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Pay Disclosure: From Trepidation to Transparency

This past year has seen a flurry of pay transparency laws enacted, most of which were intended to address gender and other forms of bias in the pay received by women and minorities. Perhaps equally important, pay transparency is also a critical component in creating an authentic employee value proposition (EVP), one that includes a substantive Diversity, Equity, and Inclusion (DEI) marker. The “Social” component of the ESG framework and related corporate social responsibility (CSR) goals are taking center stage. Especially in this candidate-centric marketplace, it is beneficial for companies to put compensation front and center for various reasons, including attracting top talent, retaining employees, and maintaining internal standards of equity.

Properly enacted pay transparency programs should help mitigate some of the pay inequalities we have seen historically related to gender and minority groups. Fairness, inherent in the idea of pay transparency, should be axiomatic. Beyond that, it makes good business sense and represents an easy DEI entry-point for companies.

To date, a patchwork of pay transparency and disclosure laws has been enacted in more than 20 states and jurisdictions. Some jurisdictions have adopted laws that focus solely on the content of job postings themselves, while others require companies to provide pay ranges for open positions only if a candidate requests it. Other laws (related to transparency, but with a slightly different emphasis) prohibit firms from asking applicants about their current salary or previous pay history. While laws limited to disclosure upon request or barring inquiries about salary history are easier to comply with than laws that regulate internal and external job postings, many companies are still struggling with how to best address what was long considered a taboo topic—and a decidedly private and oftentimes mysterious practice. Additionally, the SEC’s regulatory agenda for the second half of 2023 includes proposals requiring specific human capital management disclosures, including DEI metrics.

Transparency in pay may be somewhat easier for large organizations to achieve, given access to relevant benchmark salary valuations, standardized job titles, and market-based pay data. Big companies are also more likely to have a dedicated human resources function to help determine meaningful salary ranges and navigate conversations with candidates and employees. For small businesses and start-ups, who often have a single HR practitioner (if any) or a shared service model, knowing where to start-and how to stay compliant with evolving laws-has proven a bit trickier.

How Centri Can Help

Our team at Centri can provide the guidance necessary to ensure a smooth transition to pay transparency:

Start with the basics: Determine and document pay ranges for all positions. Doing so will compel the organization to hold managers accountable for compensation decisions, develop a documented process as to why people are paid a particular salary, and provide clarity as to why jobs are titled the way they are titled.

Take inventory: Review existing (or create new) job descriptions and job posting templates, including listings for internal promotions and transfers. This will introduce rigor around the job posting and subsequent compensation process, better aligning salaries with the objective skills, capabilities, and experience required for the target role.

Upskill the team: Train HR staff, supervisors, and managers on the implications of these new laws and take steps to ensure compliance with the new regulations. It is imperative that hiring managers and recruiters understand that determining salary should be based on data, not on “how much will it take to get this candidate?” or “how little can we pay and still fill the role?” The absence of a formal process to determine and approve salaries can result in inequities potentially causing decreased employee satisfaction and increased attrition.

Maintain good records: Consistently publish salary information related to internal and external job postings. This can provide an edge in attracting talent, as recent research by the Society for Human Resource Management reports that 82% of U.S. workers are more likely to post for jobs that include a salary range. At the same time, 66% of organizations that list pay ranges on job postings say that doing so has increased the quality of applicants.  Additionally, internal candidates report greater satisfaction with their promotion, title change, and commensurate salary or reward increase when that data is readily available.[1]

If you have questions or need assistance navigating your journey to pay transparency, please contact Centri’s HR Advisory Practice to learn how we can help.

[1] SHRM (March 14, 2023). New SHRM research shows pay transparency makes organizations more competitive, leads to increase in qualified applicants.

Michael Warech

Managing Director | Human Resources Advisory Practice Leader | Ph.D.

Michael is a Managing Director at Centri Business Consulting and is the leader of the firm’s Human Resources Advisory Practice. He has more than 30 years of experience designing, developing, and implementing data-driven human capital solutions that demonstrably impact an organization’s bottom line. View Michael Warech's Full Bio

Mihir Jhaveri

Partner | Risk & Sustainability Practice Leader | CPA, CIA, CISA, CFE, CITP, CGMA

Mihir is a Partner at Centri Business Consulting and the leader of the firm’s Risk & Sustainability Practice. He has over 15 years of experience helping large Fortune 500 publicly-traded and private companies drive process improvement, minimize company risks, and enhance corporate governance. View Mihir Jhaveri's Full Bio