- While 67% of organizations say pay transparency is increasingly important — with 4% reporting it's of the highest importance — only 14% of organizations have dealt with pay transparency beyond a "moderate" level, according to a study by WorldatWork and Mercer.
- While near half of employers have a "moderate" approach," 4% have nonexistent approaches to pay transparency, 35% have minimal transparency and just 1% have extreme transparency, according to the survey of 478 respondents. Additionally, more than 60% of respondents said their managers are not trained to effectively deliver pay communications.
- Nearly half (42%) of respondents do not share information about how jobs are valued and compensated within the organization. When pay equity adjustments are made, only 53% of organizations communicate to their employees that the increase is the result of a pay equity adjustment; 30% bundle the adjustment along with other pay increases and don't explicitly mention it.
HR's ability to accurately price workers' skills is central to the hiring process, according to PayScale. Additionally, when managers understand the value of skills, they can be more transparent when talking with employees about professional opportunities and growth.
Pay transparency has been shown to eliminate gender-based pay gaps across most jobs, except for traditionally male-dominated occupations like protective services and repair/maintenance. Pay transparency may also help reinvigorate wage growth in the United States, some have proposed.
Increasingly, pay transparency is mandated by law; a few states, including California and New York, have explicit pay transparency laws, and many jurisdictions prohibit employers from asking about an applicant's salary history (notably, Philadelphia's salary history ban was recently upheld after a lot of legal back-and-forth).
Section 7 of the National Labor Relations Act also protects employees' right to discuss pay and working conditions, even in non-union workplaces. Many big employers, including Lowe's and Burger King, have gotten in trouble for trying to shut down these conversations.
Many employers are understandably concerned about potentially opening a can of worms with employees when they consider increasing pay transparency. Experts point out that there is a big difference between disclosing individual pay decisions versus simply being open about the company's overall compensation philosophy.
A comprehensive pay audit can be a good place to begin, to investigate if any gender-based or other compensation disparities exist. This audit is best performed in conjunction with counsel so that legal privilege exists in the event of any future disputes.