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Radical Change Towards Salary Transparency

BY Julie Calli / August 31st, 2022 / 6 MIN READ

Salaries are no longer a private matter. Radical transparency leadership and corporate cultures have naturally led us to salary transparency, and it has people talking from many different perspectives. There are perspectives from the view of the job seekers and employees, and that of the companies that are the employers. 

This is not an us versus them topic, but more of how do we take action to make possible what’s right and fair for all. People should be talking, because it’s one of the biggest evolutions in our industry in its early phases. 

What is Salary Transparency?

“Salary Transparency” or “Pay Transparency” refers to companies openly sharing the compensation for roles in the organization to current and potential employees. There is no federal law today that requires companies to disclose compensation, however there are varying state level laws and regulations that do require disclosing compensation in job postings. 

Salary Transparency: Job Seeker 

Consider this, the most basic job ad could read “Work for pay”, but the first questions that then pop into a job seekers mind would be “What work, for what pay?”. The “what work” question is what we know as a job description, which is intended to provide information for a job seeker to determine if they are a match for the role based on the employer’s requirements for a certain function or skill set. This often includes important information to determine fit, such as the employer, location, role, responsibilities and requirements of the job. 

For a job seeker, pay is also a factor of determining fit, so logically it should also be included from the job seekers perspective. Since compensation is the exchange being offered for the work then it’s arguably the primary value that should be in the job description that is actually for the job seeker and not the employer. Job descriptions are loaded today with other benefits being offered, such as the standard 401k, health insurance, PTO etc. and even perks such as free snacks, gym memberships and exclusive access to merchandise or events. Compensation or salary, however, are unfortunately rare to see disclosed in the majority of job postings today. 

Job seekers have always craved the disclosure of salary and compensation information in job postings, but have been powerless to create change in employer lead labor markets. With the declining labor force participation rate, the great resignation and talent gaps across numerous industries, the tables have turned in favor of the job seekers. What attracts more candidates is starting to become more of a priority to companies as they compete to attract and retain talent. 

With more mainstream attention highlighting pay discrepancies among women and minority groups, more actions have been explored as to how regulations and policy can help address these pay gaps, including the advertising of jobs. Regulations towards disclosing the compensation in the job description are starting to take effect and several states have either already applied regulation, set a date for when it will apply or are exploring it. There will be no complaints from job seekers if all jobs are required to disclose compensation, especially if it helps to close pay gaps for underrepresented minority groups.

Take Away: Jobs seekers want compensation transparency in job postings, and few companies are doing it today. This could be a competitive edge for attracting talent and can support making a positive impact on your DEIB hiring strategy. 

Salary Transparency: Employee

Talking about salary in the workplace has long been taboo and traditionally employees have usually been hesitant to share their salaries for a variety of reasons. Some may be embarrassed by their pay and believe others are earning more. Others may fear that their exposed income could negatively impact relationships among coworkers

How a company approaches salary transparency with their employees, and what employees today expect has everything to do with providing trust. This trust can impact the view towards a company’s culture of being equitable, inclusive and fair with compensation. If salary is not transparent, it leaves the employee guessing and interested in exploring what else may be out there. In a hyper-competitive and accelerated hiring market, this could result in high churn as more employees explore their options outside the organization, because they have been left guessing as to their market value and fairness of their own compensation in the organization.

Take Away: Salary transparency can lead to a better retention and a stronger culture of trust with employees. 

Salary Transparency: Employer 

Companies have reasons as to why the culture of non-disclosure exists, but that is all being heavily challenged as to its relevance in today’s world of work. The most significant reasons are to prevent rising competition amongst existing and new employees, as well as rising competition among other companies for the same or similar talent. In the past they have been able to get plenty of candidates and retain talent without disclosing, so really why would they do it?

There are two places an employer needs to determine their approach to salary transparency. Disclosure to internal employees whom they pay currently and disclosure to external candidates and job seekers whom they may pay in the future. These decisions to disclose are really just the same coin with two sides, and each comes with benefits and challenges employers will have to consider and address. 

But, let’s explore an approach on the side of the coin that is most likely to start creating change or shall we say has already begun, the job seekers. State-level regulations requiring compensation disclosure in job postings are already here and this means that companies have to disclose compensation on job postings in those required states. 

If an employer makes the decision to be transparent with salary externally, such as within their job postings, then they might as well disclose them to their internal organization as well. It would be difficult to manage communications and trust when disclosing compensation externally in job postings, but not make that information available to their own employees. What would it say to a company’s employees, that they make that information available to the public but not their own employee’s? It implies they want to hide something from their employees and that they trust the public more than their own employee’s with this information. 

Being transparent with compensation can provide many benefits for employers to attract and retain talent. 

Take Away: The laws on salary transparency are changing in states that you could be operating in now or in the future, so start figuring out how you want to approach this now for both external and internal disclosure. 

Salary Transparency: Required Change

The most significant factor that will cause companies to make real changes towards salary transparency will likely be new laws and regulations. Today in the United States there is no federal law that requires salary or compensation disclosure, however individual states are beginning to take action. These well-intentioned states are taking steps to create positive change toward closing salary gaps among minority groups and there is real potential for this disclosure to make huge strides towards narrowing the gaps. 

Employers in the end will have to carry the responsibility for this change, and be prepared for how to operationally, technically and financially adapt to new regulation, including the pressure to do so at the rate of which a new law is applied and the timeline set to be compliant. 

So why don’t all companies just start doing it already? Because it’s not that easy.

Take Away: Salary transparency is becoming regulated at state levels. Pay attention, stay informed and bring in HR business partners for support and remain compliant in job postings.

Salary Transparency Has Gone Viral

The world of information sharing will continue to progress, and one social media star who has recently gone viral, Hannah Williams, is trying to make salary transparency the norm. With her TikTok and Instagram accounts known as Salary Transparent Street, Hannah walks around cities in the U.S. asking people about what they do for a living and how much they currently earn. And, surprisingly, many people are more than willing to share that information with her and her followers. 

At last count, Hannah’s videos have garnered millions of views on TikTok, and she currently has more than 247K followers on Instagram. Her interviews feature individuals in a wide range of professions including content creators, professional boxers, teachers, scientists, attorneys and sales professionals, just to name a few. Each video clip is under 30 seconds, but viewers get a sense of how much individuals make in many industries and roles.

So, what motivated Hannah to make conversations about salary more transparent and less of a secret? Williams started her social media accounts after realizing she didn’t know how to negotiate her salary or her earning potential. Her first job started at $40,000, but by her fifth job, she had grown her salary to $115,000. 

She hopes her accounts encourage others to talk with their bosses about their wages and negotiate higher pay when they show how they can add more value to the company.

Radical Change In Motion

The pandemic brought an increase in remote and flexible working environments putting more pressure on salary transparency. Similarly, organizations have embraced stronger workplace values of diversity and inclusion. State regulations are already starting to force disclosure of salary in job descriptions and that will require strategy and planning to remain compliant. Salary transparency is already having widespread adaptation and is rapidly becoming the expectations of job seekers and employees today. Salary transparency is likely to be the next seismic shift in the workplace, and companies who choose to adopt it early are positioned to attract and retain top talent.

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