Pay Communication: Is Our Objective Transparency ... or Clarity?

What exactly should we be shooting for in our pay communication efforts?  Is it transparency ... or is it clarity?

In a post today on his Harvard Business Publishing blog, John Maeda (President of the Rhode Island School of Design) makes the point that these are two very different things, and that we must take care not to confuse them. 

From Maeda's post:

Full transparency is access to all the facts.

But only selective transparency is actually attainable, especially in recessionary times when unpopular decisions need to be made. If you promise full transparency, when you make even one aspect of your business non-transparent — which is often legally and emotionally necessary, especially with personnel matters — people question your credibility.

Often the facts are too complex for those far from the decision to understand. I have found on countless occasions that even with an MBA and years of statistical training as an engineer I scratch my head about some of the numbers I have to manage. Thus to offer a set of raw data to any constituency opens the door to selective interpretation. There is clearly a wide gulf between having access to the facts themselves and having access to an understanding of the facts.

There are solid implications here for those of us involved with reward programs.

If full transparency is access to all the facts, then full transparency is neither appropriate nor is it likely in the cards for your organization's reward program.  This is because the facts which legitimately impact compensation include not only pay program details and not only employee salaries themselves, but also information on each individual's education, certifications, work experience and performance appraisal results and ratings.

Not gonna happen, in all likelihood.  Nor should it.  Nor would full possession of all this information necessarily lead to understanding because, as Maeda points out, the wide gulf that exists between having access to the facts and truly understanding what they mean.

Full clarity, on the other hand, is access to a full understanding of the facts (borrowing Maeda's definition).  This makes more sense to me as an objective:  a full understanding of the facts as they apply to how an employee is paid.  This is achieved through disclosure and explanation of the purpose and mechanics of the pay program and - specifically - how they apply to a particular employee's situation.

Full clarity ... rather than full transparency.  What do you think?

Image: Creative Commons Photo "Industrial Window Study 3" by greeblie

Comments

[jessica lee]

hmmm. i like this - fully clarity versus full transparency. and i think it could be applied in other situations too - selections in a hiring process, promotions, terminations... an individual employee might not need to know, nor should they know all of the reasons that went into a particular decision... but if they understand the decision making process and the issues or facts pertinent to just them, then i think that's what's important.

[E James (Jim) Brennan]

On July 11, over in the World At Work Community Compensation forum, in the string, "Downgrading a Job" (about the need for explaining pay grade rules), I posted the following paragraph:

There is a difference between pay grade secrecy and completely open full disclosure concerning all total rewards practices. The Pareto Principle is indeed operative and the pay grade structures that apply to 100% of the population can be revealed without volunteering every special individualized accommodation customized for application to members of "the vital few." People aren't cans of peas with a single uniform equilibrium-point price. Variety rules.

So today, I idly ask, is he a member of the W@W Community site? That section is indeed open to the public.
;-)

[Margaret O'Hanlon]

Full clarity is the goal, but we often fall short of this in compensation. Many Human Resource managers believe that communications can only mean transparency, which is not only confusing, but misleading to the uninitiated. So they skip it rather than working toward a genuine clarity, which involves thoughtful education, listening, talking and time.

We can accomplish an impressive level of clarity. There are many great examples in Human Resources. But, on another topic, this is one of the things that has me so worried about the health care dialogue. It seems like no one with experience is trying to build clarity among the public. I'm hoping that doesn't mean that the thinking is muddled, too. I got a bad feeling from the dialogue about executive comp where transparency offered no where near clarity, if you noticed.

[Joe Rice]

There is always neither. Unfortunately that is the current approach of my company.

[David Janus]

Nice post, Ann. I think the distinction between "full transparency" and "clarity" is definitely helpful. I see this in my work designing total compensation statements. We strive to create statements that quite clearly explain each individual's pay and benefits but, at the same time, each employee sees only what is relevant to him or her. So, in other words, each statement doesn't include a section explaining all of a company's incentive pay programs; rather, the programs for which a particular employee is eligible are clearly (and crisply) explained.

[Ann Bares]

Jessica:

You're right - I think this concept could apply to a lot of what we do in HR. Glad you like!

Jim:

Never can tell. It's an open source world.

Margaret:

Great thoughts. I think you're right on - that we often confuse clarity and transparency. That was why this post struck a nerve with me. And I agree: We can accomplish an impressive level of clarity. Without full transparency.

I worry, too, about the fast moving conversations happening in Washington these days. Not a lot of transparency or clarity. And, like many employees, it prompts me to wonder "what are they hiding?"

Joe:

Not a great approach, is it?

David:

Agreed - these concepts and the distinction are instrumental to development of clear total compensation statements. Or any total reward communication.

Thanks, all, for the great thoughts and discussion here. Glad to see that you found this distinction as helpful and useful as I did.