Pay transparency has come into the spotlight this year. LinkedIn listed it as one of the 29 big ideas that will change our world in 2022. As of April, New York now requires employers to post the salary range for every job opening.
Let’s look at what salary transparency entails, the legal parameters, and why it’s an important consideration in the pursuit of equity.
What is pay transparency?
Simply put, pay transparency is the organizational practice of openly communicating about compensation with employees. The extent to which an organization is transparent varies greatly. Some companies consider pay transparency the act of managers and employees proactively discussing salary, placing the ownership on employees to pursue open conversations. Others choose (or are legally required) to post a salary range for each job. This puts the accountability on employers to lead transparency practices. Many organizations have begun conducting regular accounting audits to uncover any pay discrepancies among individuals with similar roles.
What does the law say about salary transparency?
Legalizing pay transparency is fairly new. But, the idea is gaining traction quickly. In 2018, California was the first state requiring employers to provide the pay scale for positions to external applicants who completed their first interview, and only if requested. Since then, there are 17 states in the US with similar laws around pay transparency, ranging from those allowing employees to feely discuss their pay to those requiring employers to post compensation ranges for all positions. States with the most progressive laws include California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, Washington, and now New York.
Why should I prioritize pay transparency?
Beyond any legal requirements, salary transparency is a good HR practice. Transparency drives greater equity within organizations. Salary.com defines modern pay equity as equal pay for comparable jobs that is internally equitable, externally competitive, and transparently communicated. Pay equity dictates internal HR practices, ensuring all individuals with comparable jobs are compensated within the same pay range. It also can guide external policies, allowing current and prospective employees insights into how much their peers and they are earning.
Here are three reasons why salary transparency pays off for organizations that care about employee equity.
Black women in the United States currently make 64 cents to every dollar white men make. If your organization is authentic about the compensation each of its positions receives, you will effectively address pay discrimination in your own ranks while attracting more women and people of color who are seeking equal pay. Becoming an employer of choice known for diversity and equity starts with transparent pay.
Contributes to culture change.
Transforming organizational culture for greater equity requires a change in underlying systems. This goes beyond writing eloquent values to walking that talk via equitable policies and practices. Pay transparency is a tangible way to evolve your organization’s HR operations and provide fair compensation for all employees.
Creates an environment where all people want to work.
Trust, belonging, safety—these are some of the most important qualities employees are seeking in a workplace today. Being open about compensation is a way of clearing the air: It proves the organization is not trying to hide anything. Authenticity attracts people. Employers that “keep it real” open the door for a diverse pool of qualified employees.
How do I get started?
The first step toward pay transparency is growing the mindset that this practice is worthy of your organization’s investment. The next step is outlining a plan to get there. At Brighter Strategies, we take a systems approach to planning, people, process, and performance; we believe when these components work together, your organization thrives. We are eager to partner with you to develop more equitable practices for all employees. Contact us today to get started.