The movement for pay transparency is gaining momentum. On November 1, New York City will become the most populous jurisdiction in the US to require salary information in all job postings, joining Colorado; Jersey City, New Jersey; and Ithaca, New York. (Several other states and localities have less comprehensive salary-transparency requirements.) At the beginning of 2023, when similar laws go into effect in Washington and California, a fifth of all workers nationwide will be covered under pay-transparency laws.
Meanwhile, research suggests that a growing number of employers are sharing salary information in job listings even when not required, meeting a strong worker appetite for such information. One survey earlier this year found that the majority of workers want some form of insight into how compensation works at their organization, and more than two-thirds would switch employers for greater transparency even if the pay was the same.
What does this mean for your organization?
Whether you’re adopting pay transparency to comply with a new law or simply looking to adopt it within your workplace, one thing remains true: Any employer looking to implement pay-transparency policies needs a plan for how they talk about compensation with their employees.
In a moment when progress on the gender pay gap has stalled, organizations including the OECD and the National Women’s Law Center point to pay transparency as a way to close the wage gap for women and workers of color by making it easier to identify and address pay discrepancies. If not implemented with care, though, pay-transparency policies can have unintended consequences for employee sentiment, engagement, and performance. Employers that release salary information without context risk alienating employees and leaving them with more questions than they started with. And without structures in place to address pay inequities, salary transparency will only reveal pay gaps, not solve them.
To help workplaces navigate these changes, Charter published Get Your Organization Ready for Pay Transparency: A step-by-step guide in collaboration with OpenComp. The free playbook is designed to guide organizations through that process. Here are the key questions to ask, week by week.
Three weeks out: What does compensation look like at your organization?
Make sure your compensation strategy is setting you up to pay your employees fairly and equitably with five data-driven steps:
- Conduct salary benchmarking with current, verified, and relevant compensation data.
- Develop a compensation philosophy by determining your market position, pay mix, segmentation by department or role, and geographic strategy.
- Create a job-leveling framework that defines the seniority, expectations, and responsibilities for a specific role, as well as the process for progression through the levels.
- Review or create salary bands, and define the cross-functional minimum, midpoint, and maximum for pay ranges for like-for-like jobs.
- Define your processes for promotions, merit increases, and bonuses by creating criteria for eligibility, award amounts, and award schedules.
Two weeks out: How do you communicate your compensation philosophy to employees?
Now that you’ve defined your compensation philosophy, it’s time to share it. To shape your strategy, start with a few simple questions: Who, what, when, how, and why?
A successful strategy focuses on building trust in the policies by helping employees to understand, advises Ashley Brounstein, OpenComp’s senior director of people. “It all starts with education,” she says. “If you don’t understand how decisions are made, then you can’t trust the process and you can’t trust how your own compensation is delivered.”
One week out: How do you talk about compensation throughout the recruiting process?
To comply with the strictest pay transparency laws, job postings should include a specific salary range, with minimum and maximum, that reflects actual compensation to your best knowledge. To comply with laws in Colorado and Washington (but not in NYC), it should also include a description of other perks and benefits, including stipends, bonuses, retirement programs, and insurance offerings.
But beyond compliance, the job posting is often also a candidate’s first impression of a company’s culture. As such, it’s a powerful way to communicate your compensation philosophy and how you value equity and transparency. To put your best foot forward with potential applicants, include additional information like a full description of the role, information about your organization’s compensation philosophy, and a company intro that emphasizes your work, culture, and values.
Week of: How do you sustain an equitable approach to compensation?
Pay transparency doesn’t always lead to true pay equity. Systemic change only happens when company leaders can champion change from the top down, so create a plan to maintain your compensation philosophy even as your organization changes, grows, and responds to external forces like inflation or a recession. Practices like regular pay audits and equity analyses are key to identifying discrepancies along lines of privilege, and proactively budgeting to correct for pay discrepancies ensures that leaders can move quickly to make salary adjustments that correct pay inequities.
For more tactical advice, best practices, and tools including templates, scripts, and reflection activities for each week, download the full playbook on Charter’s website.
By working through each of these questions, organizations can develop a comprehensive strategy that goes beyond compliance, preparing leaders to discuss compensation openly while empowering workers to understand and advocate for their own pay—in short, to craft a strategy that’s equitable, transparent, and fair.