Five Reasons Pay Transparency Makes Sense From an Operations Perspective

Several US states are now mandating that companies publish salary or compensation information within job postings. The purpose of this requirement is to provide pay transparency for job seekers.

This legislative trend has caused quite a bit of discomfort for leaders who are understandably hesitant about the impact that pay transparency could cause their company. Some are worried about pay transparency’s impact on operations, while others are concerned about the logistical feasibility of even giving accurate information when pay constantly changes in their market.

But I’m here to say that based on my experience, there is a strong operational case for pay transparency. After 27 years in the healthcare staffing and workforce solutions sector, I can confidently say that any company that wants to scale up and compete in today’s economy needs to embrace it.

What Is Pay Transparency?

Generally, pay transparency means publicly publishing how much you pay (or intend to pay) your workers. This typically starts at the very beginning of the hiring process with a specific starting salary range published in a job posting. Said another way, the job-posting placeholder language, “Salary commensurate with experience,” is no longer acceptable.

While this paradigm shift may seem excessive for your industry, it’s safe to assume that such change will be necessary. Last year, nine states passed pay transparency laws and regulations that affect several industries — and it is likely that more will follow.

So, how do you get started?

Unsure of how to set those pay ranges in the first place? A good talent marketplace partner can help you understand, in real time, what skills are worth in your market, and they can help you directly source the right hires. In addition, providing pay transparency to the process, the inherent transparency of talent marketplaces also eliminates all the waiting involved with traditional hiring processes: wondering if candidates will answer your emails or apply to your job ads or if recruiters will come through with the right candidate who will show up for the interview.

PREMIUM CONTENT: US Staffing Industry Forecast: April 2023 Update

The Operations Case for Disclosing Pay Information

There are several benefits for companies that enact a policy of pay transparency.

It speeds up the hiring process. When job candidates know a position’s starting pay package or compensation range from the very start of the interview process, hiring managers can effectively weed out applicants, focusing only on those who meet all requirements. This saves time and resources for everyone involved. Plus, research shows that 82% of workers are more likely to apply for a position if the pay range is listed in the job description.

It shields you from liability. Posting a pay range and sticking to it builds trust with the job candidate and the public at large. It can also shield you from liability, helping you avoid fines and potential lawsuits over pay discrimination in states with laws governing this area.

It positions you as the ultimate source of information about your company. Every worker, no matter their industry, wants the “real scoop” about how much they will be paid. If you don’t provide this information, they will go to outside sources to challenge you — and you will likely lose control of the narrative covering your position’s value.

It builds trust with the next generation of workers. According to a Glassdoor survey, 63% of workers prefer to work at a company that discloses pay information over one that does not. Younger workers are already more likely to disclose how much they make. Being up front about pay information from the start builds trust you need with this vital pool of talent.

It helps you meet DEI goals. Openly discussing compensation is a significant, tangible move you can make toward the impactful goal of building a better company culture. Showing the real market value of in-demand skills is a great way to lead data through a sometimes uncomfortable conversation.

At the end of the day, it’s good business to position yourself as a worker-friendly company that values transparency. Embracing pay transparency before you are legally required to do so can position you as a forward-thinking employer, which in turn will attract more qualified candidates.

Steve Saville

Steve Saville
Steve Saville is president of SkillGigs.

Steve Saville

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