The Best Guide to Soft Approaches to Pay Transparency

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Amid the ongoing labor shortage and shifting work landscape, it’s clear that employees have the upper hand in the hiring market. With that newfound sense of confidence, employees share their expectations around compensation and pay transparency with both new and current employers.

Some workplaces, like software company Expensify, have heard demands for pay transparency loud and clear. Expensify even lets its employees vote on their coworkers’ pay and whether or not they deserve a raise. Meanwhile, other companies like Google see employees upset over executive pay hikes, sparking tension over pay policies.

While employers’ extreme measures (or lack of measures) to establish pay transparency may work for a handful of organizations, it certainly doesn’t work everywhere. It’s possible to have an in-between, softer approach to pay transparency that will best suit individual organizations while still satisfying their staff. Let’s dive into how companies can approach pay transparency without the extremes. 

Best Practices for Companies to Evaluate the Appropriate Level of Pay Transparency

Conversations around compensation can be difficult, but building trust with employees is an essential part of the compensation management process. Opening the floor to discussions around pay and what salary ranges employers can offer realistically can eliminate doubt and hearsay.

But before stepping into those talks, employers should be prepared to listen to employees’ thoughts and help make sure both the employer and employee are aligned around compensation. Employees value when their employer takes time to address their concerns and comes to the table ready to share their input and suggestions to make the workplace better for everyone. The same goes for today’s job seekers since 38% prefer to discuss pay transparency in the initial screening or first interview. 

Additionally, to implement a suitable system for pay transparency, employers must evaluate the size of their organization and the tools and resources at their disposal. Implementing technology that utilizes predictive analytics can help employers gather the data they need to actively provide the right level of pay transparency to their employees. 

Understanding Employee Expectations Around Transparency 

One of the biggest reasons it may be tough to talk about pay transparency is the stigma surrounding the subject of pay overall. According to a beqom study, more than half (55%) of Americans (61% of men and 48% of women) have been pressured by an employer not to disclose their pay to coworkers. For generations, a sense of secrecy has clouded conversations related to wages, but today’s employees want to remove the mystery. According to that same study, 70% of people believe that companies should disclose their overall pay gaps to employees.

As workplace trends continue to shift due to the pandemic and the ongoing labor shortage, the stigma around discussing pay diminishes. Gen Z employees have grown incredibly comfortable discussing pay on social media sites like TikTok by posting videos discussing salaries at their current or former jobs. These viral conversations are taking away the confidential nature of compensation, creating a space for employees to understand their worth, and a further need for employers to have more open and honest conversations. 

To make sure employees feel heard on their desire for pay transparency, one approach employers can take sharing salary benchmarks and ranges for specific promotions or levels within the organization. To move beyond those ranges, employers can share details around how location and remote work factor into what they can pay their employees and how PTO, work structure, and other benefits play into what they earn each year.

Why Pay Transparency Is Essential in Retaining Employees During the Labor Shortage

While sparking conversations around compensation may be new to some workplaces, today’s job seekers are seeking pay transparency with immediacy. The beqom study referenced above found that three in five Americans say pay transparency is an essential factor in their next role, and over two-thirds (68%) would consider taking a lower salary at a new job as long as there was transparency about salary benchmarks at the organization.

Since pay transparency builds a greater sense of trust between the employer and the employee, it can help with hiring and help employers form a closer connection with their current employees and increase retention. This meaningful connection is essential during the pandemic when many feel more detached due to remote work and spend more time at home. Nearly half of employees (46%) feel less connected to their company or colleagues since the start of the pandemic, compared to just 38% who say they feel more connected since the beginning of the pandemic.

If employers are serious about retaining and attracting talent in 2022, they can’t sweep pay transparency under the rug. By initiating open conversations around compensation and taking employee concerns and ideas into account, employers can show their staff that they are being paid fairly and their role is valued. With the right resources and information, employers can reverse the outdated stigma around pay transparency and create an environment where current and prospective employees feel comfortable bringing those conversations to the forefront. 

Tanya Jansen is the co-founder of beqom.


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Tanya Jansen is the co-founder of beqom, a cloud-based total compensation management platform used by global enterprises. Prior to launching beqom in 2009, Tanya worked at SAP and Accenture. She has spent her career in the enterprise software space with senior roles ranging across multiple organizational functions.