Two years of pay transparency – an honest look at successes and challenges

Pay has traditionally been one of the most closely guarded secrets in Finnish working life.  Here at Crasman, salary ranges have been visible in job ads for a long time, but internally, pay was as much in the dark as it is in many other organizations. In 2023, we set out to plan the transition to a pay-transparent model. The model has been part of our day-to-day for just over two years now.

The EU Pay Transparency Directive has put this topic on the table for many organizations in recent months. We're lucky to be at the point where the hardest work is behind us, and pay transparency has become part of our day-to-day. Of course, the model is never finished, and there's always more to refine.

Now is a good moment to pause and reflect on what our pay transparency journey has taught us: what good pay transparency has brought, what has challenged us, and how we intend to develop our pay model going forward.

What is our model about?

Pay transparency is, for us, a tool for predictability and fairness. Our model consists of three building blocks:

• Pay levels and expectations. Our model is based on pay levels, each tied to a set of expectations. The expectations describe how much expertise, responsibility, proactivity, and decision-making the level requires. Impact and acting in line with our values are also essential parts of the model.

• Transparent ranges and medians. For each pay level, we openly share both the range and the median salary. This gives a concrete reference point for where each person is on their own path and a clear picture of what we pay for different levels of expertise and responsibility.

• Continuous development. We review the pay model every year. At the same time, we go through the previous year's compensation figures with our staff: developments in payroll costs and median salaries, the distribution of pay raises across pay levels, and the development of gender pay equity.

Lessons from our first rodeo

This really has been our first rodeo. We've had to figure most things out for ourselves: there have been no instructions to follow, and hardly anyone to copy from. Experience has also taught us that there is no shortcut to pay transparency. It's not a project that ends at launch – writing the model down is only the starting point. After that, the real work begins: embedding the model, having the conversations, making corrections to the model, and fine-tuning it continuously.

Along the way, we've run into the following challenges, among others:

• The difficulty of definition. Breaking knowledge work down into clear criteria and levels is demanding. It's hard to describe expectations in a way that is concrete enough but doesn't get lost in the details. If we built detailed criteria for every pay level for each of our competencies and roles, the framework would balloon out of control. Drawing the lines requires constant fine-tuning and dialogue.

• The risk of oversimplification. Numbers and tables never tell the whole truth about an individual's contribution to an organization. That's why a pay model can never rely on metrics alone. Finding the right way to evaluate the full breadth of someone's contribution has proved harder than we expected.

• Pay is more than a number on a payslip. Pay is closely tied to how we see our own competence and worth, and transparency always brings a degree of vulnerability with it. We've had to learn how to have constructive conversations even when someone's own experience doesn't match the pay level criteria. It has required the courage to have conversations that might previously have been left unspoken.

• Ignorance is bliss. Pay transparency is a moment for the company to look in the mirror, and it efficiently reveals the blind spots in compensation. For us, the work began by fixing pay gaps and unexplained pay differences.

What transparency has given us

Despite the challenges, the benefits have been undeniable. Over two years, transparency has concretely changed three things: the way we lead compensation with data, our culture of talking about pay, and the predictability that now surrounds pay decisions and budgeting.

Pay data has become a tool for equality. As part of our annual review, we go through the previous year's pay data with our staff, including the state of gender pay gaps. Our starting point was, fortunately, already fairly good, but the numbers showed there was still room for improvement – something we would not have fully seen without open scrutiny. Today, thanks to the pay transparency process, we no longer have unexplained gender pay gaps.

We believe the only way to ensure true equality is to look at pay data regularly and critically. If we find deviations that cannot be explained by skill or responsibility, we have a clear duty to fix them. Transparency works in both directions: it protects employees and helps employers lead more fairly.

Pay transparency has dramatically increased internal discussion about compensation. Questions have shifted from the "who earns what" type to deeper questions at the heart of compensation: how are the expectations for a level defined, which criteria actually carry weight in pay decisions, how can someone move from one level to the next? This also challenges us as an employer to answer better. Open discussion has also surfaced things that previously went unsaid – for example, what someone can earn here at their best, and what it takes to get there.

Leadership has become clearer and more predictable. Pay transparency has pushed us to reflect on and articulate what we value and what we reward. It has also made the work of managers easier. When the pay levels and their expectations are clearly described, conversations about pay and growth rest on a shared framework that supports those discussions. Managers don't have to invent justifications on the fly, and employees actually get to know what moving to the next level requires.

For employees, this model makes career growth predictable. Instead of pay raises depending on who negotiates the hardest, everyone can see what each skill level pays and what it takes to reach the next one. Tt doesn’t eliminate negotiation entirely, but it gives everyone a fairer start.

What's next?

For the coming year, we've identified a couple of areas where we want to focus our efforts: we want to give pay raises in a more employer-initiated way, and to establish clear emphasis and criteria for how those employer-initiated raises are awarded each year.

We believe that employer-initiated raises promote pay equality and keep employees engaged. It shows our people that we actively track their growth, value their contributions, and reward them without them having to ask. Articulating and clarifying the weightings and criteria for employer-initiated raises, in turn, steers our decisions in the direction we see as best for Crasman's success.

The best benefits of pay transparency emerge when the pay model is perceived as fair, when role- and level-specific expectations are clear, and when pay is discussed openly and regularly. For us, improving these core pillars will be an ongoing process.

Finally:

The EU Pay Transparency Directive will soon bring its own ground rules into the everyday work of many organizations. If this journey is still ahead of you, here's my tip: don't treat it as just an obligation – take it as an opportunity to develop your company's leadership, culture, and equality.