A majority of U.S. organizations are communicating pay information to their employees, according to a new survey by leading global advisory, broking, and solutions company WTW. The 2023 Pay Transparency Survey found that increasing regulatory requirements are encouraging organizations to communicate their organization’s broader pay policy. However, barriers to pay transparency remain as employers fear increasing questions and are concerned about their effectiveness in educating their workforce on this complex topic.
The survey found most U.S. organizations are communicating different components of their pay program information to employees. Six in 10 are disclosing job levels to their employees, and almost half (48%) are communicating how individual base pay is determined and progresses. Over one-third of companies (36%) are disclosing individual pay ranges to employees, but an even larger number (46%) are planning or considering doing so in the future.
Regulatory requirements are the most commonly cited (81%) factor for encouraging greater levels of pay program communication. Other commonly cited factors include company values and culture (55%) and employee expectations (54%), followed closely by an environmental, social and governance and diversity, equity and inclusion agenda (53%).
“Many U.S. organizations are providing more visibility into their pay programs and practices,” said Mariann Madden, North America Fair Pay co-lead, WTW. “Boards of directors are taking ownership for pay equity and pay transparency and are looking for organizations to define, monitor and report on their commitments and priorities. Pay equity and transparency are closely linked. It will be very difficult to have confidence in one without the other in place.”
WTW’s survey found 38% of U.S. employers are communicating or planning to communicate publicly a pay equity commitment. A smaller number have communicated their pay transparency commitment; however, 44% of companies are planning or considering what they will share.
While these mandates are still only enacted in less than 10 states, regulatory requirements are driving more employers to communicate pay information. For prospective employees, nearly two in five respondents are communicating or planning to communicate pay rate or pay range information regardless of requirements. Of the 91% of companies communicating or planning to communicate pay ranges, 65% are disclosing a hiring rate/range for the job. A majority of organizations are using a consistent approach to what is shared and what pay range/rate is disclosed.
Half (50%) of employers believe communicating pay rates or ranges will increase questions from current employees. Manager effectiveness concerns are also top of mind for employers (47%). Indeed, although managers are the most common channel for communicating pay program information (84%), only 38% of organizations report being effective at educating managers about this complex topic.
“We are at a tipping point with pay transparency,” said Lindsay Wiggins, North America Fair Pay co-lead, WTW. “Organizations need to get their house in order by developing and actively managing foundational job architecture and leveling frameworks and conducting equal pay, pay gap and pay driver analyses to uncover and address areas of risk. Understanding their current state will support businesses in their efforts toward addressing the various legislative requirements but also in providing greater transparency into their talent and rewards programs and practices.”
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