Imagine stumbling upon your current job being advertised online with a juicier paycheck than yours. That's exactly what happened to one woman in New York City last year. She saw a role very similar to hers on LinkedIn, but with a higher salary, and thought, "Why not apply?"

No, she didn't get the job. But the awkward situation kicked off a national conversation about pay transparency, pay equality, and the widening gaps that can emerge between workers who are employed directly with a company and those who work for outsourced contractors. 

What is clear is that pay transparency is no longer just a buzzword- it's increasingly the law. It's also a well-established practice that can reap numerous benefits for employers that embrace it, including a better candidate experience, streamlined hiring processes, and higher employee retention. 

Better Candidate Experience

When candidates readily have access to information about the salary range for a position, they can make more informed decisions about whether to pursue an opportunity. This saves both the candidate and the employer valuable time and resources. Candidates feel empowered and are less likely to waste time on interviews for positions that don't align with their financial expectations. By providing transparency, employers can attract candidates who are genuinely interested in the opportunity, leading to a better talent pipeline and improved hiring outcomes. 

Consider this example: a job candidate invests considerable time and effort attending multiple interviews across the city, only to discover that the budgeted salary was far below her expectations. This situation could have been easily avoided with upfront pay transparency, saving both the candidate and the employer valuable time and resources. It's a stark reminder of the efficiency and respect inherent in transparent practices. 

In one study by SHRM Research, about 70 percent of organizations that list pay ranges in job advertisements reported that it had led to more people applying for their jobs, and 66 percent said that it had increased their quality of applicants. Those findings align with a 2022 LinkedIn report revealing that 91% of workers said that including salary ranges in a job post would affect their decision to apply, and 82% of respondents said seeing a salary range would give them a more positive impression of a company. 

Streamlined Hiring Process

Pay transparency also improves the hiring experience for employers by reducing back-and-forth discussions on compensation. When candidates have a clear understanding of the salary range upfront, there's less need for negotiation and clarification during the hiring process. Recruiters and hiring managers use the time they save to focus on other critical aspects of the hiring process, and secure top talent before their competitors. 

Transparency about pay can save you more than time, though. According to a study by Appcast, a prominent job advertising platform, the cost per click for job ads that include pay in the title is about 35% cheaper compared to those without pay information. This analysis was based on 10.8 million job postings. "Advertising market-rate pay information in a job title is one of the easiest methods to attract new candidates and gain a competitive edge over other employers," said Andrew Flowers, lead labor economist at Appcast.

Improved Employee Retention

Pay transparency can significantly contribute to higher employee retention rates. When employees feel that compensation is handled equitably, they are less likely to feel underpaid or undervalued. Transparent pay practices foster a sense of trust and fairness among employees, reducing the likelihood of turnover due to compensation-related issues. Employees who believe they are being paid fairly are more likely to be engaged, motivated, and committed to their work. 

Internal mobility is another area where pay transparency can have a positive impact. When employees have visibility into market pay ranges, it becomes easier to justify pay adjustments for internal promotions or transfers. Transparent pay practices ensure that employees are compensated appropriately based on their skills, experience, and market value. This streamlined process encourages employees to pursue growth opportunities within the organization, leading to increased employee satisfaction and retention.

Developing Your Pay Transparency Game Plan

Pay transparency is more than a compliance obligation. It's an opportunity to invest in your overall talent strategy. By openly sharing salary ranges, employers demonstrate their commitment to creating an equitable work environment. This transparency builds trust and attracts top talent who value fairness and transparency in their employment. 

Navigating the complexities of emerging pay transparency laws and societal expectations can be daunting—but you don't have to do it alone. OutSolve is here to help your company prepare a game plan to thrive under new and pending regulations, including leveraging these laws to boost your employer brand.  Don't wait until it's too late. Contact OutSolve today to ensure that your company is ready to meet the challenges and opportunities of pay transparency head-on. Together, we can build a more equitable, transparent, and successful future for your organization. 

OutSolve stands ready to help your organization understand the importance of pay transparency and pay equity. Please access these materials to enhance your knowledge of this crucial aspect of your overarching talent strategy. Contact OutSolve today for support on your total compensation strategy and policies. 

• • Recorded Webinar: It's a Journey, Not a Fixed Destination: The Road to Effective Pay Equity

  • HR.com Report: The State of Pay Equity in 2023-2024