In times of digitalization and changing social values, company data transparency and its significance for talent and compensation management is also an issue undergoing changes. In order to manage the associated risks and, at the same time, make full use of the opportunities that transparency offers, companies should approach the topic with a critical but proactive eye. hkp.com talks with hkp/// group experts Martina Schüpbach and Johanna Rewald.
Ms. Schüpbach, Ms. Rewald, why is the topic of transparency so hot these days?
Martina Schüpbach: Our increasingly digitized world allows for the availability and general transparency of company and personal data. However, due in large part to the internet and social media, companies are not always in the position to decide which information becomes public. This also applies to sensitive data about salaries, management behavior, or working environment.
This development poses a particular challenge to HR management...
Johanna Rewald: HR works primarily with personal data, so it must walk a thin line between data protection and the increased need for information of various stakeholders.
Martina Schüpbach: Transparency therefore can never be seen as an all or nothing decision. Each company must weigh opportunities and risks and decide for itself to what extent, at which point and in which form data can and should be shared.
Which opportunities and risks come to mind?
Johanna Rewald: For instance, a targeted release of information can be used to counteract the uncontrolled publication of internal company information. If a company, for example, allows for a deeper view into its corporate culture, potential applicants don’t have to rely solely on more or less professional online platforms.
Martina Schüpbach: At the same time, it is extremely important to check the information and processes being made public in advance. The transparency created should help communicate a realistic and positive image to the outside world.
In your view, does transparency present more pros than cons?
Johanna Rewald: Objectively speaking, the advantages outweigh the disadvantages. The more information is available, the more efficient and effective the work can be done. But transparency is also an emotional issue. If employees are prepared for more openness, a higher level of transparency can lead to greater commitment and satisfaction. However, if disclosed information is perceived negatively, for example in the context of performance management by highlighting poor performance, counterproductive behavior is often the result.
Martina Schüpbach: Employees react differently to an increased level of transparency. This depends, among other things, on individual preferences and experiences as well as the extent and manner to which employees are personally affected by this data. In addition, we often experience slight schizophrenic behavior: people reveal their personal data to an astonishing degree in their private lives, for example on social media. Within the professional context – at least at this time – they will often flatly reject this. Companies have to deal with this.
Transparency is associated more with compensation than talent management. How does that relate to this context?
Johanna Rewald: Awareness and interest in talent management issues have grown enormously in the past years. Employees are interested in what career and development opportunities are being offered and which goals their manager and team members are pursuing. This underlines the great interest in the transparency of corporate values, leadership styles or career models, but also of instruments or processes such as the evaluation of performance and potential or professional development.
In compensation management we are dealing with very sensitive personal data! Isn’t transparency tricky in that case?
Martina Schüpbach: Absolutely! Compensation data is treated very differently by companies and individuals, but usually with discretion. So along with a strategic decision on what, how, where and through whom to communicate, particular care is needed in communication.
Johanna Rewald: However, the sensitivity regarding compensation data in particular also greatly depends on one’s cultural background: in Germany, we see a rather conservative and cautious approach to compensation data, which leads to even wider public speculation about it. In other cultures, it is spoken about this topic rather pointedly, as a sign of people’s pride about their income.
One dominant view of compensation data in our culture is specifically competitive: confidentiality has its advantages...
Martina Schüpbach: It depends on the level of hierarchy. When it comes to Executive Board compensation, transparency has brought light into the darkness and made compensation systems measurably more professional. Meanwhile, the standards for compensation transparency of listed companies in Germany are taking the lead internationally. But this applies to other employee groups as well: compensation always reflects the business model, corporate culture and success of a company and its esteem for the individual. Therefore, a very restrictive approach to information about compensation systems and rates can quickly lead to doubts about fair and market appropriate compensation.
What should companies do in your opinion?
Martina Schüpbach: Fringe benefits pose less of a problem, as entire catalogues of valued benefits are openly communicated nowadays. Especially since, for example, a company car is still regarded as an object of public prestige. Individual compensation is another story. Here, for example, one might consider publishing compensation systems and their application to different salary levels within the company. Communicating compensation layers would also be an option.
Johanna Rewald: If individual development opportunities along various career paths are outlined, compensation communication takes on a wide-ranging character. An overall picture is presented, taking the focus off possibly critical compensation details without hiding them.
Do you have any other recommendations for companies regarding transparency?
Johanna Rewald: As we've already mentioned, transparency should be seen more as a continuum than two opposite poles. How much transparency HR wants to achieve and in which part of the company should be decided on an individual basis, while weighing the opportunities and risks.
Martina Schüpbach: When making decisions about data transparency it is also important to reflect existing behavior towards information, taking the corporate culture into account. Where a company promotes a culture of trust and greets transparency with open arms, lots of positive results are to be expected.
Ms. Rewald, Ms. Schüpbach, thank you very much for the interview!