Pay Transparency: A Transformation Project, Not Just HR

The EU pay transparency directive is progressively coming into force. The way companies choose to approach it is not a mere execution detail: it will determine whether they treat it as a simple compliance exercise or leverage it as a genuine transformation driver. The former will miss what truly matters; the latter will emerge stronger.

It is only natural for a company facing a new regulatory obligation to seek compliance first. As a result, many organisations approach pay transparency through a technical lens — focusing on producing indicators, publishing gaps, and bringing processes into line. Others take a social angle, adjusting pay scales and negotiating with employee representatives. Both approaches are legitimate but insufficient: what pay transparency brings to light goes far beyond the question of pay gaps. For many organisations, the gender pay gaps that the directive will make public are rooted in a structural imbalance at the top of the pyramid. This is a strategic issue that companies have real power to address: succession planning, women's access to leadership positions, and an explicit commitment to correcting these imbalances over time.

Indeed, the directive makes visible the inherited legacies, successive trade-offs, and gaps that have widened over time without their overall coherence ever having been genuinely questioned. In this sense, the directive acts as an organisational mirror — and it is precisely this dimension that calls for treating it as a true transformation project rather than a one-off compliance exercise.

The companies navigating this topic most smoothly are generally those that have chosen not to confine it to the legal or payroll function, but to make it a genuine transformation project, led by HR with the support of senior leadership. This positioning acknowledges a reality: the issue touches on dimensions as fundamental as corporate culture, the sense of fairness, and employees' trust in their employer. It also anticipates the long-term role managers will play as the first point of contact for employees seeking to understand their pay positioning. It is precisely because the topic touches on these dimensions that the transformation path cannot be the same for everyone: the right path depends on where you start from and the organisation's history.

Our field observations have led us to identify three types of approaches.

1. Transformation within transformation: when pay transparency is embedded in ongoing initiatives

Some companies come to this topic while already engaged in large-scale projects: a new HRIS implementation, a job framework overhaul, or an internal reorganisation. In this context, the temptation to defer is strong — so as not to overload an already packed agenda. Experience shows, however, that waiting rarely pays off: every ongoing transformation represents an opportunity. These are the moments when key decisions are made: it makes far more sense to embed pay transparency into these initiatives than to address it separately, later on.

The solution is to anchor pay transparency to already-open workstreams. For instance, when an organisation integrates, from the very configuration of its new HRIS, the ability to produce indicators by work category, gender, and entity level — rather than relying on Excel-based consolidation after the fact. Or when a job framework overhaul becomes a natural opportunity to define the homogeneous work categories the directive will require to be published. The idea is to channel existing momentum rather than multiply workstreams.

In this configuration, managers are already heavily engaged in ongoing transformations, and there is a real risk that pay transparency will be perceived as an additional burden whose purpose escapes them. It is therefore all the more valuable to involve them from the design phase, inviting them to co-construct the compensation framework rather than asking them, at a later stage, to apply a framework that has already been decided.

The key risk in this configuration is not inaction but dilution. When multiple transformations overlap, pay transparency can gradually lose visibility and end up without a clearly identified owner. To avoid this pitfall, it is useful to ensure that a COMEX-level sponsor is designated, that a project team, even a small one, bears responsibility for it, and that dedicated governance milestones are in place to track progress.

2. Multi-entity groups: when governance is the primary challenge

These organisations — present across many countries, with heterogeneous information systems and HR practices — find that pay transparency raises a governance question above all else. Before discussing pay scales or data, they must first clearly determine who decides what, at which level, and according to which subsidiarity principles.

The most common pitfall is to hand the entire project to headquarters, which then builds a globally coherent classification that proves difficult to apply locally. The optimal approach rests on an articulation between two levels: on one hand, a shared framework of competencies and levels of responsibility serving as the group's common language; on the other, a local adaptation translating that framework into applicable legal classifications, collective agreements, and market realities specific to each geography.

In this type of configuration, the manager occupies a particularly sensitive position: they are the natural interface between the framework defined by the group and the reality experienced by teams on the ground. They will be called upon to explain to an employee the reasons for their pay positioning relative to others in the same category within their legal entity — and to do so with a discourse that is both sincere and coherent. Organisations that prepare best for this stage equip their managers with contextualised talking points and do not leave them to face these conversations alone. They rely on HR business partners who know the history behind each situation, who were involved in the decisions made, and who can, when the time comes, provide managers with the depth of context that talking points alone cannot convey. It is under this condition that tooling makes full sense: a decentralised tool, accessible to managers and HR business partners, enabling them to respond quickly and with documented support to an employee's query — without every request having to escalate back to central compensation teams.

For these organisations, what makes the difference is the quality of sponsorship at Group COMEX level: it is what allows local entities to engage with confidence, as the group ensures overall coherence and data consolidation while each entity retains ownership of its concrete application.

3. Groups built through successive acquisitions: when transparency reveals an unfinished integration

This third configuration applies to groups that have grown through successive acquisitions, bringing together entities each with their own history, their own pay culture, and often different collective agreements. These entities were integrated without being truly harmonised, and the directive now shines a light on what many had sensed without formalising: the same role can result in significantly different pay levels from one entity to another, for reasons rooted more in history than in performance or level of responsibility.

Faced with this reality, two reactions present themselves. The first is across-the-board harmonisation: reopening all agreements simultaneously, at the risk of generating considerable social tensions. The second is inaction: changing nothing and publishing indicators that, as they stand, are bound to raise legitimate questions. The viable path is to sequence: first make classifications legible and data comparable without touching existing agreements, then identify the most sensitive areas of disparity, and finally open targeted negotiations within the framework of a multi-year roadmap.

It is in this configuration that managers face the greatest exposure: they will be required to hold conversations where the pay gap between two employees in comparable roles can only be explained by their entity of origin. This observation, while potentially uncomfortable, is not indefensible: entity of origin is an objective, traceable, and directive-compliant criterion. However, managers must have a firm command of the associated narrative: this is why sharing the compensation criteria charter with them — and ensuring genuine ownership — is a prerequisite for holding these conversations. Without this command, talking points remain hollow; with it, they become a credible and meaningful argument. It is therefore particularly important, in this scenario, to invest in manager training for these types of conversations, and to back them with a salary convergence roadmap credible enough to be presented to teams.

What pay transparency reveals in this configuration is often that post-acquisition integration was never fully completed on the compensation policy front. The directive can then play an unexpected role as an accelerator, giving the Group HR function a legitimate — and external — reason to finally open conversations about internal equity that the social calendar had not yet allowed.

Getting ready today rather than reacting tomorrow

The American experience — subject to similar requirements for several years — offers a useful warning signal. Companies that published pay ranges without first structuring their compensation policy triggered a dynamic that proved difficult to control: immediate cross-sector comparisons, internal demands fuelled by data without an interpretive framework, and salary escalation that their foundations were not equipped to absorb. What was missing was not the will, but the time to build structure: an up-to-date job framework, formalised policies, adapted tools. European companies still have that advantage ahead of them.

Whatever configuration a company recognises itself in, one lesson stands out: the organisations approaching this step with the greatest confidence are those that began, well before the directive came into force, to build a culture of pay transparency and to put the necessary foundations in place. The directive found them ready. For those not yet there, the challenge is not simply to catch up, but to choose, right now, the right transformation path.

In every scenario, it falls to the manager to make the system legible for each employee. Organisations that invest in preparing their managers for conversations about pay gaps will quickly see the difference compared with those that waited for the first requests before giving it any thought.

Pay transparency is not a compliance exercise — it is an organisational mirror. The question is not whether a company is ready, but which transformation path will get it there, starting from where it stands today.