Pay transparency is on the rise, according to two new Indeed surveys of more than 1,000 human resources leaders and hiring decision makers. A taboo topic across most industries until recently, salary transparency has gained strong momentum as more states and cities pass laws requiring it. Today, 7 out of 10 hiring decision makers say their companies include wage ranges in job listings and ads. And only a small number — 7% — say their businesses don’t, and have no plans to, engage in any kind of pay transparency.
“At Indeed, we know that salary is one of the most important pieces of information that job seekers value when looking at a job,” says Priscilla Koranteng, Indeed’s chief people officer. “And wanting more insight into expected salary ranges of a job is one of the top pieces of feedback that we receive from job seekers.”
It’s easy to understand why the concept is appealing for workers and new hires seeking fair pay. In the United States, women still earn 30% less than men, and that gap widens with age and for women of color. Businesses are increasingly looking at pay transparency as part of a strategy for diversity, inclusion and belonging; to create a culture of transparency; to ensure happier employees; and ultimately to burnish their brand as a healthy place to work.
Indeed surveyed 501 human resources leaders and 509 hiring decision makers in the U.S. to understand how they tackled pay transparency and what they gained. (Hiring decision makers included hiring managers, recruiters, talent sourcers and others who have influence over the hiring process. Indeed’s Leadership Connect program sponsored the survey of HR and talent attraction leaders, which targets the VP level and above; program members received exclusive early access to the survey results.) The results of the June surveys show that while leaders worried about losing competitive ground and making employees unhappy, pay transparency had a real and largely positive impact — not only creating a better pipeline for job applicants, but improving the environment for current employees and even making their own work as HR professionals and hirers easier. In fact, more than eight out of 10 hiring decision makers and HR leaders say the benefits of moving to transparency ultimately outweighed the challenges.
Most companies have some amount of pay transparency
Most of the hiring decision makers surveyed said that their company has implemented pay transparency in some way. However, there’s no one-size-fits-all approach. Some reported internally publishing ranges for current positions, and most reported posting pay ranges for open positions — which can be a huge draw for potential hires. In a separate Indeed survey about pay perceptions among job seekers, 75 percent of individuals said they were more likely to apply for a job if the salary range was listed.
The trend toward pay transparency has been spurred partly by state and city laws; Colorado, for example, requires companies to disclose compensation ranges in job listings, and similar laws will take effect soon in Washington state and New York City. “As states continue to pass legislation requiring pay transparency by law, I think we can expect the Overton window to shift here, and job seekers will expect more salary transparency across the board,” Koranteng says.
Since 2018, Indeed has moved toward pay transparency by posting pay ranges for all of its own openings at the company. Now we are emphasizing pay transparency more broadly. Posts without employer-provided pay data may now include an Indeed estimate based on factors such as job seeker–provided salary information from Indeed and Glassdoor, as well as job title, location, education requirements and other job features. The ultimate goal is to include accurate compensation information for all jobs posted on Indeed. Not only does this help posters comply with new laws and regulations, but Indeed believes that what’s good for job seekers and employees is also good for employers in the long run.
Companies worry about causing dissatisfaction…
As with any major new initiative, companies kicking off pay transparency need to weigh the pros and cons.
Hiring decision makers initially worried that open discussions about pay are taboo (27.5%) and that pay transparency would make employees uncomfortable (27.7%), lead to employee resentment and dissatisfaction (29.8%), cause overall wage costs to rise (30.5%) and expose pay bands to competitors (32.2%).
HR leaders had many similar concerns, and also initially worried it would be too complicated to implement in a consistent way across the organization (30.7%) and lead to increased resignations (32.6%).
“The concerns expressed can be valid, but we feel they are outweighed by the benefits gained from salary range transparency,” Korateng says.
…But it actually pays off
The results speak for themselves — 92.8% of hiring decision makers and 92.5 % of HR leaders whose companies implemented transparency said they were glad to have done so. And of the HR leaders who were required by law to disclose pay, 85% said they would have chosen to disclose it anyway given what they know after implementing it.
The top four benefits that hiring decision makers cited were: being better able to achieve or increase pay equity, helping build a more transparent company culture, helping employee satisfaction, and creating a culture of trust.
“In general, I always push my teams to answer the question, ‘Why would employees stay with us, what makes us unique and what do we have to offer them?’” Korateng says. “Pay equity practices influence company culture, both influence employer brand, and all are critically important to employers looking to stay competitive in the war for talent.”
HR leaders believe pay transparency and equity is critical for business today. The vast majority agreed with these statements: that pay transparency is important to job seekers, so it is important to talent attraction (84.7%); that it will help improve employees’ productivity (87.2%); and that it’s an important part of diversity, equity and inclusion or belonging (88.0%). Some 84.3% of HR leaders said the benefits of pay transparency outweigh the challenges, while 83.2% of hiring decision makers agreed.
Transparency helps close the pay gap
Diversity, equity, inclusion and belonging efforts can only go so far unless leaders literally put their money where their mouth is. Pay transparency keeps companies accountable. Are any wage gaps that surface going to turn out to be significant? Then take time to reevaluate and amend compensation before revealing those numbers — the outcome is good for the humans who work at a company, and it’s good for the employer brand too. It gives a sense of trust and transparency, and helps cultivate a more open, honest and fair hiring process.
“Pay transparency is just one piece of the puzzle,” Korateng says. “It’s critical that companies are constantly reviewing pay to ensure equitable practices. Pay equity reviews cannot happen once a year; it must be a constant, ‘always on’ practice, and that will inspire practices that make a great employer brand.”
Knowledge is power for job seekers. When they are able to see pay bands, they can better negotiate — this is particularly crucial for marginalized groups that have historically been underpaid, such as women and people of color. Pay transparency cracks open that mysterious box and gives people the same starting point. It’s not a cure for pay inequity, but it’s a crucial building block. In the survey of HR leaders, 57.5% said that, since implementing salary transparency, they adjusted salaries or wages to be more equitable.
And it leads to better candidates and faster hiring
Job seekers want transparency: 87.6% of hiring decision makers say pay transparency makes it easier to attract job seekers. Job posts with salaries listed also perform better on Indeed. “The fill rate for jobs on Indeed Hire improved by 40% when salary information was included,” Korateng says.
It also saves time in the recruitment process — if a candidate’s salary requirements are outside of what your company can offer they likely won’t even start the process.
Most of the hiring decision makers surveyed said instituting pay transparency created more interest and clarified the process for negotiating salaries.
Benefits of salary transparency, as seen by hiring decision makers:
- 56.4% say it brought greater interest from job seekers
- 88.7% say it helps ensure that only interested candidates apply
- 87.1% say it makes it easier for them to hire
- 86.7% say pay transparency in job postings makes hiring faster and more efficient
- 85.8% say it makes it easier to hire the most relevant, best-qualified candidates
The big takeaways
What did those who implemented pay transparency learn? HR leaders reported preparing for pay transparency with a range of tactics, from guiding management talking points to conducting internal training. Pay transparency is a journey, and these proactive tools can help smooth out the process.
How did organizations prepare for pay transparency implementation? Responses from HR leaders:
- 50.5% created a management guide of talking points
- 50.1% offered training for all managers, recruiters and hiring professionals
- 52% performed a pay equity or salary audit
- 52.2% identified inconsistencies in how you pay employees and made adjustments to pay bands
- 37.5% hired a third-party consultancy to help
When it comes to pay transparency, what’s good for employees and job seekers is also good for businesses. “Paying fairly and equitably is critical to running an enduring and successful company in the 21st century,” Korateng says. “Fair pay as a principle should be core to the leadership, culture and foundation of a company.”