Pay Transparency: Why it is Important to be Thoughtful and Strategic

Abstract

Pay transparency is quickly ascending to the forefront of human resources compensation issues. Employees—especially younger employees—at organizations and society in general are seeking fairer outcomes and more transparency with compensation falls in line with those expectations. Governments are responding by drafting and passing new pay transparency legislation. Based on the research conducted, pay transparency can yield benefits such as helping to close pay gaps, reducing employee turnover, and elevating trust with management and others, but can also create confusion and negative outcomes. This article provides a summary of what pay transparency is, why it is gaining in importance, how it impacts organizations and where the trend may be heading. A list of strategic recommendations is offered for organizational leaders to consider when navigating through an environment with greater pay transparency.