The LEGO Group: ‘HR leaders need to be at the forefront of pay transparency – we have a serious and long journey ahead’

Equal pay is a promise many companies want to make – but only those with a clear framework can keep it.

If companies aren’t doing their due diligence, they risk creating pay gaps that will soon be exposed through the upcoming EU Pay Directive – which will be forced in June 2026. 

Ahead of this, businesses will need to ensure their job architecture and salary structures are watertight, transparent, and consistent – otherwise they may face compliance challenges, as well as losing employee trust.

One HR leader that is particularly passionate about this topic is the LEGO Groups, Vice President Head of Rewards, Kent Hviid Frederiksen.

Frederiksen, who will be taking center stage at UNLEASH World 2025 in just over one month, sat down with UNLEASH to give his exclusive insights as to how HR leaders should prepare for this change in legislation.

The link between job architecture and pay transparency

Pay transparency is coming to the EU, which will impact not only EU countries, but those outside of it, too, such as the UK and US.

Because of this, job architecture is becoming more relevant than ever.

For the LEGO Group, job architecture is seen as the skeleton upon which everything else hangs. Once this skeleton is “clear, fair and in place,” businesses will be in a better position to create fairness while implementing strategic workforce planning.

For Frederiksen, this is all about knowing what level jobs should be placed at, so HR teams can be as consistent as possible. 

“Relating this to pay transparency, if you don’t have an architecture in place today, you need to get moving,” he warns. “That’s how important it is.

It [job architecture] is vital for pay transparency so that you objectively can show criteria for how you do fair pay. Without it, it’s going to be arbitrary and inconsistent.” 

As a result, Frederiksen explains that job architecture and salary banding are connected in a similar way that job levels indicate the median/salary range and guide organizations on how to set salaries. 

This will pose a “big task,” as to whether colleagues can understand and work within this and objectively set the right salaries.  

What’s more, when the EU Pay Transparency Directive comes into force, Frederiksen anticipates that HR leaders will see a “big surge of people asking for all kinds of details.”

Part of this, he explains, is that businesses will be mandated to make sure that employees are engaged to ask – they have to show data. 

“Businesses have to tell employees they have the right to ask,” he adds. “That’s a big difference from today where most companies don’t proactively go out and ask this question. 

“We expect a lot of people will ask because of the mere fact that you asked them to do it. So, better be prepared for that.”

For over six years, equal pay scans, payments and corrections have been in place at the LEGO Group to help foster a solid architecture. 

But Frederiksen warns that no structure will be perfect. 

“There are going to be pockets that we have not foreseen, or could not do the math on as a desktop exercise. So, what we’re doing right now is hopefully more of a dry run before we go live,” he shares. 

For the LEGO Group, this also boils down to the importance of educating leaders, partners, and recruiters, as these will be the people managing the existing workforce as well as new recruits and navigating when to pay a premium. 

It’s therefore crucial that these leaders understand the importance of not paying too little, but also not paying too much, as both can cause issues internally and create more inequity. This can force leaders into a bad cycle from a cost perspective, that they’ll later need to fix.   

“A lot of it is education for all colleagues, but especially leaders,” Frederiksen explains. 

“Leaders are going to have to proactively tell some of their team why they’re low comparatively to others and ideally with objective criteria. 

“There’s not a lot of data that’s extremely consistent. Some companies differentiate pay based on where you’re located and even in the same country. 

HR leaders are going to have to go in and evaluate all this to make sure that the conversations can be had. Leaders need to be at the forefront of this and own it. 

“So they need to be educated and trained in handling this and we need to deliver all the data that’s needed for them to do that.”

The main objectives for businesses should therefore be to avoid differentiating pay unevenly or unfairly. 

Pay can be differentiated by using objective criteria, such as performance, but moreover, Frederiksen highlights that fair pay is just “the right thing to do.” 

If fair pay is achieved at the beginning of an employee’s time at a business, it will hopefully avoid the need for costly corrections later. 

However, Frederiksen is mindful that employees move around, change jobs, go on sabbaticals, leave, then come back to the business, which can impact these decisions. “Leaders need to be prepared for that,” he adds. 

Preparing for the upcoming changes

As the EU moves closer to the Pay Transparency Directive coming into play, Frederiksen highlights that a main concern for many leaders may be that it will drive up cost.

“Hopefully most companies are managing equal pay well today, so that it’s a non-issue because you need to treat people fairly,” he adds.

“I’d like to think that most people are quite content or happy until they realize that their neighbor has something more. And then once they find out, they want that as well, but this can get lost in translation. 

For now, I remain slightly concerned but well prepared as we have a serious and long journey ahead.”

To help other leaders prepare for this upcoming change, Frederiksen uses the phrase: Reward is culture in action. 

For Frederiksen, this is a reminder to ensure that the businesses values align with how they pay. 

He elaborates: “I believe that most companies want to do this well and hence most will do it well.”

This is linked back to the importance of having a solid job architecture in order, as Frederiksen warns that other leaders should not underplay the importance of structure in an organization – especially if it’s a larger company. 

“If you have a small company, you can do without structure, but people really care about what other people get. If you can’t objectively justify it, you will have issues. 

“You’ve been able to hide that throughout the years, but without structure, transparent communication of that structure, you will fail because people won’t believe or trust if they can’t see it and understand it.  

“You really need a solid structure.”

He relates this to the idea that some companies have openly rejected having structure, such as hierarchies, titles, and grading systems.

The key issue here is not that they may be providing unequal pay, but more that they can’t show the process to avoid it.

“If this is your business, well, you’re going to be in somewhat of a pickle,” Frederiksen says.

“I’m also the chairman of the Global Works Council, so I interact a lot with works councils around the world and we also have an annual meeting where we discuss this and pull them in to make sure they are fully aligned with what we’re doing here – because this is also going to require various reporting, and they will be asking. 

So you need a very good structure to say why you’re doing what you’re doing, and without that, good luck.”

Find out more about the EU Pay Directive at UNLEASH World 2025

Curious to understand more about how your business should prepare for the changes in equal pay legislation? 

Well, make sure you purchase your ticket to UNLEASH World 2025 now to attend Frederiksen’s session: Beyond Compliance: Embedding the EU Pay Transparency Directive Across the Business.

Frederiksen will also be at the event enjoying networking opportunities. He says: “I look forward to interacting with a lot of experts and CHROs at the conference and just to make sure that we get a lot of new connections. 

“I’m bringing a colleague, Peter Vestergaard, and we’re going to have a great time meeting new friends and hopefully learning a lot as we spend three days together.”

Frederiksen will also be hosting an intimate, Chatham House boardroom session: Everything You’ve Always Wanted to Know About the EU Pay Transparency Directive – But Were Afraid to Ask!

See you there!