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Strong Payoffs for Pay Transparency

With pay transparency laws becoming more common and younger generations in the workforce expecting greater transparency, no business can avoid having a serious conversation about their pay transparency practices.

When surveyed in 2022, Gen Z and Millennial workers indicated that pay was the number one reason they left a role over the previous two years with career growth as another top priority for these younger generations. Having transparent salary data leads to better conversations on career progression among employees. Additionally, those conversations can help employees have a greater understanding of their own career growth and goals as well as the financial benefits.

Organizations that delay or avoid adoption of pay transparency policies, or at least do no approach having conversations about them in good, face risk alienating employees. Two thirds of the same groups surveyed responded that they would explore changing jobs for employers with greater pay transparency policies.

With these factors pressuring organizations to have serious discussions about pay transparency, here are some key considerations:

  • Focus on career growth and potential future earnings.
    • Given the younger generations prioritization of career growth, centering pay transparency discussion and policies and highlighting potential future earnings can make employees more invested in the discussion and growth with the organization.
  • Be prepared for resistance from existing management.
    • The shift to pay transparency policies will require a cultural shift as well as a policy shift in most organizations. Pay secrecy being the norm for most organizations traditionally can lead to resistance from managers having spent large portions of their career with that mind set. If these entrenched attitudes are not addressed directly and early, they will serve to undermine even efforts made in the best faith.
  • Delaying could cost organizations.
    • The move to pay transparency policies has been ongoing for several years, but is not the norm, yet. But the rate at which companies adopt transparency policies is increasing, which threatens to leave any organizations that delay in the minority. Organizations that delay can quickly find themselves branded as “out of touch” or “behind the times.” This can lead to seeing fewer quality job candidates, and greater turnover of those employees seeking more proactive companies.

While the benefits for employees and job seekers of pay transparency practices are obvious, the benefits to organizations is substantial as well for those that approach the change in good faith and openly with their management team and employees.