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Keeping Up With Pay Transparency Expectations and Regulatory Demands

Updated: May 11, 2023

The following is an excerpt summary. Read the full article here.


In light of inflation, the Great Resignation and regulatory changes, more US employers are feeling pressure to provide pay transparency. California became the largest state to require employers to post salary ranges for open positions in September 2022.


Experts say that while many pay transparency laws have been in the works for some time, societal pressures have pushed lawmakers to act. Of the 17 states in the US that have laws regarding pay transparency, seven have pay transparency laws. Pay transparency helps to attract new employees and hold employers accountable for any pay gaps within their existing workforce. Research shows that people who feel they are underpaid have less job satisfaction, and companies experience more turnover.


In an interview with Tom McMullen, Senior Client Partner at Korn Ferry, he explains that organizations hesitate on transparency because they feel they don’t have a good story to tell. According to McMullen, there are two moments of truth when attracting and retaining talent—getting talent in the door, either by compensation or the company’s reputation— and understanding why an employee would choose to work for their employer every day. This could be a mixture of non-financial rewards and career development opportunities. These two moments of truth provide the foundation for your organization’s transparent communications.


Your communications should provide transparency into the principles and objectives of the overall reward program and the various components of base pay, variable pay, pay for performance, and the benefits program. McMullen suggests that organizations “develop core messaging on how the base pay program works – this is why we do what we do, and this is your role as an employee in that.” With changing legislation pushing employers to be more open about compensation, every little difference in salary needs to be accounted for. In a tight labor market, companies can’t afford to wait for the transparency laws to catch up. They must start acting now.


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