Pay transparency has recently been a hot topic in US recruitment. In the wake of revelations of pay disparity, candidates and employees are now calling for employers to be more open about pay practices and salaries.
So, what is pay transparency?
Pay transparency is when an employer is open about how they compensate their employees. This most often means sharing salary information, which could be salary ranges for open vacancies or for current employees. Pay transparency can also include being open about compensation packages, including bonuses and equity and other factors.
A survey by WTW found that in 2022, 17% of US companies were already disclosing pay range information but 62% were looking into pay transparency policies for the future, and with new legal requirements coming into action across the US, it’s becoming more and more common for companies to be upfront about their pay practices. But don’t let this worry you–there are advantages about being transparent with candidates about your compensation.
What are the benefits of incorporating pay transparency?
- It helps you engage and retain candidates
Disclosing a job’s salary can motivate active candidates to apply for your roles or passive candidates to reply to your enquiries. For active candidates, a salary number could be enough to make your role stand out in a sea of job postings and a potential candidate might be willing to take a lower salary for other benefits which you may be able to offer. For candidates not actively looking to change jobs, a salary leap could be the tipping point for them to consider leaving their current role when they might not have otherwise done so. In fact, due to the time involved in applying to jobs, 85% of Gen Zers (which includes recent graduates) are less likely to even consider a job if the pay range isn’t disclosed, according to a recent Adobe survey.
- It Improves DE&I
Pay transparency is particularly beneficial for people from marginalised backgrounds, who might be put off applying for a position that doesn’t list a salary. Women, for instance, are four times less likely to negotiate their starting salary than men. Pay transparency helps boost equality in your company by closing pay gaps and promoting pay equity. It can take the negotiation out of salaries and set realistic expectations. Glassdoor found that 63% of employees would rather work at a company that discloses pay, with a boost in applicants mostly from underrepresented talent.
- It increases efficiency in the hiring process
By being transparent about a position’s salary in the posting stage, companies can filter out candidates whose salary expectations don’t meet that which you can realistically afford. This means you might have fewer applicants initially, but also better-suited applicants with a higher likelihood of accepting your offer, so less time is wasted interviewing and interacting with candidates who would refuse your salary in the end, anyway. It’s much better for both you and the candidate to be on the same page about salary expectations to avoid misunderstandings by being transparent about compensation from the offset.
- It improves employer reputation and trust
Pay transparency builds trust before a potential employee even joins your team. This boosts employee engagement and job satisfaction, according to Harvard Business Review.
- Some companies will be legally obliged to comply with pay transparency legislation.
In the US, there are currently 24 state laws, 13 local laws and 6 pending state laws covering pay transparency in job postings. Depending on the law, pay transparency laws may require employees to engage in activities such as providing applicants with the salary range for a posted position at a specified point during the hiring process, providing employees’ salary range upon request, when changing jobs, or when they’re hired or to include a salary range in job postings. These laws currently affect employees in California, Washington, and New York City, amongst other areas, and each law is different, so it’s best to navigate them with an advisor.
How can you make pay transparency a part of your recruitment?
When you work with an embedded recruitment partner such as Troi, our experts take care of this for you, but here are some starting tips:
- Include a salary range on job postings and recruitment outreach
Listing a salary range can help to engage candidates, especially if the benefits compare favourably with their current or previous role. Make sure you update all platforms where your post is available and make the salary and benefits as clear as possible to understand. If you don’t want to disclose your salary publicly on job postings, you can ask potential candidates about their salary expectations and check that it coheres with what you can offer from the offset, as long as this still compiles with your local pay transparency laws,
- Publish a pay transparency policy
A pay transparency policy is a statement that sits on your website and states your company policy regarding pay transparency. This can be linked-to in your job posting, giving potential candidate confidence in you as an employer and ensuring you’re in compliance with local pay transparency laws.
- Keep up to date with your competitors
Ensure your salary offering is competitive by checking job postings for similar roles in your area. Market research is a key aspect of recruitment to ensure you’re in the best place to attract and retain the best talent for you. An embedded talent partner such as Troi can help keep you up to date with the latest developments in your market and any fluctuations in compensation expectations.
- Share more than just base salary
Candidates don’t make their decisions on base salary alone, so if you’re worried about your base salary being lower than the competition or you simply want to stand out, it helps to share information on other benefits in your job postings as well. From work perks to DE&I policies to company culture, there’s much more to a candidate accepting a job than base salary alone. You can even share information on career development opportunities, showing that the advertised role could lead to others (with a potentially higher salary and more benefits) in the future.
With the right expertise, pay transparency can boost your employer branding, reputation, and even your company culture.
How can Troi help with pay transparency?
- Job Descriptions: These are a crucial part of the recruitment process and play a significant role in determining the salary range for a position. Embedded recruitment systems can automatically generate job descriptions based on data from similar positions in the organization or industry, ensuring that job descriptions are accurate and consistent.
- Data Analytics: We are advocates of ‘big data’ and with the use of our very own tools, database, and ATS solution we are able to identify patterns, trends, and anomalies that could impact pay transparency. This, in turn, helps you make much more informed decisions about job offers, salary negotiations, and employee promotions.
- Automated Decision-Making: Our very own systems can automate key decision-making processes, such as candidate assessment, salary negotiations, and job offer management, ensuring that they are fair, unbiased, and compliant with pay transparency laws.
- Process Redesign: Our recruiters have an average of 8-10 years experience of in both in-house and agency practices and through this able to re-evaluate current pinch points or risks along the hiring lifecycle.
- Compliance: We are able to help organizations comply with pay transparency laws by providing data-driven insights and automated decision-making processes that eliminate wage discrimination based on gender, race, and other factors.
- Efficiency: Troi’s model can significantly streamline recruitment processes, reducing the time and effort required to fill a vacancy, and improving the overall efficiency of the organization.
- Increased Transparency: Embedded recruitment systems can provide real-time visibility into recruitment processes and salary negotiations, enabling organizations to identify and address any issues related to pay transparency.