Discussing and disclosing salaries may have been considered taboo in the past, but that is no longer the case. Pay transparency — the practice of making employee compensation figures visible to others, either internally, externally or both — is happening more than ever; in fact, laws are continuously being created to break the barriers of salary inequity. In the US, employers in California, Colorado, Connecticut, Maryland and New York City must disclose base compensation to job seekers. Rhode Island and Washington will be added to that list later in 2023. Although laws aren’t uniform across all states, we will see more regulations for pay transparency being created over the next several years.
Below are five reasons why leveraging pay transparency will only help your organization source and hire high-quality talent.
Candidates believe there may be fewer pay gaps within your organization if the salaries and pay rates are posted along with the job description. More than half of workers, 53%, believe that pay transparency will result in salary equity and smaller or no pay gaps. Additionally, 43% of workers think pay transparency will lead to higher pay rates and salaries for workers. When it comes to choosing an employer, workers are much more likely to choose one that will not only offer them higher pay but also has a fair environment for them and their colleagues.
More than half of workers claim they would refuse to take a job if the salary isn’t posted. A LinkedIn study has found that including salary ranges in job postings drives more qualified candidates to apply. If you omit pay rates or salary ranges from your job postings, not only are you missing out on 53% of potential candidates, but you’re missing out on high-quality talent as well.
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Pay transparency can create a higher level of trust and show a commitment to diversity. According to the Society for Human Resource Management (SHRM), 91% of employees who believe their organization is transparent about how pay decisions are made also said they trust that their employers pay people equitably across the board, regardless of gender, race or any other biases. Even today, women still earn 82 cents for every dollar earned by men, and that gap is more prominent when comparing white men to women of color. Structural pay inequalities like the gender pay gap can no longer be hidden in plain sight if pay transparency is required.
Being transparent about pay will show that you offer competitive compensation. The reality is that if an organization isn’t comfortable sharing compensation figures along with their job descriptions, there is a good chance that the pay isn’t going to fall within a competitive range. In an uncertain and volatile economy, you must hire and retain high-quality talent. Offering potential employees competitive pay will allow you to stay ahead of the curve and ensure candidates are more likely to join your organization over your competitors.
Pay transparency will lead to shorter time-to-fill rates and increase retention. Disclosing compensation within job ads immediately may attract candidates who are best suited for the role right away. Being transparent from the start will decrease the negotiation period of the job offer and limit the number of times candidates turn down the offer since they are aware of the compensation from the beginning. By finding candidates more quickly and efficiently, your time-to-fill rates will shorten, leading to a more productive workforce. Pay transparency will not only improve your hiring efforts, it will also increase retention within your organization. Finding candidates who are the right fit for the role you’re trying to fill makes them more likely to be satisfied in their position, leading to less turnover and an increased retention rate.
Companies specializing in talent solutions, like DZConneX, help you use data to ensure your salaries are in line to compete for top talent while complying with city and state laws focused on pay transparency. Based on industry experience and an in-depth understanding of market trends, talent experts know what good compensation packages look like better than anyone else.
However you decide to implement pay transparency, doing so will help ensure that your organization attracts the best talent and follows all pay transparency guidelines while removing some of the burdens from your internal teams.