Pay Transparency Today: What Employers Need To Know

February 22, 2022 Amanda Krebs

pay transparency

When Victoria Walker resigned from her job as a Senior Travel Reporter for The Points Guy, she tweeted her salary for all to see:

While she didn’t think much of it, many were blown away by this transparency, praising it as a move toward a more equitable workforce.

Read also: The Great Resignation Has Employers Scrambling. Here’s How They Can Compete

Amid this historic ‘Great Resignation,’ a shift has taken place among today’s employees. After a pandemic where they often felt disposable, employees don’t hold the same loyalty to their employers. Plus, in a time when norms are shattered left and right, employees aren’t very concerned about adhering to traditional ‘rules’ of keeping quiet about their compensation.

In addition to these shifts, the Great Resignation mixed with inflation has caused wages to rise very quickly. With new employees sometimes making much higher pay, this has increased pay disparity in jobs with similar skill levels.

Read also: This Is A Labor Movement

In this climate of radical shifts in the job market, it’s also important to note the impact of pay transparency historically. When employers discourage talk about compensation among employees, it is often women and people of color who suffer.

For example, research shows that women are viewed as much less likable when they negotiate, and people of color are viewed as much more pushy when they negotiate. Often, this leads these groups to accepting lower pay than their white and male counterparts.

In short, employees simply want to know what their skills and experience are worth, and they’re willing to do what is needed to go out and get it while the opportunity is available. So, what does this mean for employers in today’s job market?

Overall, employers need to step up. But for each employer, that can mean taking different steps. Some companies, like Buffer, have gone as far as publishing their internal salaries for all to see. While you may not need to go that far, here’s some initial steps to take:

Recognize that your employees are talking

There’s no way around it: your employees are sharing their compensation with their colleagues. For employers, the best path forward is to accept that this is the case and act accordingly.

Tip: Don’t shut it down

For some, it is common practice to pressure employees not to speak about compensation, and some even get that in writing. But it’s important to know that these activities are protected under the National Labor Relations Act, which protects “concerted activity” among employees, including discussing pay. Any actions taken by employers to prevent this type of discussion could be in violation of these federal protections.

Post salary ranges for your job openings

State and local laws are being implemented across the country to promote pay transparency by requiring employers to disclose a minimum and maximum pay range for a job opening. Regardless of whether you are required by law to do so, implementing this practice can provide transparency both externally and internally for your organization.

Tip: Post an accurate salary range

Some employers are skirting the rules by publishing an inaccurate salary range, sometimes spanning hundreds of thousands of dollars. Keep in mind that posting an accurate salary range is not only helpful for job seekers, but also helps you. When you provide an accurate salary range, you will reel in candidates who are also looking for that salary range. This helps reduce the amount of effort required to weed out applicants and stops wasting time for both parties.

Develop a clear process for setting pay

The more clear you can be on why an employee with a certain background and skill set is paid a certain amount, the better off you’ll be as an employer. By having set processes for these at each level of your business and for different levels of experience, you’ll set yourself up for smoother conversations down the line.

Tip: Be ready for these questions

Remember, your employees are talking. As you set your employees’ compensation and raises, be sure that you not only have clear processes in place to explain why any employee makes a certain amount, but also that you can explain this clearly to your staff.

Address pay disparity

As noted, compensation is rising quickly in this job market. What this means is that your employees who have stayed loyal to you for many years could be making less than new employees who have made a move during the Great Resignation. If this is the case within your organization, be sure to address this pay disparity among similar skill levels and positions to retain your employees who have stayed with you.

Tip: Reward loyalty

For employees who have stayed by your side through a global pandemic and the phenomenon of the Great Resignation, be aware that they have made a choice to be loyal to you. To reward them for that, be sure that they are paid market value for their skills. This will not only retain these dedicated employees in the short-term, but it builds even more loyalty long-term.

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