Pay Transparency: Are you ready to tackle the benefits gap? 

Traditional pay gap reporting has gone a long way towards identifying pay disparity but often fails to capture the true picture. 

In response, countries are increasingly introducing new legislation to correct this, with the EU Pay Transparency Directive set to require employers to calculate the total amount being spent on employees across the European Union from next year.

Critical to preparing for this new era of pay transparency is getting the right foundation in place to calculate and compare benefits packages, as well as putting measures in place to communicate and benchmark the findings and address any gaps.

The time taken for employers to manually calculate the total value of each employee’s benefits package is considerable. It will therefore be essential to put in place a process to automate this.

An employee benefits platform such as Darwin, not only allows you to pull all the information about the benefits an employee has into one place, but it will automatically update the value of someone’s benefits package if they flex their benefit selections, adjust a level of cover, or add a dependant.

By also calculating the value of non-cash benefits, such as a car allowance, it can also generate a ‘total reward statement’. This captures the full value of someone’s employment package, including all their salary and employment perks.

Once you have a process in place for calculating the value of benefits, it’s important to benchmark this against similar organisations and use your employee benefits platform to run reports, segmented by age, gender and ethnicity, to see what’s driving pay disparity.

If you already have a significant gender pay gap are pension payments based on salary exacerbating benefits disparity? Are higher value benefits such as private medical insurance and company cars only open to more senior employees? Are those senior employees more likely to be male? Are home workers missing out of office-based perks? Are certain demographics missing out because they’re not aware of all the benefits they’re entitled to?

It’s useful to bear in mind that, for now, incoming legislation only requires you to calculate gaps, rather than fix benefits gaps. However, it’s important to it’s important to future-proof your solution so you can pull the analytics needed to resolve gaps in the years to come.

Transparency is set to be a key aspect of communicating benefits gaps. Not only will EU employees have the right to see their data, but they also have the right to see how it compares to others.

Including visual tools within your employee benefits platform to allow employees to access this data for themselves can help. As well as taking strain of HR teams, whose time is better spend addressing pay gaps than answering requests for information, this will create a culture of transparency where employees can see the data they want to see.

It can also be useful to include information about what pay transparency is and your strategy for delivering on this next to where employees self-serve their benefits. This can also encourage employees to make full use of their employee benefits package, to get the full financial value they’re entitled to.

If you have discrepancies across different countries, it can also be useful to run global analytics to understand and communicate the reason for this also. Most important of all is to give yourself enough time to get the right foundation in place, so you have time to act upon and communicate the findings.