HR strategy and employee behavior are shifting post-pay transparency, surveys suggest

HR strategy and worker behavior are shifting in light of new pay transparency laws, recent surveys suggest.

As of August, half the US job postings on Indeed’s website included wage or salary information, a result of legislation that has taken effect across 10 states and several jurisdictions.

The new laws have had a domino effect in a way policymakers “hadn’t entirely foreseen,” given that they’re being enacted at a time when “we’re also seeing a significant uptick in workers going remote,” Helena Almeida, vice president-counsel with HR company ADP, told HR Brew in July. To compete for nationally distributed talent in places like New York, California, or Colorado, employers must comply with pay transparency laws those states have enacted, she said.

Job-seeker, employer behavior is shifting. A large majority of employees now expect transparency, according to software firm BambooHR’s 2023 compensation report, released on December 12. The report, which draws upon a survey of 1,500 full-time salaried adults conducted from July 27 to August 4, found that “82% of employees consider some form of salary transparency essential when evaluating potential employers, up from 69% in 2022.” The same share said they expect employers to be equally transparent about their benefits, as well.

A recent survey from advisory firm WTW offers evidence that employers are changing their behavior in light of new rules and expectations surrounding pay, too. Most employers surveyed (55%) said they’ve “committed to hiring staff in a higher salary range,” while 54% said they’re “undertaking compensation reviews of specific employee groups,” and 49% said they’re planning to raise starting salary ranges.

As employees gain more information about how they’re paid, they may not always like what they find out. Those who believe they’re underpaid may become dissatisfied with their employers and look for the exit. On the other hand, salary transparency can be motivating, provided employers communicate a clear path to advancement, other studies suggest.

“With ongoing uncertainty, especially around pay transparency, we see organizations do better where there is a foundational level of understanding among all employees—on the compensation philosophy, the program design and how decisions about pay are made,” Sara Vallas, WTW’s senior director of employee experience, said in a statement. WTW recommends employers train “managers on their role, how the compensation program works, and how to communicate it effectively,” she added.