Pay Transparency
Currently, 1 in 4 workers are now entitled to pay transparency by law, and proposals on the books could double that number shortly. So far, eight states have pay transparency laws, with several cities and counties having their own pay transparency requirements.
Sixteen additional states and Washington D.C. are considering pay transparency laws in the 2023 state legislature, including Massachusetts, New Jersey, and West Virginia. It’s predicted that it’s only a matter of days before the governor of Illinois signs the pay transparency bill in front of him.
No doubt, pay transparency is here to stay.
Pay Transparency and the Attraction of Talent
The worker shortage many of you are experiencing isn’t going to decline anytime soon, regardless of what happens to the economy. That’s because of the demographics. This means you’ll need to remain on top of your game when recruiting talent.
Workers increasingly expect employers to be transparent with their salary ranges. In fact, according to an April 2023 Joblist survey of almost 30,000 job-seekers, 55% of job-seekers and 64% of Gen Z applicants will not even consider applying to a job posting that doesn’t contain wage or salary information.
Pay transparency in job postings can substantially impact the number of applicants for employers, as 91% of job seekers say that they are more likely to apply for a job with pay information. Given this trend, it makes sense that companies post salary ranges even if they’re not required by law—at least not just yet!
Educating Managers on Pay Transparency
Does the thought of conversing with one of your employees about pay excite you? My guess is probably not. Conducting conversations related to compensation is a difficult conversation for many managers, as most are unprepared in terms of how to discuss pay.
Salary.com’s Annual Pay Practices Survey found that only a third of organizations provide formal training to managers on how to communicate with employees about compensation. The study also revealed that communication around pay is lagging, and employee engagement may be suffering because of it.
Chris Fusco, Senior Vice President of Compensation at Salary.com was recently quoted as saying, “Corporate leadership must address the dynamic of burgeoning pay transparency laws and a persistently tight labor market by pulling back the curtain on pay and training managers on how to have tough conversations. If they don’t make progress, they could face lasting consequences.” With an unemployment rate of 3.7 percent, companies are missing production and delivery timelines, which significantly negatively impacts their bottom line and their reputation. Organizations can increase employee retention by educating their managers on how to discuss pay with them.
Communicating Pay with Your Employees
Since compensation practices are now becoming less of a mystery than they have been, it’s essential to have a communication strategy. Here’s where to begin:
Examine your current state: Understand how deep your manager’s knowledge is of your compensation practices. Then build your strategy and communication approach from there.
Start with the basics: You may be more well-versed in compensation practices than most, so it’s best to start with a “Compensation 101” course to cover the fundamentals, like what exactly compensation is, your company’s compensation philosophy, and why you do things in a particular way.
Extend compensation training to all levels: Teach managers and employees how to have productive conversations about pay—and feel comfortable doing so.
Continue to educate your workforce by sharing articles and encouraging them to take online courses on pay transparency and difficult work conversations. Doing so will help people engage in transparent, productive pay conversations that will build stronger relationships throughout the organization.
