Tanya is the Co-Founder and CMO of beqom, a cloud based total compensation management platform used by global enterprises.
Despite a growing list of companies laying off employees, many around the world are still experiencing a talent shortage. In fact, over three-quarters of global workplaces need to fill open roles, especially in IT, data science and engineering. While expanding candidate pools, reskilling and upskilling current employees and leveraging technology to automate tasks can help address talent gaps, organizations must also look to factors that increase their ability to compete, including compensation and benefits.
Historically, organizations relied on internal salary structures to determine whether compensation was fair and equitable. But given today’s candidate preferences and demands, as well as legislation in some states, fair and transparent pay is increasingly valuable. As companies strive to address talent needs and stay competitive in a challenging labor market, those who have embraced pay transparency and identified areas for improvement are positioning themselves more favorably.
The Current Pay Transparency Landscape
Traditionally, discussing pay in the workplace was considered taboo. Research shows that older generations, specifically Baby Boomers and Gen-X, are still uncomfortable discussing their compensation with colleagues. At beqom, our 2023 report on pay gaps and transparency found 73% of Millennials are more likely to discuss their salary openly, compared to 58% of Gen-Xers and 59% of Baby Boomers.
However, a growing number of employees are embracing a more open-minded and empowered work style, leading to a rise in discussions around transparent pay. This shift in attitude is not limited to a specific generation, as employees from various generations are interested in fair compensation. Significant world events, like the pandemic and inflation, have contributed to this change.
While we may be swinging back to pre-Covid trends and inflation is potentially slowing, workplace experts agree that pay discussions are here to stay. In fact, with only 32% of employees feeling that they are paid fairly, the frequency of these conversations is likely to increase. Given this, organizations are better off encouraging this openness and helping employees gain a better understanding of where the organization stands with pay transparency and how it can meet and support employee expectations.
Employee Expectations Around Pay Transparency
Employees have many needs and expectations when it comes to pay transparency. In order to adequately assess their compensation, employees want a clear idea of the salary range for their current role, any internal pay gaps and steps their employer is taking to remediate those gaps. As recent trends suggest, conversations about this exact information will happen with or without employers, so organizations might as well lead the charge.
With the increase in pay transparency discussions, many organizations are now on the same page as their staff; about 60% of employers cite a desire to provide more transparency. However, not all employers feel the same. One in nine workplaces admits resisting pay transparency altogether, and more than a quarter feel their leaders struggle to see the value of it. These opposing data points clearly demonstrate the varied environments candidates face during the hiring process. There’s also the confusion and skepticism that current employees feel about their employers’ stance and practices around pay transparency, which can often lead to a loss of confidence and trust and can increase attrition.
The Impact Of Pay Transparency Legislation
Expectations for pay transparency have been further intensified by the introduction of new pay transparency legislation. For example, states like Washington, Rhode Island and California have all created new laws to make salary ranges more accessible for employees and candidates. But organizations in areas not impacted by these laws should still study them and determine whether they can implement similar practices.
These blueprints for pay transparency best practices will not only help create a sense of trust from employees and attract new candidates, but they’ll also prepare organizations for potential changes to their state’s pay and labor laws. With 60% of Americans saying they would consider switching to a company that offered more pay transparency, organizations are missing out on key talent if it hasn’t been discussed as part of their recruitment and retention efforts.
How To Start Integrating Pay Transparency
While being more forward about compensation may feel daunting and require a shift in leadership and organization attitudes, employers can take tangible steps to stay ahead of employee and candidate expectations.
• Establish clear salary ranges for all roles, and share those ranges with existing and prospective employees.
• Reveal any pay discrepancies, and describe actions that leaders are taking to bridge them and prevent future discrepancies.
• Lead ongoing conversations with staff about compensation strategies, pay decisions, steps to combat potential inequities and other relevant information.
• Conduct anonymous surveys to gather insight into how employees feel about current pay transparency levels and what they think can be done to improve them.
Pay transparency is not becoming just a legal requirement. It’s also a critical step to creating a work culture built on trust, confidence and equity. As candidates with the skills needed to fuel businesses and innovation evaluate future employers, straightforward conversations around compensation remain high on their list of requirements. Pay transparency is one way organizations can create an environment that retains and attracts talent.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
Read the full article here
