Pay transparency shows just how mature your reward policy really is

How much do you earn? It is a question that makes many people shift uncomfortably in their seats. After all, pay is more than just a figure on a payslip; it is also closely tied to recognition, status, and self-worth. That sensitivity makes pay transparency a delicate topic for many companies. Yet new European regulations will require organizations to be more open about their compensation policies.

The EU Pay Transparency Directive will soon require companies to be more transparent internally about their pay policies. Although the directive was originally due to take effect in June 2026, Belgium requested a postponement. Companies breathing a sigh of relief may be missing the point, experts warn. The real question is not a legal one, but a strategic one: can your organization clearly explain to every employee why they are being rewarded exactly as they are today?

Pay transparency touches on a sensitive issue within organizations. “It is not just employees who tend to treat the subject with a degree of secrecy,” says Isabelle Meuleman, HR Director at KPMG in Belgium. “Organizations themselves often struggle to communicate clearly about their pay policies internally. Add to that the complexity of the Belgian compensation system, with base salary, meal vouchers, company cars, group insurance, and variable bonuses, and it becomes clear why many companies hesitate.”

Pay transparency is important not only because it is required, or because it helps close the gender pay gap. “It is first and foremost a maturity test for an organization’s compensation policy. Organizations with a well-structured compensation strategy should not view transparency as a risk, but as a lever for building trust and engagement,” says Carolien Van Echelpoel, Partner at KPMG in Belgium.

Transparency only makes sense when the underlying logic is sound. That requires a coherent compensation structure for every evaluated role, objective criteria for pay differences, and a clear reward philosophy. “You need to go through that exercise independently of the people currently filling those roles,” continues Van Echelpoel. “What value does a role bring to the organization? How should it be rewarded: based on performance, expertise, seniority, or other factors? Equally important, what does an employee need to do to progress to the next pay grade or position? When these principles are clearly defined, pay transparency becomes far less daunting than many organizations assume.”

A close examination of today’s compensation policies often reveal structural imbalances: inconsistencies in pay bands, historical distortions caused by mergers or individual salary negotiations during periods of labor scarcity, or roles that have evolved over time while their job grading was never adjusted. “In many cases, decisions were made in the past without being properly documented, yet they continue to shape people’s careers,” says Van Echelpoel. “As a result, the underlying logic may seem hard to find at first glance. This does not have to be a problem. In fact, it creates an opportunity to make adjustments and explain changes transparently. But organizations that communicate without being able to explain those differences are more likely to create distrust than trust.” 

A strong compensation policy is not a snapshot in time. It needs to be consistent from beginning to end. “At KPMG, for example, we already provide new hires at the point of recruitment with an overview of all benefits they are entitled to through an online Total Reward Statement (TRS). These benefits are also accessible for every role and employee via our intranet and the TRS. But we also communicate at key moments in someone’s career,” adds Meuleman. “Someone returning from parental leave, for instance, does not always know which benefits apply at that point in time. Those are exactly the moments when an employer can really make a difference.”

In most cases, it is the line manager who brings the message to the team. “Because this is such a critical topic, you only get one chance to get that conversation right,” says Van Echelpoel. “You cannot go back afterwards to adjust or soften your message three times over, because by then trust is already lost. Managers therefore need to not only understand the compensation policy, but also be able to explain and defend it. Otherwise, transparency misses its purpose. Pay transparency is not something you can tick off with a single conversation. It requires a culture of open communication, coaching, and continuous feedback.”

This article was created in collaboration with De Tijd and L'Echo.