Employees who feel and see their pay is fair through pay transparency and see themselves as part of a system where they can be promoted tend to work harder. That’s according to research reported in The Wall Street Journal, where multiple studies revealed the following:
Similarly, the Equity Theory of Motivation suggests that if an employee feels they are receiving fair pay, they are more likely to stay motivated and find satisfaction at work.
Pay transparency undoubtedly offers tangible benefits for businesses, from the opportunity to improve employee engagement and retention to closing the pay gap and attracting more qualified candidates to job listings:
While this latest research clearly supports the benefits of pay equity, employers both in and outside of those states where pay transparency laws exist still exhibit reluctance when it comes to embracing salary disclosures. But why?
Some employers erroneously believe that pay transparency simply means having to pay people more. Other concerns include fears that employees might drive a harder bargain on pay and that those earning the most would be the most proactive in seeking a raise.
Some organizations have been slow to adapt in either setting meaningful salary ranges or navigating conversations around pay. Subsequently, organizations comply by posting broad compensation ranges or only the lower part of the salary range. When new legislation came into effect in New York City, for instance, some compensation ranges were so broad (up to $100,000) they risked losing relevance.
Not only is this approach detrimental to the ethos of fair pay, but it also damages the credibility of HR among employees who already feel disconnected and disengaged, as noted above.
The shifting landscape of legislation relating to pay transparency and equal pay regulations is inspiring forward-thinking employers to provide compensation information in their job listings to remain competitive. Companies, including Alphabet, Wells Fargo, IBM, and American Express, now post salary ranges for all U.S. job listings, even in states where that information is not, as yet, required by law.
Ultimately, the decision for employers will be not whether to embrace pay equity but when.
Ongoing research continues to confirm the benefits of pay transparency. Best-in-class organizations choose to adopt a proactive approach to pay transparency by leveraging the benefits of pay equity solutions.
Conducting a pay equity audit empowers your organization to take advantage of the benefits of pay transparency and minimize compliance risks. Trusaic’s PayParity solution identifies pay disparities at the intersection of gender, race/ethnicity, age, disability, and more. Employers can take corrective action before posting job listings.
Trusaic’s Salary Range Finder enables companies to set equitable, explainable, and competitive salary ranges for both new and existing job openings. It also demonstrates your commitment to fair pay practices and keeps employees in the loop on your pay transparency efforts and policies.
Take the first steps towards pay transparency and enhance your workplace culture. Schedule a meeting with one of our pay equity experts today.
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