Understanding And Implementing Salary Transparency And Pay Equity

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Tory Clarke Forbes Councils Member

Forbes Human Resources Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based)

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Tory Clarke, Co-Founder & Partner, Bridge Partners .

It’s hard to believe that in 2023 we still need to talk about a lack of pay equity—the principle that everyone, regardless of race, gender and age should be paid equally for doing the same work—in the workplace. The reality is that, on average, American women working full-time are paid 83.7% of what men are paid . This inequity affects Black and Hispanic women even more, as they're also more likely to be paid less than their white counterparts .

One of the most significant barriers to achieving pay equity is a lack of transparency. While salary range disclosures are required by law in states like New York and California, that's not the case nationwide or even globally. According to research from Equileap , only 28 companies worldwide (less than 1%) have closed their gender pay gap, and 78% of companies don't publish information on pay differences. Some employers remain reluctant to include salaries on job postings, so salary omissions—or excessively broad ranges that belie the intent of the laws—make identifying and addressing pay disparities difficult.

Companies must pay closer attention to this growing workplace crisis and commit to building an inclusive, equitable culture that enables the recruitment and retention of a diverse employee base.

The Value Of Salary Transparency

Among reluctant employers, publishing salary ranges or allowing employees to discuss their salaries creates a fear of losing competitive advantage or being scrutinized publicly. But the benefits of transparency far outweigh the challenges.

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Pay transparency helps ensure employees are compensated fairly. When everyone knows how much their colleagues are paid, they can more easily identify and challenge any pay discrepancies. This will allow them to negotiate for higher, comparable salaries that recognize their expertise and tenure. This is crucial in helping close the gender and race pay gaps that plague the business world, and it will also help you attract top talent that values a commitment to pay equity.

As a result, morale and productivity improve. Employees who know they're equitably paid are more likely to be satisfied with their careers and encouraged to do their best work. It improves confidence in management, which in turn helps reduce turnover. On the other hand, pay secrecy may lead to team members suspecting they’re underpaid, resulting in unhappy and underperforming employees.

How To Engage In Salary Transparency And Pay Equity

Supporting your workforce through better clarity around salary takes intentionality. Here are some ways to champion pay equity through transparency:

• Make salary publication a requirement during recruitment. By publishing more accurate salary ranges for all teams, departments and job levels, you give potential and existing employees a better understanding of how they'll be compensated for their job. This also allows you to better align pay expectations with professional experience as well as identify any disparities that you can address.

• Remove the stigma of employees discussing their salaries. A culture of open communication about wages shares information around a shared fair salary structure that aligns experience and professional development with compensation. This can encourage your employees to feel comfortable talking to their managers and colleagues more freely about their salaries. You should take advantage of the demographic changes already driving this shift as younger generations enter the workforce; according to one study , 89% of Gen-Z workers are comfortable discussing salary, while only 53% of Baby Boomers are.

• Provide management training on how to fairly and equitably set salaries. In states where posting salary ranges is the law, ensure your people leaders are aware, compliant and able to communicate to employees effectively. Committing to ongoing training helps ensure salary decisions are based on experience, skills and performance rather than personal biases.

When employees know they're paid fairly, they're more likely to trust you and be loyal to your organization. Of course, there are challenges to promoting such transparency and changing an existing culture to one centered on pay equity. But even if you introduce and adopt it slowly, transparency and equity are valuable tools for creating a more equitable workplace.

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More From Forbes. 11:03pm EDT. Wealth Of The Philippines’ 50 Richest On Forbes List Rises 11% To US$80 Billion. 09:00pm EDT. Companies On Forbes Asia ‘Best Under A Billion’ List Show Resilience Amid Global Headwinds. 01:57pm EDT. Stories Of Suffering in Pakistan, On The Front Lines Of The Climate Crisis. 01:15pm EDT. 19 Ways Leaders Can Manage Their Response To Troubling News And Events. 01:15pm EDT. Baby Boomers Retiring? 20 Strategies To Help Companies Cope. 08:00am EDT. Decoding The Modern Plant-Based Diet For Brand Success. 07:30am EDT. Don't Assume: How To Equip Gen-Z For Office Technology. 07:30am EDT. How To Go From Overwhelmed To Empowered In A Boundaryless World. Edit Story. Forbes. Leadership. Tory Clarke Forbes Councils Member. Forbes Human Resources Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) 06:15am EDT. |. Share to Facebook. Share to Twitter. Share to Linkedin. Tory Clarke, Co-Founder & Partner, Bridge Partners . It’s hard to believe that in 2023 we still need to talk about a lack of pay equity—the principle that everyone, regardless of race, gender and age should be paid equally for doing the same work—in the workplace. The reality is that, on average, American women working full-time are paid 83.7% of what men are paid . This inequity affects Black and Hispanic women even more, as they're also more likely to be paid less than their white counterparts . One of the most significant barriers to achieving pay equity is a lack of transparency. While salary range disclosures are required by law in states like New York and California, that's not the case nationwide or even globally. According to research from Equileap , only 28 companies worldwide (less than 1%) have closed their gender pay gap, and 78% of companies don't publish information on pay differences. Some employers remain reluctant to include salaries on job postings, so salary omissions—or excessively broad ranges that belie the intent of the laws—make identifying and addressing pay disparities difficult. Companies must pay closer attention to this growing workplace crisis and commit to building an inclusive, equitable culture that enables the recruitment and retention of a diverse employee base. The Value Of Salary Transparency. Among reluctant employers, publishing salary ranges or allowing employees to discuss their salaries creates a fear of losing competitive advantage or being scrutinized publicly. But the benefits of transparency far outweigh the challenges. FORBES ADVISOR. Best Travel Insurance Companies. By Amy Danise Editor. Best Covid-19 Travel Insurance Plans. By Amy Danise Editor. Pay transparency helps ensure employees are compensated fairly. When everyone knows how much their colleagues are paid, they can more easily identify and challenge any pay discrepancies. This will allow them to negotiate for higher, comparable salaries that recognize their expertise and tenure. This is crucial in helping close the gender and race pay gaps that plague the business world, and it will also help you attract top talent that values a commitment to pay equity. As a result, morale and productivity improve. Employees who know they're equitably paid are more likely to be satisfied with their careers and encouraged to do their best work. It improves confidence in management, which in turn helps reduce turnover. On the other hand, pay secrecy may lead to team members suspecting they’re underpaid, resulting in unhappy and underperforming employees. How To Engage In Salary Transparency And Pay Equity. Supporting your workforce through better clarity around salary takes intentionality. Here are some ways to champion pay equity through transparency: • Make salary publication a requirement during recruitment. By publishing more accurate salary ranges for all teams, departments and job levels, you give potential and existing employees a better understanding of how they'll be compensated for their job. This also allows you to better align pay expectations with professional experience as well as identify any disparities that you can address. • Remove the stigma of employees discussing their salaries. A culture of open communication about wages shares information around a shared fair salary structure that aligns experience and professional development with compensation. This can encourage your employees to feel comfortable talking to their managers and colleagues more freely about their salaries. You should take advantage of the demographic changes already driving this shift as younger generations enter the workforce; according to one study , 89% of Gen-Z workers are comfortable discussing salary, while only 53% of Baby Boomers are. • Provide management training on how to fairly and equitably set salaries. In states where posting salary ranges is the law, ensure your people leaders are aware, compliant and able to communicate to employees effectively. Committing to ongoing training helps ensure salary decisions are based on experience, skills and performance rather than personal biases. When employees know they're paid fairly, they're more likely to trust you and be loyal to your organization. Of course, there are challenges to promoting such transparency and changing an existing culture to one centered on pay equity. But even if you introduce and adopt it slowly, transparency and equity are valuable tools for creating a more equitable workplace. Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify? Follow me on. LinkedIn. Check out. website. Tory Clarke. Editorial Standards. Print. Reprints & Permissions.