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Maximizing the Benefits of Pay Transparency: A Strategic Opportunity for Organizations

With the market in flux, the retraction of “work from anywhere” and companies closely monitoring their financial health, now is the time to look at the new regulation of Pay Transparency as a strategic opportunity.


Pay Transparency offers companies a checkpoint to reconsider their rewards approach as more states and cities require disclosure of pay ranges on job postings and employee information sharing internally.


Companies should think beyond compliance by also considering their compensation philosophy, market definition, program design, program administration and internal/external communications.


As a starting point, companies should think about:

  • Current State: Discuss rewards (including benefits) offered to employees with leadership to understand the total rewards picture. Have we taken a holistic review, or fallen into the trap of maintenance and evaluating each component in isolation?

  • Market Positioning: Determine compensation philosophy, pay by level and/or function, market definition, pay structure approach, and equity participation. The world has changed in the last 18 months and past practices do not support the needs of the future.

  • Check in with Employees/Managers: Conduct an employee survey to identify valued and non-valued programs. In a cost-conscious environment, we want to maximize ROI on our programs and de-emphasize those that do not.

  • Information Sharing: Determine the degree to which rewards programs will be communicated. Employees already talk about pay. What benefit exists with the company leading that discussion vs. reacting to noise in the system?

  • Future State: Document decisions and decide on the level of Pay Transparency Tolerance. How well does our current program design support business needs around communication and law compliance? You don’t need to wait for a law to be enacted to implement change.

  • Implementation: Communicate decisions and transparency level through leadership, management, and employee training, and set up an employee and manager portal through HRIS system and/or compensation software.


Companies that proactively adopt a Pay Transparency strategy can benefit in several ways ensuring compliance with current and future laws and by having a more engaged workforce. The following steps can be taken to build Pay Transparency into your compensation philosophy:

  1. Develop/update pay ranges and job architecture to comply with pay transparency laws and regulations.

  2. Conduct a pay equity study to identify and address pay disparities based on gender, race, or other factors.

  3. Provide employees with access to pay range and job architecture information to foster trust and engagement and help them understand how to increase their earnings.

  4. Leverage pay transparency to encourage adoption of compensation best practices such as paying employees in the lower third/quartile of the pay range and leveling roles based on responsibility and scope.


In short, companies that take a strategic approach to Pay Transparency can walk away with a new and improved rewards programs that have a better ROI while educating their leaders/managers/employees on rewards. In return, companies will benefit from a more educated, engaged and motivated employee population and reduce the risk of legal actions and reputational brand damage.


The steps above can be used to develop a broader rewards strategy that will also get you ready for compliance.


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