Pay transparency has become increasingly popular among businesses and employees. While only 14 states currently have pay transparency laws, 75% of U.S. employers believe that pay transparency is an expectation from candidates (Mercer). Pay transparency refers to an organization being open about information related to salaries and the policies that determine compensation to both employees and candidates.
Pay transparency can be a powerful recruiting tool, giving your business a competitive advantage. Not listing a salary range may be perceived as a red flag to applicants. Studies have shown that four out of five workers would be unlikely to apply for a job that doesn’t provide a pay range. Candidates do not want to waste time applying to positions that won’t fit their needs. 76% of employees searching for a new role are doing so in search of higher pay (Bartech Staffing). If you are not listing the salary or the salary range in a job description, you may be missing out on top talent. By embracing pay transparency, you present your organization as trustworthy, fair, and accountable.
Increased retention is another benefit of practicing pay transparency. Unfair pay is often the main reason that organizations lose talent. Pay transparency can strengthen employee trust by assuring them that they are being properly compensated. It can also create a growth-focused environment, as employees feel confident that their pay level aligns with their growth within the organization.
Unsurprisingly, Human Resources holds a major role in facilitating pay transparency. HR is responsible for finding the balance between the needs of employees and the ability of employers to accommodate them. The successful implementation of pay transparency starts with policy. It is key to lay out what factors influence compensation, so that there is no question of unfair standards. Looking to industry peers as a guide for pay scales may also be beneficial to assess if compensation rates are consistent with the market. HR should also consider conducting audits, such as pay equity and job description audits, to ensure employees are properly classified and compensated accordingly. However, if you do plan on conducting an audit, you must be prepared to correct any pay discrepancies that are found.
Implementing transparent policies should be done with caution. While there are many benefits to pay transparency, if the workplace culture is not up to par, it could have negative effects. For example, salary transparency between employees can bolster differences in status between high performing and low performing employees. It is vital to foster an environment that encourages growth and supports team members across the board.
The approach to pay transparency may be nuanced, but the ask from employees is simple: salaries and the factors that decide them should be made clear. Pay transparency establishes trust and reinforces fairness in the workplace. These practices also improve your organization’s ability to attract and retain top talent. HR is responsible for facilitating pay transparency through implementing policies, conducting reviews, and researching to ensure that compensation aligns with market rates. At Lever1, our HR experts are here to assist you with creating custom policies that enhance your workforce.
Shannon Carpenter | Vice President of Human Resources and Client Services
Shannon brings over 20 years of experience in all areas of HR including HR Strategy, Recruitment and Employee Management. She has experience serving as a resource and advisor to clients on all areas of HR, including performance management, onboarding, terminations, handbook creation and updates, training, investigations, complaints and company P&P.