Despite challenges, companies expect to increase level of pay communication

U.S. companies plan to increase their level of employee communication about pay and pay equity, although they realize it may be a struggle.

“Many U.S. organizations are providing more visibility into their pay programs and practices,” said Mariann Madden, North America Fair Pay co-lead for 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.”

The 2023 Pay Transparency Survey from WTW 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.

Among the key findings of the survey:

• Six in 10 are disclosing job levels to their employees, and almost half are communicating how individual base pay is determined and progresses.
• More than one-third of companies are disclosing individual pay ranges to employees, and 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%).

Nearly 4 in 10 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.

Although these mandates still are enacted in fewer than 10 states, regulatory requirements are driving more employers to communicate pay information. For prospective employees:

• Nearly 2 in 5 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 or range for the job.
• A majority of organizations are using a consistent approach to what is shared and what pay range or rate is disclosed.

Half of employers believe communicating pay rates or ranges will increase questions from current employees. Manager effectiveness concerns also are top of mind for employers (47%). 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.

Related: Companies are still failing on pay equity

​“We are at a tipping point with pay transparency,” said Lindsay Wiggins, North America Fair Pay co-lead for 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.”