The author of the blog, Mia Norhomaa, is part of the Fairness & Friends expert pool. She is an experienced change leader with a strong background in business and organizational development – both as a consultant at Accenture and EY and in management positions at Veho and Forenom. In her blog, she examines how transparency extends to different levels of the organization and pushes to develop leadership structures and an open culture to act as a strategic competitive advantage.
The national preparation of the EU Pay Transparency Directive, which will enter into force in 2026, is underway. At the same time, organizations have already begun to consider its effects and the practical measures required by the new regulation.
Aiming for a more equal working life
A key objective of the Directive is to increase transparency in gender pay and thus promote equality in working life. For organizations, this opens up an opportunity to:
- identify and correct structural deficiencies in pay
- strengthen communication of existing good practices
- build trust internally and externally
In other words, pay transparency does not mean the possibility to inquire about colleagues’ current salaries, but a systematic way of identifying larger deviations (more than 5%), addressing them and ensuring that equal pay is paid for the same work and for work of equal value. Above all, it is a question of the transparency of the principles of pay: they must be clearly defined, documented and accessible to everyone.
Practical impact on organizations
When an organization starts working on practices in accordance with the directive, it is often noticed that the current documentation on pay is not up-to-date or clear enough. Simply documenting current, possibly outdated models, does not serve the purpose. Genuinely functional structures and comparable practices are needed, since the directive also requires equality between collective agreements. This requires the organization to have a comprehensive pay system that can be used to demonstrate comparability.
In many organizations, the first reaction is “let’s take care of this with a minimum”, for example, with an Excel summary. While this may seem tempting in the midst of resource pressure, it is important to understand what a good and sustainable solution requires. The directive is not just about reporting average data – it is an opportunity to renew pay systems and strengthen culture.
Well-designed and managed pay transparency not only fulfils the obligations of the Directive – it strengthens trust, engages employees and attracts talent.
Pay is an integral part of the organization’s everyday life and operations:
- It has to do with goal setting, performance management and bonus models
- It is visible in recruitment, role development, and even sales monitoring
- And above all, it has a direct impact on an individual’s livelihood.
Despite the fact that HR bears responsibility for the implementation of these processes, the harmonization of pay structures and the review of roles require cooperation, resourcing and commitment from management. The Pay Transparency Directive is a cross-cutting theme for the entire organization, and it must be part of the agenda of the management team and the Board of Directors.
When managed well, pay transparency creates a competitive advantage, increases trust and strengthens the organization’s values on a practical level.
Questions that every organization should answer:
- How can we integrate pay more strongly into operational activities across organizational and country borders?
- How do we use transparency as a competitive advantage and to strengthen culture?
- What are the risks if we wait?
- And above all: how can we be pioneers in this change?
