What Is Pay Transparency?

 

Alison Doyle

 

Pay transparency is the practice of employers revealing salary data during the hiring process or within the organization. Different companies have various degrees of pay transparency, ranging from providing pay grades for job titles to offering a full list of the salaries of everyone at the company, from the CEO on down.

 

How Pay Transparency Works

 

Pay transparency is a compensation philosophy that involves sharing information about salary with employees and prospective hires. Traditionally, salary information is a closely guarded secret at many private-sector companies, where pay grades are less public than in government jobs. However, employers that commit to pay transparency choose to share more information with workers about salaries.

 

Alternate name: Salary transparency

 

Companies may opt for different levels of pay transparency. Some organizations may choose to share salary ranges with new hires and current employees, while others may publish exact salary data, including bonuses and other discretionary compensation, for every worker at the company.

 

Employers that choose to embrace pay transparency first must decide how much information they want to share with employees and candidates. Depending on their goals and legal compliance requirements, this might mean:

 

1. Creating salary ranges for job titles and publishing them internally and externally on job ads

2. Sharing all pay ranges for every job at the organization

3. Providing details about factors that influence compensation, such as seniority and skillset

4. Publishing exact salary data for every job at the company, including C-suite roles

 

Compensation pros often recommend that companies that implement pay transparency have a plan to measure outcomes. This can include employee surveys and pay equity audits.

 

How To Find Salary Information

 

As a job seeker or employee, you can find out salary information from a variety of places.

 

Job Listings

 

A small but growing number of employers have started listing salary ranges in job postings, even in areas where they are not legally required to do so. For example, Target has set a starting wage range from $15 to $24 an hour.

 

Salary Websites

 

Websites like Glassdoor, Payscale, Indeed, and LinkedIn have tools you can use to obtain salary data for many different occupations. The Bureau of Labor Statistics’ Occupational Outlook Handbook has median pay for hundreds of occupations.

 

During the Interview Process

 

Some cities and states require employers to provide salary ranges to applicants who ask, but laws vary as to when they must do so. For example, employers in Cincinnati must disclose a salary range to any applicant who has received a conditional job offer. But employers in Toledo must provide a salary range to any applicant who inquires – regardless of whether they’ve received an offer.

 

Internal Sources

 

Companies who choose to reveal pay data to employees may provide it in job postings, on the company intranet, via a shared spreadsheet or file, or any number of other ways.

 

Public Sources

 

Very few companies share their salary data with the world at large. For example, Buffer publishes its pay information – including the exact salary of all its employees – on the company site.

 

Benefits of Pay Transparency

 

Pay transparency has multiple benefits for job seekers, employees, and companies, including:

 

A Better Hiring Process

 

The traditional hiring process is a black box as far as salary is concerned. Employers might not ever share their budgeted salary range, hoping that applicants will name their price first and lock themselves into a lower salary. This strategy has a number of flaws, including the risk of underpaying valuable employees. It’s also a time-waster for everyone involved.

 

Improved Pay Equity

 

Studies have shown that women tend to be less likely to negotiate pay than men. One result of this is a persistent gender pay gap, even after controlling for factors like job title, education, and skillset.

 

Pay transparency can close the gap by ensuring that all candidates start on the same footing – or at least in the same pay band.

 

Decreased Turnover

 

Pay transparency also has a positive effect on pay perception, meaning employees’ feelings about whether or not they’re paid fairly. Research shows that employees who feel that they’re paid below market are more likely to look for a new job than those who think they’re being paid appropriately.

 

Increased Employee Engagement

 

When you’re happy at your job, everyone benefits. You’re more engaged, which makes you more productive and effective. Ultimately, that leads to higher profits and better outcomes for your employer.

 

Frequently Asked Questions (FAQs)

 

Are companies required to list salaries in job postings?

 

In many locations, employers don’t need to list salary information when they advertise jobs. However, some state and local laws require employers to list a salary range in job postings. Others mandate that salary be disclosed during the application or interview process.

 

How can I find out how much a job pays?

 

There are several ways you may be able to get the estimated salary for a job. You can use websites like Glassdoor and Payscale to get estimated salaries for specific job titles. Some companies advertise how much they pay.