Over the past few years, U.S. employers have heard—and many have heeded—the call for increased pay transparency and pay equity. In turn, many employers are realizing the benefits of providing a realistic pay range in job ads, as well as discussing compensation early in the recruiting process and throughout an employee's tenure.
Are you considering implementing greater pay transparency and equity in your organization?
If so, this move could have a positive impact not only on attracting and hiring top talent but also on improving employee engagement and retention, building your organization's brand, and more. If you're looking for strategies to offer better pay transparency and equity, we have some ideas that could benefit your organization.
Pay transparency, pay equity, and pay range are related but don't mean the same thing. On the legal side, pay transparency laws support pay equity in the workplace with the goal of ensuring all employees receive fair pay for their work.
The act of openly sharing information about compensation with current employees and job seekers is known as pay transparency, sometimes referred to as wage or salary transparency.
When implementing pay transparency, some organizations discuss pay with individual team members as needed, while others publicly disclose pay information for certain positions. Pay transparency also refers to the practice of providing a salary range in job listings so candidates have a rough idea of their earning potential based on the qualifications and requirements set by the employer.
The principle of pay equity aims to encourage equivalent compensation for the same position, irrespective of their age, race, or gender identity. The U.S. Department of Labor established the Equal Pay Act in 1963 and reinforced it in 1964 with the Civil Rights Act, both of which helped to reveal unfair pay practices and move pay equity forward.
Pay equity and related laws focus on a single objective: if two people do the same work, they should receive the same pay. However, even after half a century, not all employers adequately observe these laws.
A pay range is the minimum and maximum pay for a specific job. When provided with a narrow and realistic pay range, candidates are better prepared to make informed decisions, whether that be to pursue a specific job or seek ways to develop a strategy for career growth and pay progression. Stating a realistic pay range also helps employers attract viable employees whose compensation goals are likely more aligned with the offered salary.
Historically, many hiring companies did not discuss pay until the end of the interview process nor openly reveal salaries for internal roles. Therefore, for many employers, compensation transparency is a shift in the status quo that may seem to be more challenging than beneficial. But if done properly with a solid plan, the pros of transparent pay policies will likely outweigh the cons and promote an environment based on and fueled by honesty and trust.
Additionally, a transparent and equitable environment can increase employee satisfaction, retention, and productivity since employees understand that their qualifications and work are valued. When employees perceive that they are being compensated equitably and appreciated for their efforts, they tend to be more committed and less likely to leave their job, which can help to minimize expensive turnover.
Human resources teams often lead pay transparency and equity initiatives and shape related organizational policies and strategies. However, it’s essential that executives, directors, and other decision-makers partner with HR and support the move to transparency for it to be effective throughout the organization. Working together, HR and leadership can create policies that provide fair compensation and promote pay transparency, ultimately improving employee satisfaction and retention.
Because implementing pay transparency can be a complex process, the following step-by-step strategy will help your organization get started:
By following these steps, organizations can effectively implement pay transparency and equity, promoting fairness and equality in the workplace.
The process of implementing pay transparency and pay equity strategies may feel challenging at first. However, the shift can bring tangible benefits to hiring and retention efforts, build stronger teams, and ultimately support business success.
Nelson Connects is committed to supporting employers and job seekers alike as they navigate pay transparency in the hiring process. Learn more about our talent recruitment and hiring solutions by contacting us today.