Pay transparency has become a hot topic as states are passing legislation that requires companies to provide more transparency on pay with employees and in job postings.
Pay transparency puts employees and job seekers on a more level playing field with employers, who have always held the advantage in compensation discussions. Companies that have always paid at or above market salaries will have an advantage when disclosing salary information. Companies that pay below-market salaries must consider increasing wages or finding other benefits that attract employees to compete.
Pay transparency also eliminates the employee and employer’s awkwardness when interviewing. Job seekers will know if the job is in their anticipated pay range. At the same time, employers will not waste time speaking with candidates, potentially on multiple occasions, and finding out later that their compensation expectations are out of line with the job.
According to a Harris Poll survey for Glassdoor, 83% of respondents said that transparency is essential to them. This number is even higher for Millennials and Gen Z. These younger workers have pushed for more workplace transparency beyond salary information. The importance to women was higher, at 85%, which is unsurprising since it should eliminate gender differences in pay.
According to the study:
- Millennials (born 1981-1996) have 43 percent greater odds of reporting pay transparency as very or somewhat important than Baby Boomers (born 1946-1964).
- Women have 40 percent greater odds than men to report pay transparency as very or somewhat important.
- Self-identified Republicans have 54 percent smaller odds than Democrats to report pay transparency as very or somewhat important.
“While these differences may seem large, Americans still by and large support pay transparency. For example, the regression analysis would predict that a white Baby Boomer man, self-identified Republican, would still be 71 percent likely to regard pay transparency as very or somewhat important. Even if by contrast, a white Millennial mother identifying as a Democrat would be 93 percent likely to report it as very or somewhat important.”
In many ways, pay transparency indicates your organization’s culture. Employee-centric cultures won’t have an issue sharing this information. Michelle Cheng, talent director at British venture capital firm Notion Capital, was quoted in a Forbes article on the impact pay transparency can have on culture. “A company that embraces pay transparency conveys so much more than just the salary itself. It’s the subtext in treating everyone like an adult and establishing a culture of openness. A company that’s happy to publish its salaries is more likely to compensate its people fairly, manage performance consistently and communicate on other matters clearly. Increasingly, top candidates are looking for companies that align with their personal values, so it’s no surprise they’re looking for companies that prize transparency.”
If you have questions on pay transparency or creating a culture of openness, send us a note, and one of our retained search consultants will be happy to share additional information.