Workplace communication is a constant topic of discussion with respect to driving culture, strategic direction, and employee engagement. We can now add pay to the list. A recent Wall Street Journal article, Ask Me How Much Money I Make: Pay Gets More Transparent, highlighted another difference as to how millennials act and communicate at work. Millennials are very open with one another about their pay, benefits, bonuses, promotions, etc. Previous generations tended to be more private and hold pay and benefits information much closer to the vest. Not so for millennials, approximately one-third of millennials (average ages 18-36) indicate their comfortableness with discussing pay with their co-workers – about four times the rate of baby boomers. In fact, the article illustrated an example of an employee who felt that open discussion among peers helps young workers learn how to negotiate regarding pay and benefits. In light of this change in workplace practices, what should employers be aware of as they prepare for this?

NLRA Limitations

First, a reminder as to legal pay communication at work: The National Labor Relations Act (NLRA) allows employees to discuss with one another anything having to do with wages, hours and working conditions. So, for employers, the NLRA makes it illegal to either officially (via a policy) or in practice, prevent pay conversations. This legal consideration is expanding as certain cities (Philadelphia, New York City) and states (Massachusetts in 2018) have new regulations preventing employers from asking job candidates about their pay history.

Think Big Picture

Second, employers should adopt more formal pay practices to ensure market competitiveness in an effort to attract and retain top talent. What does this really mean? At least every other year, employers need to compare their pay programs to similar jobs in similar geographies – simply because employees, especially millennials will. This doesn’t mean that employers must pay what the market bears, but knowledge is power. Employers can decide on a compensation philosophy which pays at market, above market, or below market. The importance is to have a philosophy and implement it. When the time comes to negotiate a job offer with a job candidate or a counter-offer with a current employee, the employer will know the market data and be able to make an educated decision. Additionally, having valid market pay information makes it easier to communicate with employees about their compensation, why some positions command higher pay than others and will enable trust in all compensation communications going forward.

Paths Forward

Third, organizations should create career paths which enable employees to grow both in role and in pay. This is critical in both attracting and retaining employees, especially millennials! If an employer cannot pay at market but can offer career development, it can be the difference in hiring or retaining top talent.

More and more pay information and decisions are becoming transparent in the workplace. There are many reasons, but near the top of the list, millennials demand it. More importantly, employers are competing for good talent and finding it harder to retain top talent as unemployment rates continue to drop. A sound pay communications strategy, inclusive of being market competitive, career-oriented, talent retentive, and regulatory compliant, will enable employers to compete in the “war for talent” – especially for millennials.