As companies seek to build healthier, more engaged and more productive workforces in an uncertain economy, developing strong diversity and inclusion practices is no longer optional. While leaders have long considered how best to offer fair, equitable and competitive compensation to recruit and retain top talent, these efforts were historically executed privately. The growing movement for pay transparency challenges this traditional approach.

Spearheaded largely by a new generation of employees, the pay transparency movement seeks to shed existing taboos around compensation disclosures, which can perpetuate gender- and race-based pay gaps. Supporters argue that companies should take concrete actions, such as disclosing salary ranges on job applications and proactively communicating the criteria for determining pay and pay progression, to create fair compensation practices for all employees.

While the pay transparency movement was fueled primarily on social media amid other conversations about the future of work, it has grown into a priority for regulatory bodies around the world. In 2023, the European Union passed its Pay Transparency Directive, which requires companies operating in the EU to disclose pay ranges to applicants, share how pay is set, progressed and managed to employees, and assess compensation using gender-neutral job classification and evaluation systems, among other actions. The UK, Japan, Canada, Australia and more than 20 states in the U.S. also have some form of pay transparency regulation.