Opinion: Despite new laws, most Canadian companies fall short on pay transparency

Written for Daily Hive by Grace Barbosa-Chin, manager of people operations at Unbounce.

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The call for pay transparency within organizations is ringing louder than ever. With a growing spotlight on gender and racial equality, the pay gap has become a more visible issue for today’s leaders.

In Canada, women make roughly 13% less than their male counterparts, according to 2022 data. And things are even more challenging for BIPOC professionals. Women of colour earn an average of 33% less than non-racialized men.

These statistics demand massive change if we want to see a more equitable future for our workplaces, families, and communities. Part of this means being more transparent about compensation throughout the employment lifecycle.

Arriving at pay transparency means heading down a path of reinvention

Between rewriting compensation bands, improving diversity and inclusion practices, and being forthcoming about salary bands from the get-go, there’s a lot of work to be done.

On top of this, time is not on the side of organizations that choose to wait. Global laws are shifting in favour of pay transparency. Job seekers expect more throughout the application stage. As this trend becomes more prominent, employers who want to remain competitive need to put strong foundations in place to make pay transparency possible in the near future.

At Unbounce, we’ve been on a journey towards pay parity and transparency for the past four years. While it hasn’t been easy, we’ve taken things one step at a time to arrive at a more equitable, transparent place, disrupting the industry status quo along the way.

A global shift: Transparency is the new norm

The good news is that there is a global shift towards pay transparency. The bad news is that most organizations aren’t prepared.

In the province of British Columbia, the first-of-its-kind Pay Transparency Act received royal assent on May 11, 2023, mandating full pay disclosure across all publicly advertised job postings in Canada from November 1, 2023, onwards.

The US has taken a similar tack, with states like Washington, California, and New York all establishing salary disclosure laws in recent years, requiring employers to include accurate compensation figures and ranges on each posting.

Not only has this sparked more discussion about pay transparency, but it’s also given job seekers more agency over the application process. Candidates are now armed with more information at the closing table, more clarity around which career opportunities are truly equitable, and a better grasp on where they stand in their organization.

Employers who embrace this shift will rise to the top. Both from an employer brand perspective and their performance in the market. Because ultimately, pay transparency means trust. Where there is trust, there is retention. And companies with low turnover enjoy benefits like faster time to market and higher profits.

To arrive at pay transparency, organizations need to take a hard look at their entire compensation philosophy, performance management programs, and people leadership development practices. Laws that force transparency will increasingly reveal which teams have truly prioritized values like pay parity, diversity, and performance-based rewards, and which teams haven’t.

At Unbounce, we define pay transparency as being clear on why you’re earning the salary you are, along with a clear view of the full earning potential for each role. Doing this well requires a lot more than just disclosing numbers in a job posting. It requires thoughtful consideration of career pathing, performance reviews, people leadership development, and placing a priority on equitable practices that start at the top.

As teams start down this road, there’s a lot involved in tackling pay transparency. Here are some things we’ve learned, and ways to get started.

Lessons from the field: start with building out your compensation philosophy

When we launched the Pay Up For Progress pledge in 2020, we knew it would lead us to unexpected places. Four years into the journey towards pay equity, achieving pay parity has been an incredible step towards achieving our goals. While it hasn’t been simple or easy, every step has been worth it.

From hearing feedback on our performance review and career laddering processes, we knew taking a holistic view of our overall compensation approach would be the path to lasting change.

For any organization beginning this work, this is where I’d suggest you start: review your compensation philosophy and check for pay parity. If you skip this step and dive right into pay transparency, you’ll run into more headwinds in rolling out a good process.

You’ll want to start by asking questions like, is compensation tied to performance in the role? Is it taking cues from market rates? Are there discrepancies between gender or race when it comes to compensation? The answers to these questions will inform your overall compensation philosophy and provide clues on how far away you are from achieving pay parity – the first step towards pay transparency executed well.

At Unbounce, we define pay parity quite simply: same work equals same pay. While we look at buildable career factors like tenure and career level, equal pay across race and gender is non-negotiable. We audit this every year and make adjustments to ensure we’re paying market rates that are fair and in line with the criteria we’ve set within each compensation band.

Through this work, we’re excited to have arrived at a place of pay parity. The benefits we’ve seen around equipping our team with clarity and support in their careers, far outweigh any fear and uncertainty we had to push through to arrive here. Our goal is to move towards a place where our team is fully engaged, clear on what they need to do to excel, and see Unbounce as a place to build a career with longevity in their role.

Steps for any organization to move forward

If you’re just getting started, embarking on this journey can feel like trying to tackle a mountain of issues all at once. From coming to grips with discrimination or gender equality issues to re-evaluating your entire performance management approach, this work requires patience and an intrepid attitude to get things right. For many organizations, the continued rollout of pay transparency laws will likely unearth thousands of dollars worth of compensation that needs to be fixed.

From our experience, here are a few areas to hone in on to make this process a little easier.

Seek market data

If you’re like many organizations and haven’t yet achieved pay transparency, a great way to start the process is by examining industry benchmarks. You can use compensation reports from companies like Radford or Mercer to better understand market data, and align your compensation bands with industry rates. If you’re not yet at pay parity, tackling this element will be a foundational step to reaching pay transparency. At Unbounce, we’ve published a toolkit with a step-by-step guide to help organizations work their way to a better pay approach.

Define career levels

You’ll need clear career paths and career levels defined to set intentional, equitable compensation bands for each role. Carving out lanes for individual contributor versus people leader roles ahead of time will help ensure you bring consistent, objective data to compensation decisions like market data, and the scope of functions in each role. Doing this work will set you up well to roll out transparency practices, as you’ll reveal a thoughtful compensation approach.

Performance reviews

Teams who don’t have a well-considered performance management process will struggle to achieve both pay parity and transparency. If employees don’t understand where they’re falling behind, or what performance factors correlate to compensation ranges, you’re in for frustration. At Unbounce, we revamped our performance enablement program to ensure every team member gets clarity on their performance in role, and what they need to do to progress in their compensation range. Building up the team with leadership development training, and ensuring that they have the tools and resources to have productive conversations, even when they’re hard, played a crucial role in getting to where we are today.

Be open about your journey to pay transparency

One of the key learnings we had over the last year is that your team will want to understand where you’re at in your journey to pay transparency, and how long it will take to reach that state. Being open to where you’re at is key to building trust and confidence, and is aligned with our value of being real at Unbounce. Keeping your team informed on the steps you are taking will go a long way.

Wherever you are in the journey towards pay transparency, start small. Know that while your efforts may be imperfect, each tiny step is what progress looks like. At Unbounce, it took us several years and many iterations in our approach along the way. As we continue the move towards pay transparency, we’re excited to work towards milestones over the next year. By early 2024, all Unbouncers will know their own compensation range within their band, and by the end of the year, everyone will have a clear understanding of the salary band for their role.

While we’re now in maintenance mode with our pay parity program, we’re keeping a close eye on evolving laws and employee expectations, and continuing our work towards pay transparency. As the workplace demands more transparency, every organization has the opportunity to take an active role in driving positive change and creating a more equitable future for all.