5 Things to Know About Salary Transparency

Salary transparency means that the candidate knows what the pay range for a job is before the offer is made. Some states and cities are requiring more pay transparency in the hiring process. This is an opportunity for some organizations to develop a clearer compensation philosophy.

Recent Salary.com surveys of both employers and employees revealed that:

• 35% of employers do not have a formal, documented compensation philosophy that supports pay transparency
• 35% of HR pros say getting leadership support for pay transparency is their biggest challenge in addressing pay equity
• Only 34% of employers can say that any manager at their organization can honestly and accurately answer employees when they ask, “How is my pay determined?”

Here's why salary transparency matters.

1. Salary transparency promotes pay equity for everyone.

When salary ranges are decided as part of an overall compensation strategy and are available to both hiring managers and candidates, it promotes pay equity. Compensation is tied to the role instead of who is in it. It promotes equal pay for comparable work.

Pay transparency not only protects women and other marginalized groups from discrimination, it protects everyone. If someone new is hired at a higher rate than a white man who has been there for 5 years, the person with longer tenure should be paid the same, if not more. Pay transparency means fairness for everyone.

2. Salary transparency saves time.

When everyone knows the salary range at the application stage, then people who would not accept an offer in that range can self-select out of the process. This saves everyone time and effort going through an interview process that is not going to work out no matter what because the pay is too low.

3. Salary transparency is not just a good idea; it's the law—in some places.

Since California passed the first wage transparency law in 2018, other states and some cities have passed similar laws requiring employers to disclose the pay range for the job either upon request or by a certain state in the hiring process.

What is required varies depending on the law. Some places, like Colorado, require that pay ranges be disclosed in the job posting. Others, like Connecticut and Maryland, require that employers provide the wage range to an applicant upon request. Nevada requires that employers disclose the pay range after a candidate has completed an interview.

These laws generally protect applicants, and it is the law where the applicant lives that applies. So, if someone from California interviews with a Texas company, the company should be sure to comply with California laws on pay transparency, salary history questions, and other laws relating to job applications.

State and local laws on salary transparency are being enacted and modified frequently. Be sure to double check the latest changes.

4. Salary transparency promotes market competition.

Organizations want to be competitive so they can attract and retain the best candidates. When pay ranges are transparent, everyone has more information to understand the market.

Employees have often been forced to change companies to get paid the market rate. It is expensive for employers not only have to find, hire, and train the replacement, they also lose that specific person with their experience, skills, institutional knowledge, and networks inside the company.

Knowing what the market is for a specific role in that industry and location means employers have the data they need to keep their best people. And it's often less expensive to bring current employees up to market compensation than to replace them.

5. Salary transparency normalizes talking about money.

Financial literacy is important to navigating our lives and our futures. Most of us don't get much education on how to negotiate salary, manage money, invest, budget, spend and save.

We've all driven 10 miles to save a few cents per gallon not realizing that the savings were consumed by the driving to a farther gas station. What would happen if we were comfortable talking about money the way we discuss the weather?

Salary transparency is good for employees as well as employers. And being able to understand compensation and money in general gives people the information they need to make smart choices.

Want to learn more about salary transparency? Check out this.