U.S. employers are increasingly embracing pay transparency, even as regulatory complexities introduced by the federal government present new challenges, according to a new survey by WTW.
The survey, which polled nearly 400 employers, found 82 per cent said they’re either communicating, planning or considering communicating individual pay ranges with employees and 79 per cent are doing the same with external candidates, regardless of legal mandates. This shift is being driven by a combination of factors, including growing regulatory requirements (72 per cent), company values and culture (44 per cent) and employee expectations (41 per cent).
A third (32 per cent) of organizations said they’ve publicly shared a narrative or commitment on pay equity and 20 per cent have done so for pay transparency. Among companies that have issued a pay equity narrative, nearly three-quarters (72 per cent) have adopted a global perspective, addressing pay equity across the entire organization, although they often allow for local or regional differences within this global narrative. A third of employers said they’re actively planning or considering doing similar disclosures.
Despite this progress, there are improvements to be made, the survey noted. Fewer than half of employers said they share how individual base pay is determined and progresses. And even fewer said they convey how pay ranges are designed and managed and the employee’s position within the pay range.
Most organizations believe that sharing pay ranges with employees will lead to significantly more questions about compensation from managers (70 per cent), more questions about compensation from employees (68 per cent) and more pay negotiations (53 per cent).
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More than half (56 per cent) of companies use metrics to measure the impact of pay transparency. The most prevalent metrics used are adjusted gender pay gap, questions received from managers and employees and impact on employee retention.
Despite growing interest, most employers are not utilizing artificial intelligence to support their pay programs. Fewer than a fifth said they’re planning on using AI to support pay information communication (15 per cent), market compensation research (17 per cent) or pay gap identification (11 per cent).
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