What is pay transparency?

Pay transparency is a broad, complex subject that essentially refers to the availability and visibility of, and dialogue around, pay information for jobs. It’s a multi-dimensional topic and is gaining momentum on many fronts, becoming an increasingly important agenda item for HR and organizational leaders.

Why is pay transparency important?

A combination of the many varying forms of pay transparency is the key to unlocking fairer and more equitable compensation structures within organizations. Openwage.com highlights some of the main advantages of pay transparency:

• It can help close pay gaps – most employers need to drastically close pay gaps. In Denmark, a gender pay gap research study showed that pay transparency legislation closed the gender pay gap by 13%.
• It can help improve diversity – as pay inequities disproportionately impact those from underrepresented groups, being transparent helps attract more diverse candidates.
• Attract a more relevant, self-qualified talent pool – according to a Hays survey in June 2022, 26% of candidates would not apply for a role without knowing the salary.
• Recruiters spend their time more effectively. If candidates already know the salary, you’ve removed a major barrier and they know what they’re getting into from the start.
• It builds trust with candidates and employees – as the employer is forthcoming with their salaries, it removes any ambiguity and the need to negotiate (which can also assist with improving diversity), as well as any potential mistrust with existing colleagues (although this can have the adverse effect if employers do not keep pay increases in line with new hires).
• Regulation/legislation is mandating change – widespread change is happening across the US and substantial change is on the horizon in Europe, which will force employers to be more transparent with pay.

What are the types and drivers of pay transparency?

1. Pay transparency driven by employers

Employers have been voluntarily participating in forms of pay transparency for many years. Examples of employer-driven pay transparency include:

• Publishing salaries on job listings. UK retail business, Co-op, publishes salaries on all types of jobs, from store jobs to tech roles.
• Publishing salary range by role type and tier. Glassdoor published the salary ranges for each job title and associated tier (filterable by location and department) in a blog post authored by their CEO. In the same blog post, they also published the names of executive leaders along with their associated salaries.
• Publishing salaries of named employees. Buffer famously publishes the names and salaries of all employees on their careers website.  
• Publishing salary calculators. Some organizations offer not only an interactive salary calculator on their career site, but also expose the equation they use to calculate it. Examples include Buffer, Codacy and GitLab.
• Pay gap reporting. Many organizations report on gender pay gaps, such as Apple, Google and Microsoft. In the UK, Network Rail and the Nursing & Midwifery Council are examples of employers publishing disability pay gap reports.
  SEE ALSO: The UK Government’s gender pay gap service provides access to over 13,000 UK employers’ pay gap reports. UK employers with over 250 employees must report on gender pay gap.
• Pay increases in the news. Microsoft, PwC, Barclays, Bank of America, and many others have featured in the news this past year, offering various pay-related commitments – from improving overall pay transparency, to offering salary increases and bonuses, some of which was the result of unionized action.

Other examples of employer-driven pay transparency include:

• Advising candidates of the salary at various steps in recruitment process
• Asking candidates about their previous and/or expected salary
• Employment contracts that prohibit the discussion of one’s salary/wage

2. Pay transparency driven by employees

In recent years, employees have become bigger drivers of pay transparency as social and technology platforms have enabled the democratization of access to historically taboo information. Examples of the common types of pay transparency controlled by employees include:

• Discussing salaries in the workplace. A survey by Bankrate.com found that “42% of GenZ and 40% of millennials have shared salary information with a coworker or other professional contact.”
• Submitting salary reviews on employer/salary review sites. There are many salary review, comparison and estimation sites, many of which use similar third-party sources in addition to their own primary data, such as income surveys from censuses or user-submitted job offer letters to enhance verification of the submitted salary. These include but are not limited to: Glassdoor, Indeed, Payscale, Comparably (US) and Levels.fyi (US).
• Openly discussing salaries on social channels. Employees are taking to social platforms such as Reddit and Fishbowl to ask (and answer) questions about pay, discussing how much they earn and sharing it with the rest of the internet. Examples include the subreddit r/humanresources, which has over 65,000 members, and the “Salaries in HR” Fishbowl community, which has over 40,000 members. Most recently, USA Today reported that TikToker, Lexi Larson, was fired from a job she hadn’t started yet for sharing her new salary on the video sharing platform.

3. Pay transparency driven by job and career technology companies

Tech platforms, such as Glassdoor, Google and Payscale have started to help drive the pay transparency agenda in recent years. Specific examples include:

• Estimating pay for job postings that don’t provide salaries
• Showing pay comparisons against other employers
• Displaying salary reviews

Many of the tech companies operating in the jobs and careers information space provide most of the above with varying forms of detail and filtering capability. The likes of Glassdoor, Payscale and Google (with “Google for Jobs”) have been providing salary estimations, comparisons and/or reviews for several years now and, most recently, Indeed (in the US) has started to mandate that salary information be provided on job listings, or they will provide estimations based on its aggregate data. 

4. Regulation- and legislation-driven pay transparency

Regulation and legislation activity at both local and national government levels around the world is evolving at an incredible pace, most notably in the US. There is also a proposed EU Directive that could have major ramifications for European employers should it be passed. Below is a summary of the current pay transparency landscape in the US:

Current US state/city pay transparency

• California: upon candidate request
• Colorado: in job posting
• Connecticut: upon candidate request or at hire – whichever is sooner
• Maryland: upon candidate request
• Nevada: after first interview
• New York City, NY: in job postings
• Cincinnati, Ohio & Toledo, Ohio: upon request after conditional offer of employment is made
• Rhode Island: upon candidate request or when inquiring about candidate’s salary expectations or when offer is made – whichever is sooner
• Washington: upon candidate request. From Jan 2023, in job postings and upon employee request, salary range must be provided for internal promotions/transfers.

Source: Payscale

5. Social activist-driven pay transparency

Social activism around pay transparency is on the rise, whereby individuals and activist organizations are working together to bring about change in society. Examples of social activist-driven pay transparency include:

• Social influencers advocating pay transparency. @SalaryTransparentStreet on TikTok (with more than 814K followers at the time of writing) stops members of the public on the street to ask them what job they do and how much they earn, as well as asking other questions around the topics of education, experience and debt.
• In the UK, during International Women’s Day in March 2022, an automated Twitter bot account called Gender Pay Gap Bot would automatically tweet out an organization’s gender pay gap whenever they tweeted about International Women’s Day, causing some employers to look less than transparent.
• UK-based tech job marketplace platform, Otta, created an outdoor advertising campaign in London, UK, to encourage employers to disclose salaries on behalf of all job seekers with the message: “If the salary is so competitive, why don’t you tell me what it is?” with the sign off; “From, all job seekers.” Tech companies in the jobs and careers space are not only driving pay transparency on their platforms, they’re also driving it with social activism.

5 tips for employers and talent acquisition teams to act on pay transparency

1. Understand your employer’s current position and future plans on pay transparency.
2. Conduct a job posting pay range audit. If you are publishing pay ranges, are they being added correctly to the ATS? Are they appearing correctly on your career site and job board postings? Simply providing pay ranges within your job description body text is not going to be sufficient. It’s important to understand how the platform is reading salary information (likely in the form of structured schema data), so it’s important that accurate information is provided to the platforms in the correct manner. Your recruitment marketing platform provider should already be doing this for you, but it’s worth checking.
3. Conduct a channels audit to understand where your salaries are being published, estimated, compared and discussed.
4. Highlight pay gap reports on your career site. If your employer publishes pay gap reports, use your career site CMS to create a page(s) that summarize the report highlights, making it easily accessible to prospective candidates.
5. Create content to contribute to the pay narrative. Once you have a good understanding of your own “pay transparency landscape,” taking into account the five drivers we covered above, consider proactively creating content that addresses your position on pay transparency, corrects any misconceptions, or addresses any inconsistencies.

The information in this article was correct at the time of writing. Please seek specialist legal advice when it comes to pay transparency regulation and legislation in your region.