Between changing employee attitudes and evolving legal requirements, the topic of pay transparency is getting harder and harder to avoid. Top talent expect job listings to include pay ranges, and many jobseekers won’t bother to apply for positions they’re qualified for if the job description doesn’t mention compensation information.

At the same time, you know that any changes to your organization’s compensation policies come with risks and challenges. Disclosing pay scales could leave some employees feeling undervalued. While those who benefited from old compensation systems may be resistant to change. If you evaluate and update your compensation policies too frequently, you could drain essential resources from your HR teams.

Despite these challenges, implementing pay transparency is usually worth the effort since it makes your organization more equitable for all employees in the long run. Read on to discover more about the key benefits of pay transparency and having the right compensation management software.

1) Save Time With Fair and Efficient Hiring Processes

Omitting salary ranges from job descriptions creates the perfect recipe for frustration. Jobseekers and recruiters might go through the first steps of the hiring process full of excitement and anticipation only for both parties to be disappointed because the salary for the role doesn’t align with the candidate’s needs. This forces your hiring manager and recruitment team to start the process over again, spending precious time sourcing more candidates instead of focusing their energy on other essential tasks.

Filling open roles can cost three to four times the previous employee’s salary. To put this into perspective, replacing someone who was paid $60,000 annually could cost your organization $180,000. Restarting the hiring process drains your organization of valuable resources you could be leveraging to reach your more impactful goals.

Meanwhile, the person who turns down the position at your organization is left feeling dissatisfied by the experience. Candidates spend many hours refining resumes and cover letters, not to mention preparing for interviews and completing tasks that showcase their experience and value. A Gartner survey found that 44% of jobseekers won’t apply for a position if the salary information isn’t included in the job description. The high amount is likely because candidates want to avoid wasting their time applying for roles that ultimately won’t meet their needs.

Being transparent about your organization’s salary ranges for open positions helps prospective candidates decide right away if they might be a good fit for your organization. You’ll be more likely to get applications from people whose pay expectations match your compensation budget. Additionally, you’ll establish your organization as one that has fair and consistent hiring practices. In the U.S., 73% of workers report being more likely to trust organizations that provide pay information in job listings over those that aren’t transparent about salary expectations.

Once you know that applicants are comfortable with your salary range, then you can focus on determining whether the candidate is the right fit for the role. Including pay information streamlines the hiring process because you’ll be far less likely to lose your top candidates because of misaligned compensation expectations.

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2) Gain Employee Trust and Improve Retention

While you can’t prevent employees from leaving your organization, you can take measures that will make them more likely to stay. Building trust among your employees helps with engagement and productivity, and it’s crucial to improving retention rates. Disclosing compensation information helps you establish credibility among your workforce.

You can help your workforce feel more valued by being transparent about salaries and your compensation practices. In fact, 83% of employees and jobseekers in the U.S. report that pay transparency is important for making them feel more included in the workplace. Being transparent with this information demonstrates that you care about fairness and want to set clear expectations for every contributor at your organization. It’s also an opportunity to showcase that your compensation and benefits are in line with current market ranges. This, in turn, can help with retention since employees will be less likely to search for something “better” when they can see that their current compensation falls within the market standards.

3) Increase People Manager Effectiveness

Having a pay transparency policy can help you set your managers up for success so they can be more effective leaders. There’s a culture shift occurring among workers discussing their pay, especially for younger employees. Compared to 53% of Baby Boomers, 89% of Gen Z workers feel comfortable discussing their salary. Whether you officially disclose compensation practices or not, the odds are ever-increasing that employees will discuss their pay among themselves. It’s also becoming more likely that employees will ask their managers about pay raises and opportunities for higher compensation. By having a formal policy regarding pay transparency, you can give your managers a toolkit for responding to their direct reports’ questions and concerns surrounding compensation.

Being transparent about compensation policies also empowers your managers to build stronger relationships with their teams. Give your people leaders the tools they’ll need to easily explain how compensation works, when employees are eligible for increases, and what needs to be done to earn performance-based bonuses. These conversations help managers set and maintain expectations regarding employee performance as well as career progression. When employees can easily see what’s expected of them and the steps they’ll need to take to reach their compensation goals, then managers can serve as leaders and guides to help workers meet their goals.

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4) Improve Pay Equity

Wage gaps are a very real concern for diverse and underrepresented groups. For instance, women in the U.S. in 2002 made approximately 80 cents for every dollar their male counterparts made, and by 2022 that wage gap only narrowed by two cents. The same research found that the gender wage gap is even wider for Black and Hispanic women. They earn approximately 70% and 65% as much as men, respectively. It’s no wonder that women are 85% more likely than men to consider pay transparency somewhat or very important in the workplace.

Pay transparency promotes equal opportunities for all job candidates, regardless of gender and race. Clearly define your job descriptions to ensure that they only consider the required skills, competencies, qualifications, and responsibilities of the position. Doing so will help your organization eliminate wage disparities while demonstrating your commitment to improving equity across your organization.

5) Drive Organizational Success

Your organization can’t succeed without the hard work and dedication of its employees. When your workers are engaged with their jobs, they’re more likely to be productive. Employee productivity and performance are directly related to your company achieving its organizational goals. If you want your workers to be more engaged, be transparent.

Money isn’t the only motivator, but your workforce is far more likely to improve its performance and productivity when employees can see how to increase their compensation or earn performance-based incentives. Showing employees a path to higher earning potential can help you combat the so-called “quiet quitting” trend by giving them a roadmap to achieving their personal goals.

Not only that, but pay transparency encourages healthy communication about compensation expectations that can level the playing field between employers, employees, and even job seekers. Ultimately, you want your employees to feel valued and respected so they continue to deliver results and drive productivity for your organization.

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Take Advantage of the Latest Compensation Tools

While pay transparency isn't a remedy for everything, it can be a great first step on your organization’s journey to creating a more equitable and productive company culture. Using current technology is key to a smooth transition. PeopleFluent’s compensation management software makes it easy to manage every aspect of your compensation strategy. It empowers you with easy-to-use tools to design, model and manage pay and reward programs. So you have the insight and control you need to improve consistency and fairness across your compensation programs.