Navigating the EU Pay Transparency Directive with SAP SuccessFactors

In today’s world, transparency isn’t just a buzzword—it’s a mandate. The EU Pay Transparency Directive is reshaping how businesses handle compensation, pushing for a more open, fair and equitable workplace.

At Effective People, we understand that meeting these requirements isn’t just about generating a report; it’s about fostering a culture of openness and equity. Here’s how SAP SuccessFactors can help you not just comply, but thrive under the new directive.

Understanding the Directive

The EU Pay Transparency Directive mandates a series of requirements for employers, aimed at ensuring transparency and fairness in pay practices. These include:

• Informing applicants about starting pay or pay ranges before interviews

• Prohibiting questions about candidates' pay history

• Providing employees with information on pay ranges for similar work categories upon request

• Basing career progression and pay decisions on gender-neutral criteria that employees can review

• Allowing employees to discuss their pay openly

• Providing pay comparisons between employees and their peers, including gender breakdowns

More Than Just a Report: A Holistic Solution

While our “Compensation Insights” report is a powerful tool, it’s only part of the solution. Adhering to the directive requires a multifaceted approach that integrates recruiting, Employee Central (EC), internal knowledge-sharing, and a supportive culture. Here’s how the SuccessFactors solution supports each requirement:

1. Informing Applicants About Pay

In SAP SuccessFactors Recruiting Management, standard fields in the Job Requisition module allow you to include starting pay or pay ranges in job postings. This ensures transparency from the very first interaction with potential hires. Additionally, if you have Employee Central set up with Pay Ranges, this data can flow seamlessly into your recruiting efforts. This integration means that hiring managers and recruiters are working from the same accurate and up-to-date pay range information, reducing inconsistencies and making compliance easier.

2. Avoiding Questions About Pay History

While this isn’t a system requirement, it’s crucial that your recruiting team and interviewers are trained to avoid these questions. SuccessFactors can support this through structured interview guides and recruiter training modules, which can be linked to Employee Central. By leveraging EC, organizations can centralize their compensation policies and ensure that recruiters are aligned with the directive without relying on outdated or irrelevant candidate pay history.

3. Providing Pay Range Information

Employee Central plays a key role here. Pay ranges can be configured and managed within SuccessFactors Employee Central, ensuring that employees have access to accurate and real-time information about pay ranges for similar work categories. Additionally, SuccessFactors Reporting capabilities, such as Report Story, allow for easy generation and distribution of these pay ranges to employees upon request. This not only ensures compliance, but also supports a culture of transparency.

4. Gender-Neutral Career Progression Criteria

Using SuccessFactors Compensation Management and Employee Central, you can ensure that pay decisions are based on specific, gender-neutral criteria. By centralizing these criteria in EC and making them available via an internal knowledge-sharing platform, you can further enhance transparency. Employees will have clear visibility into how pay decisions are made, creating a more open environment for career progression.

5. Encouraging Open Discussion About Pay

Creating a culture where pay discussions are encouraged starts with clear communication during onboarding. While this isn’t a system requirement, leveraging SuccessFactors Learning Management System and Employee Central to educate employees about their rights can foster this cultural shift. This way, organizations can use a unified platform to support ongoing learning and openness around pay policies.

6. Providing Pay Comparisons

For more mature organizations, SuccessFactors, especially with Employee Central, can generate comprehensive reports that compare individual pay with peers, including gender breakdowns. Leveraging tools like compa-ratio or range penetration makes these comparisons clear and actionable. Having this data readily available in Employee Central means that any reports generated reflect the most up-to-date compensation details, supporting more accurate and timely decision-making.

Diving Deeper: Reporting and Analytics

While the basic reporting capabilities of SuccessFactors are critical for meeting compliance, there is an opportunity to explore reporting in more depth. With advanced reporting tools available in Employee Central and SuccessFactors Compensation, you can uncover trends, identify potential pay discrepancies, and monitor pay equity across your organization. Whether we focus on this in more detail in separate blogs depends on how many posts we aim to publish on the topic.

The Path Forward

Compliance with the EU Pay Transparency Directive isn’t just about checking boxes; it’s about creating a transparent, fair and engaging workplace. At Effective People, we believe in providing a 360-degree solution, leveraging SAP SuccessFactors and Employee Central to help you navigate this complex landscape seamlessly.

Transparency is a journey, not a destination. By integrating these practices into your daily operations, you’re not just complying with a directive—you’re building a workplace where every employee feels valued and fairly compensated.

Join the Conversation

We’re here to support you every step of the way. Let’s discuss how we can tailor these solutions to meet your unique needs and create a transparent, equitable environment for your workforce.

For further insights into the EU Pay Transparency Directive, you can refer to this comprehensive guide. Let's build a better, more transparent future together.