1. Greater accountability for pay differences
Wage discrimination still happens, despite the advances that minorities have made toward equity. You might not realize you’re paying differently based on demographics. Salary transparency can help your company get closer to your pay equity goals if you’re not quite there yet, and it can force you to look more closely at potential pay gaps. It holds you accountable to ensure you’re compensating your employees the same regardless of their demographics.
If you already practice pay equity, being transparent lets others see that, which can improve your company’s reputation. It can help create a more positive work environment where all employees feel valued, and it can improve diversity by attracting people from underrepresented populations if they know they’ll be paid the same as their colleagues.
2. More applicants who are a good match
Making your salary ranges public knowledge helps job applicants determine if your organization is a good match for them. If you can’t come close to someone’s minimum compensation, they might keep looking for other opportunities. What you’re left with is a pool of candidates who are happy with the pay you can offer and are more likely to accept a job offer so you don’t waste your time. Your interview process is easier when the candidates are comfortable with the salary range. Regardless of how much fulfillment they get from the work, people work for a salary and want to be fairly compensated.
3. Increased competition for job openings
If your salary range is on the high end, being transparent about it can increase competition for job openings. Applicants who don’t know the salary range might be hesitant to apply. If they find the salary attractive, they’ll likely jump on the application opportunity. Creating a competitive application situation gives you more candidate options, which can help you find a good match for your needs.
4. Salary transparency might be required
Some states require some degree of salary transparency. The Equal Pay for Equal Work Act in Colorado requires companies to list salaries in job postings. Companies must also let employees know about promotion opportunities and keep records of wages. In Nevada, Senate Bill 293 requires employers to disclose the salary after an interview. Even if your state doesn’t currently have pay transparency laws on the books, that could change at any time. Practicing wage transparency now means you’ll already be in the habit if your state requires it eventually.
5. Increased employee trust
Transparency in all business areas helps build trust with your employees. When you keep salaries secretive, you create a sense of mistrust. Employees might assume you’re trying to pay as little as possible or compensate employees unfairly. Sharing salaries can show employees that you’re not trying to exploit them or be unethical.
6. Improved employee satisfaction and relationships
When employees don’t know how they compare to their colleagues pay-wise, there can be tension, jealousy or the assumption that they’re getting paid less than others. Sharing all employees’ salaries eliminates that mystery. If you’re practicing pay equity, your employees will see that they’re being compensated fairly compared to their colleagues, which can help improve intraorganizational relationships. It can also increase employee satisfaction and allow them to focus on work instead of being consumed with questions about compensation.
7. Greater productivity
A related benefit of employees knowing they’re being paid fairly is increasing employee productivity. If employees know they’re being fairly compensated like their colleagues, they might work harder. On the other hand, keeping salaries a secret can hurt productivity if employees assume others are being paid more.
8. Streamlined conversations
Providing salary information can improve company communications because employees and applicants can access the information easily without asking. It can cut down on negotiations and employees complaining about being underpaid. Employees can also better understand your salary policies based on skills and experience, which gives them better information when they ask for a raise.
9. Inspiration for advancement
When employees can see all salaries within your organization, they see the potential if they climb up the ladder. It can motivate employees to seek advancement opportunities and reach higher salary points. Employees might put more effort into their work to earn promotions or take more classes and training to gain the qualifications they need to move up the salary scale. This not only improves their current performance, but it also gives you a pipeline of candidates for internal promotions.
Potential drawbacks of salary transparency
While pay transparency is overall beneficial, it can cause some conflicts with employees, especially if you don’t have a clear salary policy and equitable pay. If an employee is being paid less than someone in the same position, there could be resentment. It can be difficult for employees to understand that their colleagues in similar positions might have more experience, additional certifications or a longer employment time with the company. Having a formula to calculate and adjust salaries before going public with them can minimize this issue.
