HR Q&a – What Is Pay Transparency and How Does It Help Employers?

Pay transparency refers to sharing information about pay with applicants, employees, and possibly the entire world. While some states and localities require that employers include a pay range with job postings, many employers now choose to do this on their own to stay competitive. But pay transparency can be taken much further. Employers that really want to commit to the project will often share pay ranges for positions or job types with their entire organization. This may include sharing median salaries, how pay is determined, and even individual salary information with their employees. Here Sarah, PHR, SHRM-CP, expands on the answer:

“When done properly, pay transparency can help close the gender wage gap by providing more visibility into salary structures and helping to create more equitable compensation practices. It also helps with recruitment efforts as job candidates are likely to be more attracted to an employer who is willing to be transparent about pay. In addition, it can also help foster a sense of trust between employers and employees, as well as create an atmosphere of fairness and respect in the workplace. Pay transparency is not just beneficial to organizations; it’s a win for employees too. By providing more information on wages and salary structures, employees are able to make informed decisions when negotiating pay and ensure they are receiving fair compensation for their work. Furthermore, it can help create a more level playing field between employees of different backgrounds, genders, and experience levels.

While being transparent about pay may feel uncomfortable, and may not go smoothly at first, it does have advantages. First, it saves time during the recruitment process. By disclosing compensation up front, typically in the job posting, employers discourage people who wouldn’t accept the salary offer from ever applying. Second, pay transparency on job postings has been shown to increase the number of applicants significantly. Many job seekers are unwilling to apply for positions that don’t indicate a pay range, and others will value the transparency for what it says about the organization. Third, it encourages compliance with equal pay laws by essentially forcing employers to choose and stick with a logical pay range for a position, at least on a going-forward basis. Finally, internal pay transparency, like sharing position pay ranges with the entire company (not each person’s individual wage rate), can reduce pay paranoia and gossip while also enabling employees to see what they can look forward to as they advance in their career.”

You can learn more about pay transparency on the APlus HR platform.

This Q&A does not constitute legal advice and does not address state or local law.