Sep 4, 2024
Which companies are most transparent when it comes to pay? How's that working out for them?
Pay transparency is grabbing headlines with the upcoming EU legislation, but some organisations adopted these practices years ago. We took a closer look at how pay transparency is playing out in the real world by examining three companies who are ahead of the curve:
Buffer - an adopter of early pay transparency.
Novo Nordisk - a member of the UN's Equal Pay International Coalition (EPIC).
SAP - which leveraged pay transparency as part of its business transformation.
Here’s what we discovered.
Headquarters: Germany
Headcount: 105,000 | 75 countries
Sector: software as a service
The challenge
During a business transformation project, SAP’s HR leaders saw fair pay as a critical lever in supporting rapid change. It also offered a way to recognise employees’ efforts at all levels of the organisation.
The solution
Founded on the concept of equal pay for equal work, SAP:
Launched a global compensation framework to ensure internal equity and market competitiveness and provide all employees with a consistent and transparent job structure.
Removed promotional increase caps to avoid salary compression.
Ensured salary transparency and real-time pay insights for managers by ensuring data was up-to-date and made available through software.
Made annual pay adjustments to align with salary range minimums.
Leveraged technology to translate the fair pay vision and practices into day-to-day reality.
SAP went beyond gender by ensuring its fair pay practices applied equally to everyone, regardless of gender, race, culture or identity.
The results
99.8% of SAP’s employees can see the salary range for their job family and location in SAP’s HR software.
A global statistical analysis of SAP’s pay equity showed 99% of SAP employees were paid fairly for equal work in 2022.
An initial salary adjustment cycle was so successful HR only used 70% of its allocated budget in the next round of fair pay adjustments.
Headquarters: USA
Headcount: 75 | Working remotely across 15 countries
Sector: social media marketing
The challenge
With a core value of ‘transparency’, Buffer made a commitment to radical transparency that included its approach to pay. They not only shared their ideas internally but made them public in the hope it would influence more companies to do the same.
The solution
Buffer made a number of key changes over the course of a decade:
2013 - introduced the concept of ‘Open Salaries’ and created the company’s first formula to calculate everyone’s salaries which were shared with the whole team.
2015 - made the salary formula more robust by including data from external sources and launched their salary calculator which allowed anyone to work out what they would be paid if they joined Buffer (this is now only available for employees of, and people applying to, Buffer).
2017 - added cost of living bands to make the formula more consistent.
2019 - benchmarked all roles to the San Francisco 50th percentile.
2021 - clarified their compensation principles and launched their salaries page on their website. You can see every Buffer employee’s salary, job title and location, the salary calculation formula and compensation philosophy on this page.
2023 - simplified their compensation approach by only having two cost-of-living bands to support location-independent living.
2024 - released their new salary system including a detailed overview of the changes they’ve made including their approach to setting salaries and using market data.
The results
Buffer in 2013:
17 employees
8 different roles
Average salary was $100,812
Annual revenue run rate of $2.2M
Average revenue per team member was $129,411
Buffer today:
75 employees
30 different roles
Average salary is $151,113
Annual revenue run rate of $18M
Average revenue per team member is $240,000
While the improved revenue figures can’t be solely attributed to pay transparency, they’re likely influenced by the company’s commitment to living its values. As Joel Gascoigne, CEO and co-founder at Buffer notes, all this activity has led to greater trust: “We believe that trust is the foundation of great teamwork, and we’ve learned from over a decade of experience that transparency breeds trust.”
Headquarters: Denmark
Headcount: 64,000 | 80 countries
Sector: healthcare
The challenge
Novo Nordisk wanted to reach a level of global pay transparency to reflect the company’s values. This meant offering a sustainable, equitable and transparent rewards proposition to ensure all its employees feel respected, valued, included and proud to work for the business.
The solution
Novo Nordisk tackled six key areas:
Senior leader support - they created a Sustainable Rewards Council and invited senior leaders to provide advice around pay equity and transparency. They also developed pay ambassadors to manage the change through education and communication.
Data quality - ensuring it was reliable and well-maintained was a foundational step.
Living wage - a commitment to providing employee salaries and benefits to at least the minimum living wage of a given country, ideally exceeding it by around 20%.
Pay equity - a commitment was made to:
Balance gender representation across all managerial levels.
Not ask for salary history from internal and external candidates during the hiring process.
Provide rewards insights to people leaders via dashboards with dynamic data to highlight biases and pay gaps during key compensation processes - like salary reviews and recruitment offers - to help managers make effective pay decisions.
Annual pay gap reporting published internally and externally.
Inclusive benefits - that move the focus from market data to greater equity around the world. A country-level benefits gap analysis helped remove unnecessary exclusions.
Committed to diversity and inclusion targets to ensure leadership accountability and drive change - the targets included:
Creating an inclusive culture where all employees have a sense of belonging and equitable opportunities to realise their potential.
Achieve a balanced gender representation across all managerial levels.
Achieve a minimum of 45% women and a minimum of 45% men in senior leadership positions by the end of 2025.
The results
In 2023, just 0.6% of the positions covered in the pay review had an equal pay gap.
By Q2 2024 the share of women in:
Leadership positions increased from 42% to 46%.
Senior leadership positions grew from 35% to 41%.
82% of employees responded positively to statements about inclusion in the employee survey.
As you can see, none of these businesses has taken the same approach to pay transparency. So how can you decide on the best path to move your business towards greater pay transparency?
Introducing Pure Pay
We’ve assembled a crack team of reward and technology experts to help you quickly and easily achieve compliance and foster a culture of pay fairness. Our three-step approach helps you simplify the journey to pay transparency:
Readiness assessment
Our Pay Transparency Readiness Index identifies where you stand and what you need to do next. Get a customised report and playbook with clear, actionable steps tailored to your firm's size and location, ensuring a smooth transition.
Preparation Support
Bring your playbook to life with our expert guidance in:
Job architecture development
Job levelling
Salary band definition
Pay benchmarking
Pay equity audits
Communication and reporting
We craft the tools and materials you need to effectively communicate and report on pay transparency. We simplify manager involvement and offer training to ensure confident, effective pay-related conversations.
If, like Novo Nordisk and Buffer, you feel pay transparency is the right thing for your business to do, or you need to ensure compliance in the face of legislative change, we’re here to help. Book a free consultation with Michelle.
