Organizations Should Move Past Skirting Pay Transparency Legislation
Workspan Daily
September 28, 2022
Key Takeaways

  • Embrace pay transparency. Instead of avoiding pay transparency, employers should focus on fostering it proactively instead of reactively to current legislation. After all, since a state or region’s pay transparency laws are bound to change over time, adjusting pay practices proactively can help them feel more authentic to employees. 
  • Understand varying employee perspectives. To encourage more employees to share their views on compensation, employers can conduct anonymous employee surveys. These surveys can prove that an employer is actively seeking employees’ perspectives by creating another open line of communication and allowing employees to express their thoughts in a more comfortable and private setting. 
  • Share data about internal pay gaps. When employers share more information about why employees are paid their current compensation — including information such as an organization’s gender pay gap, as well as details around salary ranges and industry salary benchmarks — it can have the power to build employee trust and retain talent. 

Pay transparency is becoming increasingly important for today’s employees and job candidates. In fact, most (60%) employees say they’d switch jobs for more pay transparency. However, many employers are still hesitant about revealing information about their organization’s pay practices.  

In an effort to break that hesitation, lawmakers in places such as New York and California are actively working toward building new legislation that boosts compensation transparency, ensuring that employees are being paid equally and fairly across all industries.  

However, not all workplaces are excited about these new regulations. In fact, some employers have even tried to find loopholes to avoid increasing transparency. These employers often fail to realize that by prioritizing pay transparency and making sure employees understand why they earn their current salary, employers can build greater trust and boost retention rates.  

Additionally, many employers have a skewed view of pay transparency, thinking only about the option of releasing specific salary information for each employee. But pay transparency can look different for each organization, and for employers still on the fence, there are several softer steps they can take to boost transparency.  

Getting Ahead of Pay Transparency Legislation 

While pay transparency legislation has already begun to take hold in some states like Colorado, some employers have been skirting around the requirements. Instead of avoiding pay transparency, employers should focus on fostering it proactively instead of reactively to current legislation. After all, since a state or region’s pay transparency laws are bound to change over time, adjusting pay practices proactively can help them feel more authentic to employees.  

By implementing a greater level of pay transparency now, instead of after legislation goes into effect, these initiatives will feel more genuine and trustworthy to employees. 

Additionally, offering pay transparency in job openings can increase the number of applicants — beqom found that four in five workers are more likely to apply for a job if the job description is transparent about compensation. In today’s competitive labor market, pay transparency is often the deciding factor for today’s candidates searching for open roles. 

Understanding Employee Perspectives  

In addition to offering pay transparency, employers must make sure their staff understands their salary and benefits, especially since less than half of workers in the US (48%) know their total compensation. In order to avoid confusion and create a greater sense of fair pay, employers must lead conversations around their organization’s pay strategy to help employees understand their total earnings. 

However, it should be noted that not all employees feel comfortable voicing their opinions or concerns around pay directly to their employer or their co-workers. In fact, only 43% of workers say that they’re comfortable talking about their pay with their colleagues. But that doesn’t mean they don’t have anything to say. Employees want their voices heard, but are often afraid to share their thoughts.  

To encourage more employees to share their views, employers can conduct anonymous employee surveys. These surveys can prove that an employer is actively seeking employees’ perspectives by creating another open line of communication and allowing employees to express their thoughts in a more comfortable and private setting.  

Sharing Data on Potential Internal Pay Gaps and Bias 

More than a third (37%) of U.S. workers say their company does not share current gender pay gap data internally or externally. This sense of secrecy could be why 22% of employees believe pay gaps have gone up over the course of the last year. For 29% of employees, a lack of transparency also creates the feeling that employers do not pay them fairly, and 24% say they think companies are purposely secretive about salary and bonus information.  

When employers share more information about why employees are paid their current compensation — including information such as an organization’s gender pay gap, as well as details around salary ranges and industry salary benchmarks — it can have the power to build employee trust and retain talent. For example, some companies are proving that by sharing data about their pay practices, employers are incentivized to take greater accountability to bridge pay gaps and potential bias.  

Sharing this data also helps gain employee buy-in, eliminating any suspicion of unfair pay practices, as well as potential bias when it comes to promotions and raises. 

There are a variety of ways to better implement pay transparency, but it’s up to employers to decide the methods and level of detail that best suits their organization — by helping employees to fully understand their compensation and feel that their employer creates a sense of fair and equal pay.  

Without that, employees will be heading for the door.   

Editor’s Note: Additional Content 
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