The movement for greater wage transparency has been booming over the past year as many US states pass laws requiring employers to share estimated salary ranges in job openings.
While “wage transparency” encompasses a wide variety of practices — from listing employees’ salaries to publishing pay policies — it essentially boils down to employers sharing pay practices more openly than traditionally expected.
Visier, a people analytics provider, recently launched the Payment Transparency Pulse Report to explore respondents’ feelings about and experiences with transparency. Based on a survey of 1,000 full-time workers in the US, the report’s findings show that wage transparency is becoming a point of differentiation for job seekers, especially among younger generations.
Here are the key findings from Visier’s report, how it applies to people leaders, and the benefits to employers adopting the practice.
Job seekers prefer to know the salary bands early
Job seekers want to know the estimated pay when evaluating job openings, calling it the number 1 factor in their decision to apply. In fact, 11% of respondents have: never applied or interviewed for a position without knowing the salary range. On the other hand, half of the respondents actually left a job application or interview process because the salary did not meet their expectations when it was finally revealed.
dr. Andrea Derler, head of research at Visier, says it’s a smart move to be more transparent about pay sooner, both in terms of compliance and talent recruitment. “Every year, more wage transparency laws require estimated salaries on job openings. If you’re willing to hire outside applicants, these rules apply to you too.”
Derler adds that by providing estimated salary ranges in advance, you can save your recruiting team time, energy and frustration. “This transparency acts as an extra layer of vetting. It ensures that you don’t make a final offer to a candidate and get rejected because they expected double that amount.”
Generation Z wants to talk about compensation
Seventy percent of employees say they enjoy talking about pay at work and 85% say they have discussed their pay with someone, regardless of the environment. But the comfort level differs enormously per generation. Eighty-nine percent of Generation Zs say they enjoy talking about pay at work, compared to just 53% of baby boomers.
“The generational differences in wanting to talk about pay are largely cultural,” Derler says. “As a society, we have traditionally been silent about money and finances. But today, the internet has made it easier than ever to share information.”
As more Generation Zs enter the workforce (and more baby boomers leave), employers can expect salary sharing and wage-related discussions to increase. Still, Visier’s research shows that 41% of respondents had a negative experience discussing pay with an employer. Derler adds that to reduce cultural and generational frictions, managers should be trained to conduct wage-related conversations with empathy.
Most employees want more transparency about pay
Seventy-nine percent of respondents want some form of pay transparency, and more than two-thirds (68%) of respondents said they would even change employers before the benefit, assuming the pay would be the same.
When asked whether their employer provided adequate pay transparency, most respondents agreed, but there was a significant gap between C-suite executives and their employees. Ninety percent of C-suites agreed, compared to just 68% of entry-level employees and 60% of managers, employees and analysts.
“We see that executives have an excessive confidence that they are doing enough to address pay transparency,” Derler says. “Additional Visier research confirms that this represents a larger trend of executives becoming disconnected from the wants and needs of their employees. This isn’t coming from a malicious place, rather, it’s a lack of awareness.”
To overcome this executive bias, people leaders should ask their employees: straight away which wage transparency initiatives they would like to see. Small steps, such as publishing pay ties or conducting informative training sessions on pay-related topics, can help satisfy younger generations’ desire for pay transparency and improve retention.
The findings from Visier’s report show that wage transparency requirements will not disappear anytime soon. It is in the interest of all employers to think about how they are going to adapt – whether new labor laws require it or not. Ultimately, addressing payroll transparency now can help your hiring and retention efforts (especially for the best and brightest Gen Zers) and future-proof your organization for the regulations to come.