The Struggles with Pay Transparency and How Companies Should Approach Them

Written by Staff

May 7, 2022

The Struggles with Pay Transparency and How Companies Should Approach Them Hero

For most people money can be a sensitive topic. This is also true when it comes to the amount of pay workers receive. But at present, there are laws that urge companies to reveal data about their workers’ pay.


For many years, companies have kept their workers’ pay private for several reasons. But pay transparency laws of today require otherwise. Of course, this is due to valid reasons, especially for the purpose of achieving fair pay for all.

Pay Transparency

This is a practice of revealing existing and potential workers’ pay. Firms do this for the purpose of achieving pay equity. This practice aims to improve communication involving workers’ pay. Also, it aims to address unfair pay practices and enhance trust within the workplace.

Pay transparency can look different from one company to another. There are companies that publicly share their salary data. But there are others who only share how they come up with their workers’ pay.

Struggles with Pay Transparency

Like other practices, embracing pay transparency has not been easy. As the government mandates laws to support it, many companies struggle to start incorporating it within their plans. Also, there are others that do not consider it as a good thing to have at all. Here are the usual struggles when it comes to pay transparency and how companies should deal with them.

Impact on Turnover and Performance

Revealing pay ranges may cause problems within the workplace. This happens when workers find out they are not receiving equal pay. One example is finding out that there is an obvious gender pay gap within the workplace.

Disclosing pay ranges can also reveal favoritism in the workplace. As a result, this can have a major impact on turnover and performance. In addition, when workers reveal this issue, it can affect the company’s reputation and branding.

Solution: The best way to approach this challenge is to conduct a pay analysis or pay audit. This will help find out if there are pay gaps within the company’s pay structure. Workers will not likely quit if they know the company is paying them fairly.

Internal Conflict

One more struggles most companies face is internal conflict. This can happen when there is no clear communication about the workers’ pay. For example, if a company is not clear on how they compute their workers’ pay grades.

The same goes when companies do not relay how they do pay grade for high and low earners with similar job roles. This will create tension between workers unless they receive a rational explanation.

Solution: Companies can overcome this by ensuring that they have a clear pay policy. In addition, they should supply effective guidelines for pay ranges. Firms should also train their managers to understand these policies and guidelines.


Is Pay Transparency Good for Business?

With those struggles and more, is embracing pay transparency worth it? That may be the most usual question businesses ask. Here are some reasons why companies need to consider having pay transparency within the workplace.

  1. Combats gender pay gap.

Keeping workers’ pay secret can make it hard especially for women. They will not know if they are receiving equal pay as their male counterparts. This could easily lead to gender pay gaps.

For this reason, many companies now include pay transparency policies in their plans. With this strategy in place, it is a way for companies to help close the gender pay gap.

  1. Offers better employee experience.

Most job seekers want to know how much they will receive when they are applying for a job. Also, the amount of pay they will receive should depend on market data to ensure its accuracy.

With this knowledge job seekers and existing workers become more at ease. As a result, they feel they have better experience during their employment.

  1. Improves company culture.

Embracing pay transparency proves that salary is more than just a number. It can reflect the values of a company. While some are reluctant about pay transparency, there are firms which know it is good for them and their workers.

Transparency fosters an environment of trust within the workplace. It allows company leaders to communicate with their workers without bias. As a result, a workplace that fosters trust can help improve company culture.


Like other progressive practices, many may not completely embrace pay transparency. There may be firms that second guess its advantages. But for most firms, the benefit of pay transparency outweighs its struggles. For this reason, more firms are joining in to embrace this practice.

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