Stephanie Mauney

2 min read


Effects of Pay Transparency in Recruiting

With each month, more states are joining the trend of passing pay transparency laws. Primarily, these laws require job postings to include pay ranges publicly. As of January 1, 2023, Washington and California will join the fold, widening the number of employers responsible to pay transparency laws.

With laws already passed and likely more legislation to come, employers need to consider how to be ready for changes in the law. Compliance with new regulations will help employers remain at low risk for future legal action. Employers outside of current pay transparency laws may consider reviewing their current policy and adopting an official approach to remain attractive to candidates in the current job market. One thing is true, all employers planning to implement a pay transparency policy need to consider the ramifications and construct a compliant plan.

Identifying Gaps in Pay

Employers facing pay transparency requirements must address existing salaries and examine gaps, considering how transparency could affect employee morale and sentiment. Employers should remember that employees discussing salary amongst themselves is considered protected activity. Executives may want to hire a compensation expert to conduct a pay audit. A subject matter expert from a non-biased third party could help identify where perceptions about unfair pay may lie.

Following the identification of potentially unfair gaps, market benchmarking should be done for the positions. Understanding where the minimum, maximum, and mid pay range stands for the local job market assists in pointing to whether current employees are over, under, or averagely paid. Of course, other factors are at play and should be considered including tenure, skillset, and value to the organization when conducting a compensation review. 

Address Pay in Recruiting Process

In a recent survey by Indeed, 75% percent of 1,500 job seekers say they would be more likely to apply for a job if the salary range was listed in the job posting.

Depending on the state, there may be different requirements when it comes to pay transparency for job postings. Many states require employers to be transparent if a job seeker asks for salary information during the application process while others require it to be made clear in the job posting itself. Some states require additional information to be posted including benefits, retirement plant, bonus structure, and other company offered perks.

Job seekers have the ability to be more selective now than ever before. As employers strategize on how to attract top candidates, they should consider how being transparent about pay will impact the candidate perception of the organization. Organizations providing clarity up front with salary ranges can send a powerful message about company culture and show equity as an important value.

In today’s competitive market, showing candidates from the start of the hiring process that the company values treating employees fairly when it comes to pay not only widens the hiring pool, but it can result in longer tenure. 

Pay Transparency Communication is Key

Keeping the doors of communication open when it comes to a new policies or changes to hiring practices is vital. In order to build trust with employees, share with them who will be affected, when changes are taking places, how decision were made, and why the change is occurring. Planning a communication strategy is often an after thought when it should be at the forefront. 

Employees headed towards disengagement, recently coined ‘quiet quitting’, often start down that path with some form of feeling distrust. When organizations trust their employees and communicate openly, their workforce is empowered to engage in a meaningful way.

Stephanie Mauney is a freelance writer and content curator specializing in Human Resources

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