Why You Should Embrace Pay Transparency
Discussing salary information with colleagues used to be taboo, but younger employees are pushing for pay transparency—and for good reason. Pay transparency helps employees and employers.
Talking about how much money you make isn’t just about bragging rights. Conversations about income can help employees know where they stand in an organization. It can also help applicants know what sort of salary to expect.
Pay transparency can also help improve pay equity.
Finally, by embracing a pay transparency philosophy, employers can better retain and attract talented candidates.
According to a recent survey from Bankrate.com, less than 20 per cent of baby boomers shared salary information with a colleague. However, that figure rises with each successive generation, from 31 per cent of Gen Xers to 40 per cent of millennials and 42 per cent of Gen Z.
Researchers speculate that the economic impacts of the Great Recession and the pandemic pushed younger generations to more job-hopping to increase salaries. Along with the onset of social media, there is more potential for informal conversations outside the workplace to discuss salaries.
Further, there has been a greater emphasis in public discourse surrounding racial and gender pay gaps. More than half of millennials reported they felt underpaid compared to their peers despite having the same amount of experience and credentials.
Experts seem to agree that pay transparency is helping to address these inequities. AnnElizabeth Konkel, an economist at the Indeed Hiring Lab, says “across the board, salary transparency does help eliminate those asymmetric information problems that can contribute to the gender wage gap, racial wage issues, and the labor market.”
Pay Transparency Also Good for Employers
A survey from Glassdoor found that two-thirds of employees prefer to work for a company that shares salary information. However, less than a fifth of respondents said their company discloses pay ranges internally among employees.
Clearly, there is a disconnect here. With the current talent crunch in the labour market, employers would do well to embrace pay transparency to entice talented candidates.
Pay transparency can also help retain employees. Without adequate salary information, many employees believe they’re being underpaid when they aren’t.
A Payscale survey found that nearly 60 per cent of employees who are paid at market believe they’re underpaid. More than 40 per cent of employees paid above market also think they’re underpaid. This is significant because employees are 50 per cent more likely to resign if they feel they’re being paid below market—whether or not it’s true.
While pay transparency can help decrease intentions to leave, only 35 per cent of HR workers say their companies are transparent about their pay. They say a lack of leadership support is standing in the way of pay transparency.
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