Show me the money: Why HR leaders are embracing pay transparency

6 mins, 6 secs read time

Pay transparency has been a hot topic in recruiting. Employees (and candidates) have demanded companies be more open about their pay structure. But some employers have pushed back, losing talent to companies that embrace full salary transparency.

Our Chief People Officer, Donald Knight, joined leaders from HiBob and Leapgen to discuss pay transparency and why it’s crucial HR leaders embrace it.

Where does pay transparency fall on your list of priorities?

Jess Von Bank, Head of Luminate & Leapgen Brand at Leapgen, dropped a few shocking stats. Did you know 93% of Gen Zs expect compensation transparency? Or that half of job seekers won't apply if the pay rate is unclear?

While the conversation is changing, the numbers don't lie. People want salary transparency. So, how do you make the shift to pay transparency? Jess offered a few considerations:

1. Pay transparency is a compliance issue. No matter where you hire, legal compliance needs to be paramount. Internal conversations about how you'll address evolving regulations are a must.
   

2. It plays a pivotal role in HR transformation. Having discussions about the skills you're looking for? Revamping your talent strategy? Pay transparency is crucial to these conversations. Without it, HR transformation simply can't happen. You have to understand how your infrastructure will translate to your pay philosophy.
   

3. It's an employee expectation issue. Candidates tie how you treat people with how you pay people. Poor pay, poor employee experience. Talent wants – and expects – transparency.
   
   

How are talent demands changing across generations?

As we get more comfortable talking about pay, demands for compensation transparency are shifting. The new workplace makeup includes more generations than ever –boomers, millennials and Gen Zs. And that plays a role in changing demands. Another is social hardship. For example, employees hear stats about how it will take 200+ years for women to achieve pay equity with men. These stats emphasize social hardship and contribute to candidates' need for pay transparency.

“So many companies are pushing back on why we should have pay transparency. But, in reality, transparency pays – It pays with top-tier hires.”
– Donald Knight, Chief People Officer at Greenhouse

Sarah Reynolds CMO at HiBob shared a shocking fact: the majority of employees would leave a company that lacked transparency – even if the job and pay were the same.

What are some benefits of embracing pay transparency?

There are countless reasons to practice org-wide pay transparency. But it's more than just pay transparency. Sarah pointed out that one tenet is opportunity transparency. It lets employees know what positions are available and how you make promotion decisions. HR leaders have a responsibility to be open about more than employee salaries.

Jess also explained that knowing how much an employee is worth shouldn't be on the candidate. You're responsible for understanding their value to your business. The salary should align with that value. By doing so, you show candidates and employees you value and respect them.

Diversity, equity and inclusion (DE&I) leadership involvement is also crucial because it provides a broad perspective. It identifies gaps and ensures inclusive pay equity conversations. And if you view the move toward pay transparency as a positive and necessary shift, you can see many other benefits, like a celebrated employer brand.

When looking for a new job, candidates are looking for trust. Are you going to live up to what candidates expect of you? If pay transparency is something talent values (and you offer it), those candidates will trust your business. They'll want to work with you. Why? Because you built your employer brand around transparency and openness.

How do you decide where you sit on the salary transparency spectrum?

To understand where you are or want to be with salary transparency, start by asking questions. Jess suggests figuring out where or how pay transparency applies to your business:

• Ask where your employees live and determine if you need to talk about transparency as a compliance issue

• Consider how it impacts hiring strategies

• Define how to move forward. Consider it from a cultural, organizational structure, position management and job structure perspective

Once you know how pay transparency applies to your organization, take a small step forward. Disclose the salary range for the position you're in to understand what percentile you fall in. Then, leverage that data with employees and have open conversations about how they can move up.

Another consideration is whether you've equipped your teams to be truly transparent. Sarah shared two necessary steps for true pay transparency:

1. Do you have a program to train managers to have conversations with employees about pay?

2. Do managers have access to pay data across the organization? Do they know how to access it?

If the answer is "No," you're undermining your success before you begin.

How does Greenhouse approach pay transparency?

When asked about Greenhouse's approach to pay transparency, Donald gave sage advice:

"Great companies don't need rules to treat people right."

Pay transparency can be a compliance issue, but Donald sees it as much more. You should want to treat people the right way. Transparency is one way to do that.

At Greenhouse, we do a few things to foster pay transparency:

• We updated our job descriptions to include pay ranges

• Our compensation team educates the organization to help employees understand what compensation means. We explore topics like bonus vs. company variable pay and the impact of equity

• We focus on helping our employees become more educated on the impact of their pay
  
  

How do you get buy-in from the C-suite?

We already know candidates favor more transparent companies, and leaders want to get the most out of their employees. So, looking through a pay transparency lens, you need to see how you compare to your competitors.

If competitors are more open and honest about pay, you likely won't get top talent in the door. But you won't get the max from your current employees either. Look at what other companies are doing and how pay transparency has worked for them. Gather details on things like:

• Its impact on employee trust and morale

• How pay transparency helps employees feel like you're equitable

Get your C-suite on board by telling these stories through data. As Donald said earlier, transparency pays, and it's good for business. From an employer brand and culture perspective, it's great. But don't forget to emphasize its impact on the bottom line.

Good for everyone

Candidates and employees have spoken – pay transparency is a must. It benefits everyone. Your organization benefits from a more positive employer brand and increased employee trust. You also get more from your employees.

Candidates and employees view your company more favorably. They understand the value they bring to the business. And it can create more equity and help employees plan a path to promotion.

Want to learn more about pay transparency and how it can boost your employer brand? Read our blog to learn about the benefits of pay transparency.

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