WHAT YOUR COMPANY
CAN DO
Companies can significantly help close the wage gap by implementing pay transparency initiatives. These are general guidelines and best practices for creating a culture of transparency and trust in your company. Be sure to check local legislation for unique requirements & pay reporting.
Benefits of Pay Transparency
Building a Culture of Trust
When employees know they are being paid fairly & equally, they have higher trust in their employers. This leads employees to be more engaged, motivated, and collaborative with each other. Talking about pay isn't taboo and such conversations may even be expected.
Bline, K., Dammann, C.E.L. Improving workplace culture by increasing financial transparency. Pediatr Res 92, 1492–1493 (2022).
Desired by Applicants
Applicants searching online recruiting websites increasingly state they are more likely to apply to companies that share pay-range data. In an ever-competitive job market, being transparent may give your company an edge when looking for top talent as such applicants are assured you will recognize their value.
Brown, Michelle, et al. "Pay information disclosure: Review and recommendations for research spanning the pay secrecy–pay transparency continuum." Journal of Management 48.6 (2022): 1661-1694.
Higher Retention Rates
Employees who know they are being valued are more likely to stay with a company long term. Research shows companies with high transparency have higher retention rates and spend less money on recruitment. Because the pay philosophy is clear, employees invest their loyalty.
Trotter, Richard G., Susan Rawson Zacur, and Lisa T. Stickney. "The new age of pay transparency." Business Horizons 60.4 (2017): 529-539.
Brand & Reputational Gains
Companies that are proven to pay their employees equally are a rarity even among established brands. As more and more pay data becomes public, it will quickly become clear which companies are committed to closing the pay gap and those that are not. Customers, in turn, want to support equality.
Avdul, David N., William Marty Martin, and Yvette P. Lopez. "Pay transparency: Why it is important to be thoughtful and strategic." Compensation & Benefits Review 56.2 (2024): 103-116.
Higher Productivity
Employees report and research shows that they are more productive when employees know how they are being paid and their company shows they are valuing them. Additionally, employees are motivated by learning how they can earn more in the future.
Gutierrez, Cédric, Tomasz Obloj, and Todd Zenger. "Pay transparency and productivity." Strategic Management Journal (2025).
Innovation over Stagnation
Surveys show Gen Z employees, who are currently flooding the job market, value transparency much more than past generations, even viewing nontransparent companies as untrustworthy. New talent is eager for innovation, giving big benefits to companies that attract them.
Gao, Huasheng, Po-Hsuan Hsu, and Jin Zhang. "Pay transparency and inventor productivity: Evidence from state-level pay secrecy laws." Available at SSRN 3632849 (2023).
What Employees Want to Know
What is your company's pay philosophy? How is that shown in my employment package?
Employees want to know if a company is committed to transparency and how pay is determined.
If there are pay differences at the same level, what is the criteria behind them?
If there are instances of unequal pay that a company justifies, employees want to know the criteria for this decision.
If current inequities are unjustified, what is the plan and timeline for equal compensation?
For unjustified instances of unequal pay, employees want concrete information that this will be quickly rectified.
Transparency in Top Companies
Incorporating pay transparency and implementing internal checks like pay equity analyses isn't a fad. This is the future of the workplace. Top companies have already began embracing these policies, even before their state requires them, putting them ahead of the competition when such laws are passed.
Explore below how companies like Airbnb and Ethena have engaged with pay transparency. Not sponsored by these companies.
First Steps
Employees increasingly are looking for and working longer for companies they trust and that are transparent. Fairly investing in your employees now empowers them to reciprocate, setting up your company for a culture of trust and long-term success.
1
Review Pay Philosophy &
Pay Criteria
Understand how pay is determined across your company. Critically examine this criteria to be sure it is objective and not based on subjective opinions that may be at risk for bias. Look for criteria that may indirectly perpetuate pay gaps such as penalizing maternity and paternity leave or weighing overtime availability which systemically penalizes caregivers.
2
Analyze Current Gaps in
Employee Compensation
Identify where pay gaps exist in your company and investigate why they arose. If your company has fixed salary increases, look at starting salary discrepancies which can perpetuate unfair pay gaps. Likewise, wholistically analyze across position levels to determine if some employees may be facing barriers to being promoted above a
certain level.
3
Run A Pay Equity Analysis & Correct Inequalities
Create a plan to systemically correct these pay gaps and implement a plan to prevent future inequalities. This can look like not using pay history to determine salaries or increasing employee salaries that are below market value for their role. Conduct a pay equity analysis to determine trouble spots for your company. Communicate these plans to employees.
Transparency in Action
Hiring & Data
Prioritize reviewing and correcting salaries to match market value for positions you need to hire most urgently. By triaging your data collection and implementation, you can create a system for periodically adjusting expected salary ranges based on fluctuating markets without overwhelming yourself or your employees as you conduct pay audits.
Communication
When communicating with your employees about your pay philosophy, give them concrete data and information instead of general commitments to pay equality. Collaborate openly and closely with your finance and legal teams to create an actionable pay strategy and review employee packages for systemic underpayment. Create channels for conversations with your employees about your pay strategy and provide opportunities to answer questions.
HR Reporting
A key component of pay transparency is internal and external pay reporting. Confusions around pay decisions and information can be mitigated by having a clear process for employees to request documents and ask questions. This helps foster a culture of trust where employees are heard and employers can clarify their pay philosophy.
Pressure Tests
As your company transitions to a transparent structure, the processes put in place to communicate employee packages and criteria will be used regularly, often incorporating changing market data and employee feedback. Learning how other companies have handled edge cases, like an employee making above a salary range, can help guide your company as you communicate pay citeria.
Potential Communication Pathways
As you implement pay transparency in your company, simultaneously creating a clear communication process with your employees is crucial for effective and beneficial pay discussions within the company with opportunities to clarify pay data.
1
Pay Transparency Ambassadors
Trained to explain the pay structure and answer employee questions, Ambassadors build a culture of trust with employees by being designated personnel who can clarify criteria.
2
Interactive Webinars
Set at a specific time, employees know when they will have opportunities to ask questions and a chance to voice their concerns. This allows companies to commit to communication.
3
In Person Lunch & Learns
Doubling as a time to communicate with each other and to bond across company levels, such events give employers a chance to demonstrate their support for employees.
Pay Precedence
It's important to note that pay transparency isn't novel. Unions and public institutions currently, and have for the last few decades, published not only salary ranges but the exact salaries of specific employees. This data is freely circulated and easily accessible with a simple internet search. Such transparency is beneficial to these institutions because of their effective communication alongside it.
Learning from the Laws
While legislation varies by country and state, whether you must comply with these laws or not, pay transparency is increasingly sought after by top employees. These laws can help you propel your company forward in this new era by enacting policies that talent is looking for.
HELP LEAD A GROWING MOVEMENT
Now that you've joined a growing movement of companies building a culture of trust, take action to propel pay transparency forward and help us close the wage gap globally before the next century. Show employees you've created a sustainable and effective pay transparency initiative that matches this lasting shift in how compensation is discussed and expected to be implemented.