Navigating the new era of compensation management
The EU Directive on Equal Pay and Pay Transparency brings about a major change in how companies should manage rewards.
The directive aims to strengthen the application of equal pay principles between men and women through increased transparency and enforcement. The importance of a structured approach to workforce organization, fair pay decision-making, and greater transparency is immanently woven into the directive. While organizations increasingly adopted a "human-centered" rewards approach that prioritizes talent attraction and flexibility in light of the recent global challenges, the directive will bring about a new perspective to rewards, with a strong focus on transparency and compliance.
This article presents four viewpoints on the effects of the EU Equal Pay and Pay Transparency Directive.
This article presents four viewpoints on the effects of the EU Equal Pay and Pay Transparency Directive.
Four questions to ask when navigating compensation management:
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As a person responsible for rewards in my organization, what will I need to adjust in the way we manage rewards to prepare for the upcoming requirements?The compensation management perspective looks at how organizations must adjust their approaches to managing rewards to meet upcoming requirements.
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As someone in charge of pay equity and pay transparency, how do I ensure that my people managers are able to have open and substantive discussions about pay?The pay equity and DEI perspective explores a shift in compensation management towards unbiased approaches, transparent pay discussions, and evaluating gender neutrality in policies and performance management.
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As a CHRO I need to look beyond day-to-day compensation management — what are the legal considerations I should be aware of for our future compensation setup?The legal perspective evaluates the implications of the compensation setup, ensuring compliance with the EU directive through gender-neutral and objective structures, documentation of compensation decisions, and involvement of employee representatives.
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With all the reporting requirements coming up, how will our people analytics function be able to capture this in a consistent and effective way in our HRIS?The AI, data and tech perspective emphasizes prioritizing data quality, reevaluating career frameworks, and addressing challenges in preparing compensation data for AI-driven tools to ensure accurate pay decisions, identify gaps, and promote fairness in compensation practices.
About the author(s)
Kathrin Schnaufer
Senior Pay Equity Consultant
Stefanie Schweitzer
Managing Consultant Rewards and Pay Equity
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