Employers and employees alike are benefiting from pay transparency practices.
By Debbie Bolla
Pay transparency has gained in popularity in recent years. Some of this has been driven by legislation requiring employers to disclose compensation practices. In fact, the National Women’s Law Center reports that nearly 44.8 million people (26.6% of the U.S. labor force) reside in a state that is required to include salary ranges in job postings. The organization reports that as of March 2023, eight states have instituted pay range laws with another 16 under consideration this year.
What impact does pay transparency have on the talent pool and current employees? New research from SHRM asked just that and revealed some interesting findings. Of the group of HR professionals surveyed, 42% said their organization has an office in a state that requires pay ranges in job postings and 32% began including pay information in job postings last year. The results of these practices?
- The number of applicants is up. Nearly 70% of respondents agree that including pay ranges in job postings has increased the total number of candidates that applied.
- The quality of applicants improves. Survey respondents report that being transparent with compensation practices allows them a better pool of candidates, making them more competitive. In fact, 66% agree that the quality of talent has improved and 65% allows them to attract better candidates.
- Pay ranges in job postings encourages candidates to apply. According to the U.S. workers that were surveyed, 82% say they have greater consideration for a job posting that includes the pay range and 74% are less interested when it’s excluded.
- Trust increases with pay transparency. Being open about pay range instills trust with 73% of respondents agreeing they are more likely to trust organizations that follow this practice.
- Organizations participate in pay transparency even if it’s not required. For those businesses that are currently not required to include pay ranges in job postings, 67% do so on their own accord sometimes, often, or always.
- Current employees are taking notice. In addition to the impact on candidates, the survey found that pay transparency is encouraging more current employees to evaluate their compensation with 36% in agreement that workers are asking for a raise as a result.