- Financial services is, comparably, ahead of the game. According to a Syndio report, the financial sector is at the forefront of addressing pay gaps and embracing pay transparency.
- Pay transparency provides benefits. Increasing pay transparency has become a critical factor for organizations looking to boost trust with their employees as well as meet compliance and investor parameters.
- Pressure is mounting. Industries likely to see the most pressure on pay transparency will be ones that have the least gender and/or racial/ethnic diversity within their boards, executive groups and workforces.
Pay transparency is a trend showing no signs of slowing down. On July 24, Massachusetts became the latest U.S. state to pass a related law. Progress is also seen within industries, as some sectors are visibly stepping up their commitment to pay equity.
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According to a new report from Syndio, a workplace equity platform provider, the financial services industry is at the forefront of addressing pay gaps and embracing pay transparency. It showed 68% of large financial services companies disclose pay equity results, compared to just 44% across other industries.
Additionally, Syndio’s research, which was combined with Arjuna Capital’s scorecard, showed the number of large financial services companies disclosing their unadjusted pay gaps nearly doubled over the past year — a direct response to growing investor pressure, increased regulation and a competitive talent environment.
Syndio also reported major financial services players like Amalgamated Bank, Blackrock and Visa are leading by example, as each negotiated to disclose their median pay gaps without needing a shareholder vote.
While this shift can be tied to intensifying investor proxies, Nancy Romanyshyn, a senior director of total rewards strategy and solutions at Syndio, said it’s underscored by the financial sector’s increased transparency in pay equity disclosures and a robust commitment to addressing pay gaps, positioning the financial services sector as a leader in workplace equity.
Leading the Pay Transparency Charge
According to Romanyshyn, Syndio’s research suggested organizations within the financial sector made progress by bringing greater accountability, thereby better positioning themselves for long-term growth.
Romanyshyn also noted total rewards professionals in that sector have had to be very careful with what they share and generally had to ensure they were “getting it right,” so using technology to conduct robust analytics was essential.
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“By harnessing advanced analytics, total rewards pros can unearth and tackle pay disparities head-on, turning raw data into actionable insights,” she said. “But let’s not forget the human element. Transparency isn’t just about throwing numbers at your team; it’s about painting a clear picture and sparking meaningful conversations around pay.”
For a traditionally conservative industry like financial services, Romanyshyn explained that any communication surrounding pay transparency should “authentic, clear, concise and accurate.” As professionals accustomed to addressing all aspects of financial well-being, she said it was important for leaders within these firms to promote trust with their employees by building confidence in the data, the methodology and the organization’s commitment.
“By embracing these strategies, an employer can foster equity and build unshakeable trust within the organization,” she said.
More Pressure Lies Ahead
In addition to the financial sector, Romanyshyn said industries dependent on knowledge work, such as technology and life sciences, are set to face increased pressure for pay transparency.
“These sectors rely on workers who are in high demand and can quickly reference going rates for their jobs,” she explained, noting that, historically, the financial sector has been under scrutiny for issues of equity and fairness while at the same time advising clients about good human capital practices to deliver long-term value.
Tom McMullen, a senior client partner at Korn Ferry, said the industry sectors likely to see the most pressure from investor groups on pay transparency will be ones that have the least gender and/or racial/ethnic diversity within their boards, executive groups and workforces.
“This pressure consists of seeking these organizations to conduct analyses as well as to disclose [the results from] them,” he said.
McMullen also pointed to World Economic Forum data, which showed industries in line after financial services to be the most scrutinized include manufacturing, infrastructure, energy, transportation, agriculture and technology.
McMullen said that while investor pressure can be a key driver for action in addressing and communicating about pay equity/transparency improvement, another driver is likely an organization’s belief that pay equity/transparency management is a strategy, as opposed to a compliance issue.
“In that case, an organization will have robust frameworks and policies in place regarding compensation management and hold the view that pay equity is a differentiator in attracting and retaining talent,” he said.
Korn Ferry also has observed larger, publicly traded multinational organizations working ahead of the curve on pay equity/transparency analysis and communications.
“We’ve seen smaller to mid-size, privately held organizations being behind on pay equity and transparency,” McMullen said. “This is somewhat attributable to the scrutiny that publicly held organizations receive in general, as well as more resourcing available in larger organizations to support this work.”
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