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Effective communication is crucial. It’s not just about educating managers but also equipping them with the skills to clearly convey these expectations to their teams, leaders tell us. Priya Sunil reports.
Among the various trends that have been accelerating at the workplace since the pandemic, has been a push for pay transparency. Whether being advocated by employees, or by management teams, it has become a topic of discussion across industries — with employees increasingly questioning whether their compensation is reflective of their contributions.
As a result, there is growing pressure on HR departments to delve deeper into pay equity and to ensure that salaries align with experience. This shift requires leaders to adapt more rapidly to changing expectations, we learnt in a panel at the Total Rewards Asia Summit 2024, Malaysia.
Despite Malaysia's status as an ageing nation, by 2025, Millennials and Gen Z are expected to constitute 75% of the workforce. These generations demand flexibility, innovation, and transparency. They are career-oriented individuals who will not hesitate to move on if their current job does not meet their expectations, the panellists shared.
A critical component of this new landscape is diversity, equity, and inclusion. Issues such as women’s empowerment, pay disparity, and equitable representation on boards are increasingly important in Malaysia, further driving the need for pay transparency.
Why are the younger generations so focused on pay transparency?
The fixation on pay transparency among younger workers is less about navigating its complexities and more about understanding the underlying reasons for it, one speaker pointed out. To manage this complexity effectively, organisations must consider three key factors:
1. Individual beliefs and upbringing: How do personal backgrounds influence perceptions of pay equity?
2. Team dynamics: How will the disclosure of salary information impact team relationships and collaboration?
3. Organisational policies: Are there appropriate structures in place to support transparent pay practices?
When everyone in an organisation understands the rationale behind compensation decisions, they can better grasp what is expected of them. Effective communication is crucial. It’s not just about educating managers but also equipping them with the skills to clearly convey these expectations to their teams.
Equality vs. equity in compensation & benefits (C&B)
Among the challenges our speakers face, is aligning the intangible factors involved in pay transparency. Here, it was pointed out, is where C&B comes in as the "unsung hero" of the talent strategy — with total rewards playing a pivotal role as the anchor that influences budgets, helping to determine what skills training is needed, and more.
To navigate these complexities, organisations can look at implementing an index that can measure the intangible factors, and how to ensure the expected results are delivered.
The role of data & analytics in compensation management
Data & analytics are invaluable in managing compensation. By building a talent database, organisations can collect and analyse data on monetary rewards, enabling them to benchmark their rewards strategy effectively. Employee surveys also provide insights into current salary structures and guide the creation of salary guides in nascent industries. These figures, often derived from adjacent industries, must be continually evaluated to determine what works best.
However, not every industry or position has readily available salary benchmarks, necessitating open discussions during recruitment to assess whether an organisation can meet salary expectations.
A shift in mindset: Understanding what the market needs
A mindset shift is required to grasp the true needs of the new generation entering the workforce. Organisations must move away from traditional methods and consider whether they will strictly enforce rules, such as prohibiting side hustles, or adopt a TR strategy that embraces these modern realities.
As stressed by the panel, pay transparency is an emerging need, whether organisations are ready for it or not. The time to prepare is now — Start small by disclosing salary ranges by grade or position. Ensure that employees can understand the information, that management is prepared to support these initiatives, and that leaders can implement them confidently.
The session above comprised the following leaders (pictured above, from L-R):
- Moderator: Adzlan Zakaria, Head, Group Performance & Rewards Management, FGV Holdings
- Poh Yee Nee, Head of People, C27
- Nuriswadi Zainudin, Head of Total Rewards, Gentari Group
- Khairul Syafiqah binti Mokhtar, Executive Director of People & Admin, Gobi Partner
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