What Reward leaders can take away from IKEA’s pay transparency journey
20.08.25
Equal pay and transparency aren’t just legal requirements – they’re strategic imperatives. That was the message from Konstantinos Karavidas, Global Head of Reward at Ingka Group | IKEA, when he joined us at Benifex’s Future of HR Forum.
Konstantinos challenged reward leaders to stop framing pay transparency as a compliance burden and start treating it as an opportunity. Done well, it’s a chance to modernize reward, embed fairness, and create a culture of accountability.
Konstantinos shared four core areas that he believes will become non-negotiable for reward teams under the EU Pay Transparency Directive:
1. Factor-based job evaluation
The Directive is putting structure back in the spotlight – and that includes formal job evaluation frameworks. While many organizations have preferred looser job slotting methods, factor-based evaluation is making a come-back.
IKEA sees this shift as a necessary step to ensure consistency and comparability. While it may feel like a step back, it’s also the foundation for meaningful equal pay analysis.
“The reason why I say it’s the revival of the dead is because practitioners like myself don’t necessarily like job factor-based evaluation. We do job slotting, which is similar, but not exactly the same. So, it’s bringing us a step back, if you ask me. But again, I welcome that challenge to ensure that we have the right infrastructure to show that we’re doing the right job evaluation.”
2. A clearly articulated pay philosophy
A defined pay philosophy is no longer a nice-to-have – it’s an operational requirement. Under the Directive, employers will need to clearly articulate how they set pay, how progression works, and why certain pay outcomes occur. Konstantinos emphasized the growing expectation for companies to be able to explain their approach to employees and external stakeholders alike.
“[Pay philosophy] shifts the balance of power from the company to the employee. Now we need to defend why, not the other way around. And I think it is a very strong message, and it pushes us to the right direction quickly.”
For reward leaders, this means moving to a philosophy that’s consistent, transparent, and defensible.
3. The right to pay information
The Directive empowers employees with the right to request pay information, which dramatically shifts the balance of power.
Line managers, not HR, will often be the first point of contact when employees ask “why.” IKEA’s approach has been to invest heavily in manager training, equipping them with the knowledge and language to answer pay-related questions confidently and accurately.
“We train managers in equal pay, we try to explain why we do equal pay analysis, why we want them to help us prevent gaps. And this is our attempt to hit the core reason why gaps are created. If we manage to shift that, we manage to close the gap for the long term, not just for the short term.”
4. External reporting requirements
External reporting may feel like the final exam for reward teams – a public-facing demonstration of internal practices. Konstantinos acknowledged that while reporting gaps may oversimplify complex realities, organizations still need to prepare for this scrutiny.
At IKEA, this has involved building a granular, actionable approach to equal pay analysis that goes beyond surface-level metrics. By examining gaps at the most detailed levels of their job architecture, IKEA aims to address root causes rather than rely on a single headline number that lacks nuance or context.
Konstantinos acknowledged the challenge but stressed the opportunity: public reporting is not just compliance – it’s proof of accountability. As he put it: “Even though there is no shaming and blaming, peer pressure always works.”
How IKEA is embedding equal pay and transparency
IKEA built its own methodology for pay analysis, starting with a clear definition of what “equal work” really means. They look at pay equity at the most detailed level – combining job role and job grade – so comparisons are genuinely like-for-like. From there, they roll the data up and test it against three parameters:
- Performance: variable pay can legitimately differ when performance does.
- Competence: IKEA’s formal competence assessments give managers the data to recognize differences in capability within the same role.
- Legal constraints: some outcomes are shaped by collective bargaining or national legislation, which must be acknowledged even if they can’t be adjusted immediately.
This bottom-up approach allows IKEA to explain, challenge, and act on unjustified gaps with far more precision. But even with rigorous analysis and budget set aside for closing gaps, they found the same issues resurfacing. Why?
“Because we don’t make pay decisions at one point. We make them throughout the employee lifecycle. Every pay decision is an opportunity to either increase or reduce the gap.”
That’s the real lesson: transparency isn’t a one-off project. It’s about embedding fairness into every pay decision, every day. Complete pay transparency may never be fully achievable, but taking the action to work towards it is what matters.
A local and global approach to transparency
IKEA is taking a country-by-country approach to transparency. Rather than enforcing a one-size-fits-all global policy, the business is focused on adapting to local legislation and maturity levels first. The goal is to meet mandatory requirements while building broader transparency through education, communication, and progressive rollout.
Konstantinos described this as a conscious decision to foster commitment rather than compliance.
IKEA doesn’t want to push a global directive that forces every market into the same mold. Instead, the company wants to build understanding and momentum from within: starting with local compliance, learning as they go, and potentially lifting transparency efforts to a global level over time.
“We went for the nuanced. We want to say, let’s try country by country first… and then as we get a bit wiser, we might decide to lift it up as a company global-wide policy.”
Transparency at IKEA includes:
- Sharing total reward statements with all employees to increase awareness of their full package
- Publishing pay ranges (or minimums) in job ads, acknowledging this will also make pay visible internally
- Showing pay information to specific audiences based on need, rather than full visibility for all
- Equipping line managers to answer tough questions with confidence
To support this, IKEA is rolling out a global learning solution: four short videos covering pay philosophy, structures, and how to communicate them. These are being supplemented with in-person sessions where possible.
Looking to the future of reward
“Equal pay and pay transparency are not about compliance – not really – compliance is the minimum of what we can do. It’s about doing the right thing.”
IKEA’s approach shows that compliance and culture can go hand-in-hand. By focusing on infrastructure, manager capability, and communication, they’re building a more consistent and fair pay experience for their people – and sending a clear message about their culture.
The message for Reward leaders is clear: if you don’t already have the basics in place (job architecture, pay philosophy, pay-setting principles) now is the time. Because when employees start asking questions, you’ll want to have the answers ready.
And as Konstantinos reminded the audience: “Train your leaders. They’re the best people to do the job.”
If you’d like to watch Konstantinos’ full session from the Future of HR Forum ‘Equal pay and transparency in practice – the IKEA approach’, you can watch it on demand here.
And for more information about the EU Pay Transparency Directive, read our blogs:
