getting their houses in order – at least on the technical baseline.

Many companies have started their pay fairness journey (Ref. TRF Spot Survey, November 2024) by focusing on unadjusted or adjusted pay equality analysis and building or fixing the infrastructure like job architectures, title policies and other HR processes to measure and display the balance of “jobs of equal value”.

…. but adjusted for what? How many employers have truly solved the mapping of jobs of equal value?

… and will the potential pay gap revealed tell you what to do about it?

I.e., just increase the salary level for the lowest paid group (in most cases females)?

OR take a more macro-economic approach to closing the gap somewhere in the middle without adding extra cost – And/Or, closing the gap over time by changed pay setting policies – i.e., choosing a more cost sustainable and sensible approach?

… and what about the market level? Is pay equality only an internal challenge or should the outcome ensure an overall pay structure that ensures both competitiveness and long-term sustainability? Many unanswered questions that a pay equity analysis does not answer by itself….

Understanding the legal and statutory requirements like reporting, union representation and involvement, penalties, and financial risk of non-compliance takes time and will at the end require the full country legislation on pay transparency to be finalized and known to employers and employees before these activities can be finalized.

… but what if people just leave and no one shows up to replace them? No need to fear a speeding ticket if the car will not start! (then worry about a parking fine… 😉)

SO, WHAT TO DO WHILE WAITING?

Throughout my more than 20 years of working with building and fixing reward operations in larger organizations, I have found it beneficial to adopt a more holistic and comprehensive perspective on HR processes when building (or rebuilding) a fair and sustainable reward practice.

A good starting point would be to take an offset in assessing and redesigning reward on these 8 dimensions in your HR operation:

1. Reward Philosophy: An inclusive reward philosophy that articulates a fair and attractive pay proposition to current and new employees.

2. Job Architecture: A job architecture with clearly defined job levels for work of equal value.

3. Salary Ranges: Salary ranges for external as well as internal use in the organization.

4. Audit & Reporting: Measures to ensure pay equity for roles of equal value – pay equity reporting and focused salary budgets.

5. Benefits: Fair benefits, with a transparent and flexible benefits approach for all employee groups.

6. Incentives: An incentive model with a focus on equal and transparent allocation of award opportunities.

7. Performance Reviews: An unbiased and objective approach for evaluation of individual results and contribution.

8. Career Progression: A clear and sustainable approach to setting the right pay when entering a new job.

   
   

What we do know is coming, and much faster, is what we can call the candidate movement. Already now a significant and increasing number of job seekers are deselecting companies for not showing a transparent pay philosophy, offering fair and equitable pay to new hires within an open salary range or a committed pay strategy to maintain a fair pay practice once employed by the firm.

As the candidate movement most likely will arrive much sooner than the legislative classification, it seems wise to focus on making your reward value proposition in both words and actions a fair and transparent one! Then people will stay or seek your company on that proposition alone and not worry on compliance and financial risks – and the yearly pay equity reporting will be a quick maneuver….

So, what you can do now is to embark on more holistic assessment activities to understand the current state of the nation on pay equality and which processes and pay structures need fixing. But, fixed to what? Does your company have a clear understanding of what their pay philosophy should be – not just where to position itself in each labor market, BUT how do you want to pay your people?

So, what is your offer to current and new people in your company? You should start thinking about your pay proposition or the overall REWARD PLEDGE to your people and shareholders!

“Under construction” – many companies have started to design and build their job architectures or modernize the ones they have. This is the right start, but not the end goal by itself. Job architectures or structures of jobs of equal value to the company will be needed, not only for the compliance demands, but also to provide the engaging and fair reward value proposition. Structure and consistency build engagement through trust and fairness!

Remember that the job architecture is only the backbone of your people operation – it’s how you deliver your WHAT and WHY that matters. Even the most well-designed job architecture must be regularly maintained and updated. A static job architecture without yearly update of job criteria and how people are mapped to levels and functions, quickly becomes unfair for people to relate to.

Thus, building a robust job architecture process requires 20% design and 80% ongoing maintenance. Its 20% design and implementation, and 80% ongoing maintenance and governance to keep it clear and fair for all people. So, start focusing on building sustainable reward processes already at the beginning.

Setting up the fence – On the backend of a job architecture, companies should start setting up salary ranges to be compliant with the upcoming pay transparency regulations. BUT remember your salary ranges are not just the benchmark or your desired market position (e.g., 50th percentile). Your salary ranges are your pay proposition or policy on how your company wants to pay its people on the base salary. So, the salary range should not just be how you are paying your people today, but how you want to pay your people as an attractive and sustainable employer.

BUT there is a but…. most companies are not positioned where they aspire or believe they ought to be in the labor market – especially when examining market data and benchmark analyses. Remember market data typically only reflects 10-20% of the labor market you are comparing yourself to. Market data is only an indication - it’s not the whole truth. In many cases, companies define their target market, industry, and job functions too narrowly when selecting benchmarks—risking the oversight of where they are actually recruiting talent from (or losing it to). So, start by looking at what you're paying new hires to validate your salary ranges. Then adjust to reflect your current situation, and update over time to move toward your desired competitive position.

Good salary ranges are not the benchmark or your current cost base – it’s how you decide to pay your people to be the desired employer you want to be!

Once you have established your salary ranges (typically one per country), you will face the challenge of internal horizontal fairness between functions (nature of work), which have equal value to your company. Are you to differentiate (or discriminate?) between job functions of equal value to your company just because the market (allegedly) says so?In other words, would you give your kids (siblings) different volume of Saturday candy, just because one is playing soccer, and the other is playing the piano – or do your love your children equally?

… and in many cases the market difference between job functions for the same value (impact level) of jobs are much smaller than thought by many, when you choose to look at large and reliable samples. REMEMBER the market is defined by supply and demand AND reflected by poor (in many cases) statistics – BUT the market is NOT FAIR. Only you can make your pay philosophy fair!!

But more on that note in the next part of this article series.

Part II: So, what is the next thing to do?

By Morten Broekner, Executive Reward Advisor, The Reward Firm

References:

1] 4 in 10 Job Candidates Would Lose Interest in a Job That Doesn’t List a Salary Range, SHRM, July 26, 2024

This Is Why You Should Include Salary Ranges in Your Job Posts, LinkedIn, February 13, 2023

Gartner HR Survey Finds Within 12-Month Period, Half of Candidates Have Accepted a Job Offer – and Then Backed Out Before Starting, Gartner, August 23, 2023

2] “EU Pay Transparency Directive: which countries have implemented?”, Ius Laboris, 18. July 2025

Background Readings:

• * “Fair Pay to Heaven” – or “High Pay to Hell” – by Morten Broekner, Executive Reward Advisor, The Reward Firm

• ** The 4 Disciplines of Execution: Achieving Your Wildly Important Goals, Free Press, 2012

• *** https://www.cipd.org, Employee engagement: definitions, measures and outcomes, 2021