Would you apply for a job if you didn't know the salary? According to a Monster survey, 53% of respondents said they would only apply for a job with pay transparency upfront. The initiative to close the gender gap and pay equity has given way to the recent pay transparency legislation.
While a core part of pay transparency is salary transparency, another part is transparency in the total value of the compensation package offered to employees. It's up to HR leaders to ensure that they are offering a fair compensation package to attract and retain employees.
What is pay transparency?
At its simplest, pay transparency requires employers to post salary ranges on job postings. Several states—Colorado, New York, Washington, California, Connecticut, Maryland, Nevada, Rhode Island, and Hawaii—have passed legislation that promotes salary transparency. It's also why you've probably seen some geographic restrictions prohibiting applicants in these states.
Many companies view pay transparency as a negative, but it benefits companies more than harms them.
Benefits of pay transparency
There are several benefits of pay transparency:
- Boost employee retention and engagement. When companies compensate employees fairly, they are happier and more engaged at work.
- Build a reputation for offering fair compensation and treating employees well. Posting salary ranges can give your company a reputation for providing fair compensation and being a great workplace.
- Address pay gaps and demonstrate commitment to pay equity. When you're transparent about your pay, you show that your company is trying to address pay gaps and demonstrate commitment to pay equity.
- Attract more qualified candidates. By sharing salary information, you can ensure you're attracting top talent.
- Improve morale and productivity. Open and honest conversations around salary can improve the morale and productivity of your employees.
- Communicate a culture of instilling trust in candidates who will perceive the company as transparent, confident, and objective. In fact, 73% of U.S. workers are more likely to trust organizations that provide pay ranges.
Pay transparency is more than just salary
Salary is just one part of an employee's overall compensation. Employers should be open about all details of their employees' compensation packages. While everyone knows their salary, many have yet to learn of the actual dollar value of their employee benefits. And the value of their employee benefits can amount to upwards of 20% of their total compensation. If employees don't have the value of that information, they greatly undervalue their compensation, which can frustrate them.
This includes PTO.
If your company has an accrued or lumpsum PTO policy, employees' PTO has a value attached. While many associate PTO with time off they can take, it's a convertible benefit; employees can take the value of their PTO and convert it into other uses. Employees can turn their unused PTO into financial wellness benefits, wellness benefits, and philanthropic efforts.
Not only does this allow employees to create custom benefits packages, but it also offers employers a differentiated benefit they can offer. While competing employers can likely match salary, benefits can be the deciding factor between two companies for candidates. This can work to your advantage if your budgeted salary is lower than other companies hiring for the same role—competitive benefits may be the factor that tips a candidate's decision in your favor.
How employers can encourage total rewards compensation transparency
There are several actions that employers can take to encourage transparency across total rewards compensation:
- Quantify the dollar value of the employee benefits you provide. Calculate the value of all the employee benefits you offer, from medical and dental to voluntary benefits, and share that number as a percentage of their overall compensation. Employees want to see the value of their employee benefits and use it to compare them with what a competing job offers them.
- Highlight the benefits that help you stand out. If you provide unique benefits like fertility assistance, extended parental leave, or life planning accounts (LPAs), highlight this in your compensation package. Differentiated benefits show that you listen to your employees' needs and care about their well-being.
- Establish a culture of pay transparency. Employers shouldn't be afraid to post salaries and the value of employees' total compensation. This helps reduce any stigma around discussing salaries and compensation in the workplace. Lastly, HR leaders should leverage demographic, company, and employee data to set fair salaries and compensation packages for their employees.
Support pay transparency
The pay transparency initiative isn't going away anytime soon. But salary transparency alone won't cut it; pay transparency extends to the total compensation package. Learn how PTO Exchange offers convertible PTO as a differentiated employee benefit.