Compensation transparency isn’t just gaining popularity – it’s here to stay. Have you been keeping track of how well your compensation management practices stack up to the current market? Continue reading as we review the trends at the forefront of today’s movement toward compensation transparency and improved employment outcomes for all.
These days, employees are adapting to demands alongside the economy. In response to the pandemic and some of the highest inflation rates seen in decades, candidates and employees are expecting much more from their employers.
A 2022 HR Dive Report found that 73% of HR professionals cited the tight labor market as the top reason for upcoming salary increases, while 46% cited changing employee expectations as the reason behind the increase.
According to beqom’s Employee Expectations in Hiring Report, in 2021, employees were expecting companies to raise the bar in more ways than one. They found that:
From day one, candidates expect employers to step up by being transparent not just about their pay, but about the various factors that make up total compensation, such as remote work, flexible hours, benefits, time off, and more.
It’s no secret that pay equity still has a long way to go, which is why it’s at the forefront of many of today’s pay transparency discussions. Bureau of Labor Statistics data from 2020 found that women’s annual earnings were 82% of men’s, and the gap widens even more for many women of color. While these issues are a part of ongoing labor market structures, the COVID-19 pandemic exacerbated pay equity gaps and exposed the consequences they have had for all working women in the United States.
Although gains toward closing the pay gap have been made in recent years, pandemic layoffs and a lack of available child care forced many women to leave the workforce entirely. Take this staggering statistic for example: In February of 2021, women’s labor force participation rate was 55.8% – the same rate as April of 1987. Women of color and those working in low-wage occupations have felt the biggest impact.
Pay inequality extends beyond women and affects all underrepresented groups. For instance, for every $1 earned by white men, Black men earn 88 cents. Even when adjusting for similar educational backgrounds and experience levels, Black men receive 98 cents for every dollar earned by white men. While it may not seem like a huge difference initially, these differences can add up to hundreds of thousands of dollars over the course of a career.
Fortunately, new pay equity laws, such as pay disclosure laws, can help lessen the pay gap and provide both employees and employers with a host of benefits. These benefits include:
The truth of the matter is that the issue of pay equity won’t be fixed overnight. However, compensation transparency initiatives can promote pay equity and help level the playing field, which is all the more reason for companies to implement steps toward compensation transparency.
Compensation transparency benefits everyone – workers and employers included (read our article about common pay transparency misconceptions to learn more). According to a recent survey, a majority of employees said they would consider switching jobs for more pay transparency than their employer currently provides (60% of US workers and 57% of UK workers). Members of Millennial and Gen Z generations in particular have taken notice, so much so that US Millennials (68%) are the most likely to consider switching jobs for more pay transparency compared to Gen Zers (61%), Gen Xers (48%), or Baby Boomers (49%), with similar numbers in the UK.
Compensation transparency initiatives are especially crucial during the recruitment stage. Let’s face it, job seekers don’t want to waste their time applying and interviewing for jobs that may not end up meeting their salary expectations. The same survey reported that a whopping 79% of US candidates and 89% of UK candidates would be more likely to apply for a position if job descriptions were transparent about salary range.
With increasing demand for transparent pay structures among candidates and employees, many US cities and states have passed legislation to address employers providing salary ranges in job posts, prohibiting questions related to salary history, and requiring employers to offer equal pay for equal work. Curious what that looks like? Read more about recent compensation transparency legislation taking place across the US in our article here.
HR software and compensation management software like Welcome give teams access to real-time compensation market data to benchmark salaries against market rates and your company’s internal data. This means candidates can receive fair and equitable job offers, and your employees can rest assured they’re being paid equitably for their roles.
Understanding total compensation shouldn’t have to be a guessing game — and it shouldn’t have to be a complicated manual process for HR teams to carry out either. Welcome can help your team improve compensation transparency and increase your hiring and retention rates. Book a demo to learn more.
We’re looking forward to normalizing compensation transparency and building better employment outcomes for you and your team!
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