Pay transparency is more than an HR project: it tests the quality of leadership

As new regulation approaches, a familiar process often begins: HR reads the legislation, payroll checks the data, lawyers assess the obligations and management waits for a summary.

All of this is necessary. For pay transparency, however, it is not enough.

At Rokmind, we believe pay transparency belongs directly on the leadership agenda. It makes visible how an organisation values work, determines pay, manages performance and explains decisions.

In other words, pay transparency tests the entire management system as well as the pay system.

The real test fits into one question

When an employee asks, “Why am I paid this amount?”, can the organisation answer clearly and consistently, using the same reasoning whoever responds?

If the answer varies according to the manager, unit, location or historical practice, the challenge extends beyond communication. It suggests that the reasoning behind decisions is not yet shared.

Pay transparency does not mean that everyone must be paid the same or that individual salaries will be published for all to see. Justified pay differences can and should exist.

Their basis must, however, be visible, understandable and consistently applied.

Three systems become visible

A pay decision becomes credible only when three elements tell the same story.

The first is the value of the work.

The organisation must be able to describe what the work actually involves and how its demands are assessed. A job title alone is insufficient. Relevant factors include the expertise required, responsibility, impact, independence, problem-solving, workload and working conditions.

This gives job descriptions renewed importance. If jobs have changed but their descriptions have not, comparisons between roles and explanations for pay decisions can easily rest on the wrong foundations.

The second element is the logic of pay.

Can we break total pay into understandable components? What rests on a collective agreement or starting level, what on the demands of the role, what on personal competence or performance, and what on different supplements or local arrangements?

Each component needs at least four things: a criterion, supporting information, agreed decision-making authority and the ability to discuss the decision.

A pay difference may be entirely justified. Its explanation should not, however, rest on a general impression of a person or the phrase: “That is how we have always done it.”

The third element is everyday leadership.

Pay transparency shifts pressure from the system into the conversation. A manager needs to connect the pay decision to agreed criteria, listen to the employee’s experience and address differing perspectives.

A legal instruction alone will not create this capability.

Managers need shared language, calibration, practical rehearsal and the confidence to have difficult conversations. Otherwise, the same system can produce very different decisions across the organisation.

There is no need to wait for the final wording of the law

In Finland, Government Proposal HE 129/2026 vp on pay transparency is under parliamentary consideration. The proposal envisages the changes taking effect on 1 January 2027, but the content and timetable may still change.

This does not mean organisations should wait.

Preparation can begin with work that will remain useful even if individual provisions change:

Make current job descriptions, pay models, decision-making and data visible.
Test comparison groups, pay criteria, exceptions and possible unexplained differences.
Prepare a correction process, a shared approach for managers and communications.

This work is about more than meeting a future obligation. It can also clarify leadership, reduce arbitrary decisions and strengthen trust.

Openness can support leadership

Poorly prepared pay transparency can increase uncertainty, perceptions of unfairness and difficult conversations.

When well led, it can do the opposite.

It can help an organisation articulate what is expected of work, what is valued, how performance is assessed and how decisions are made. It also requires examination of historical practices and exceptions that people may not have dared to challenge for a long time.

Rokmind’s Jari Hellstén will explore this perspective in a presentation to Puutuoteteollisuus on 17 September. Jari’s extensive experience of performance-based pay systems and demanding People & Culture transformations brings an important combination to the discussion: an analytical understanding of structures and the human side of change.

At Rokmind, we see systems and technology as tools. Ultimately, people, leadership practices and the organisation’s everyday work determine the outcome of change.

The law may still change. The need for clear reasoning behind pay does not.

Leaders can start with one question:

Which parts of our pay logic already stand up to scrutiny, and where do the system and everyday practice still tell different stories?

This article reflects the situation on 7 September 2026. HE 129/2026 vp is a government proposal whose content and timetable may change during parliamentary consideration. This article is not a legal opinion.

Sources: Government Proposal HE 129/2026 vp and Directive (EU) 2023/970.

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CEO

Melina "Mellu" Näätänen

Senior Executive Coach

Jari Hellstén

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