Five reasons for transparent pay

It’s good for employee satisfaction
Five reasons for transparent pay

There’s plenty of evidence to support having a transparent approach to pay.  For example, the Glassdoor Global Salary Transparency survey shows 70% of businesses see pay transparency as good for employee satisfaction, and 72% believe it’s good for business too.

Despite this, for some of our clients, persuading senior decision-makers to take the bold steps needed to improve pay transparency isn’t always an easy task.

So, here’s five reasons why sharing your pay strategy, principles and frameworks (e.g. salary ranges) are a good idea:

  1. It improves employee engagement.  When an individual understands how their pay is set, they are more likely to feel it is fair, and fairness matters when it comes to engagement.  The Aon Hewitt Annual Global Employee Engagement Survey 2018 places Reward and Recognition as the no.1 opportunity for employee engagement globally and key to this is the perception of fair pay.

  2. It reduces pay inequalities and helps close the gender pay gap.  The Government Equalities office has identified six effective actions proven to reduce the gender pay gap.  Two of these concern pay transparency.  Firstly, having open pay and reward processes means pay has to be justified to employees.  This inevitably leads to more objective and evidence-based decisions.  Also, it is a fact that women are less likely to negotiate pay. However, sharing pay ranges to ensure all applicants know what they can reasonably expect, results in women securing salaries closer to men.

  3. It impacts retention.  When something is kept ‘secret’, it’s human nature to expect the worst: “How people perceive their pay matters more than what they’re actually paid, the more information they have the less likely they are to quit” Payscale.  With more than half (56%) of employed adults believing they must switch companies in order to obtain any meaningful change in pay, it’s worth being absolutely clear on how pay can be progressed internally.   

  4. It’s what employees want.  Being treated well is an essential part of today’s employee deal.  This means having open and honest ‘adult to adult’ conversations about emotive issues such as pay.  “69% of employees wish they had had a better understanding of what fair pay is for their role and skills and only a third feel that their pay is fair” Glassdoor

  5. It puts you in control of your narrative.  Whether you publish salary ranges or not, pay details are being shared in the public domain through sites such as Glassdoor and Payscale.  This is unavoidable.  By communicating your reward strategy and principles, you can take control of the messages, and explain the context, behind pay decisions.

Having clear pay foundations, with all of the associated benefits, may be just the first step when it comes to pay transparency.  The Guardian recently reported growing calls from Labour, trade unions, thinktanks and campaign groups to introduce pay disclosure, and a survey undertaken by YouGov shows 56% of workers support making personal information such as monthly income and tax returns publicly available.

It’s clear that transparency when it comes to pay is going in one direction.  How far have you progressed?


At Verditer we make reward more effective.  Talk to us if you'd like support with any aspect of pay benchmarking or pay structures.

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Photo: "Eye Beam" by JD Hancock