Five Things to Know About Salary Transparency

Salary transparency is an increasingly hot topic in the workplace these days. As more companies recognize the importance of fair pay and equal opportunity, salary transparency has become a key element of many organizations’ commitment to equity and openness. But what exactly is salary transparency, and why is it important?

Salary transparency is best described as the practice of openly communicating salary information, such as pay ranges. It most commonly includes providing salary ranges and information about benefits in job postings but can also include employees having access internally to pay ranges for their own and other positions, and an explanation of how salaries are calculated. It helps employees with making informed decisions about their career trajectory, improves communication, and boosts overall satisfaction and morale in the workplace. But that’s not all. From increasing trust to sparking conversations surrounding compensations and benefits, here are five things you need to know about salary transparency.

1. Salary Transparency Promotes Pay Equity. One of the biggest benefits of salary transparency is its potential to close pay gaps, particularly those based on gender and race. When salary ranges are discussed openly, it becomes harder for bias — whether conscious or unconscious — to influence pay decisions. Salary transparency ensures that employees doing similar work are paid fairly, creating a more equitable workplace. In addition, salary transparency often encourages important conversations about benefits, bonuses, and other perks. Open discussions can help employees fully understand their compensation package, not just the base salary. This leads to a more informed staff that feels empowered to advocate for better compensation packages, whether that includes negotiating for higher pay or requesting additional benefits like flexible working arrangements or professional development opportunities.
2. It Increases Trust and Employee Engagement. When employees know that their company is transparent about pay, it builds trust between them and management. Research from the Society of Human Resource Management (SHRM) found that 73 percent of employees are more likely to trust their organization if they are transparent about their salary ranges. Salary transparency shows that the organization is committed to fairness―resulting in employees feeling more valued and respected, and leading to higher morale, engagement, and retention. Also, when salaries are clear, it can reduce dissatisfaction among employees, which often arises from perceived inequality.
3. Transparency Can Attract Top Talent. In a competitive job market where candidates are looking for employers who demonstrate fairness and openness, salary transparency can be a powerful tool―particularly to those who value fairness and equity in the workplace. Especially when attracting Gen Z candidates. According to Adobe’s Future Workforce Study of upcoming college seniors and recent college grads, 85 percent stated that they are less likely to apply for a job if the company does not disclose the salary range in the job posting. The Society of Human Resource Management (SHRM) also stated that 65 percent of organizations that list pay ranges on job postings say that doing so makes them more competitive in attracting top talent. When candidates know they will be paid fairly for their skills and experience, they are more likely to apply for and accept a job offer — giving companies a competitive edge in attracting diverse, skilled employees.
4. Salary transparency benefits both workers and employers. When employers share salary ranges at the start of the hiring process, it streamlines screening. By providing salary information, employers can eliminate the need for salary negotiations later in the process. And candidates who know the pay range in advance will base their decision on whether it meets their expectations, saving both parties time and money. A study from the Society of Human Resource Management (SHRM) found that 70 percent of organizations that list pay ranges on job postings say that doing so has led to more people applying to their postings. They also saw that nearly two-thirds (66 percent) of organizations that list pay ranges on job postings say it has increased the quality of applicants they’re seeing.
5. The salary transparency amendment to the Illinois Equal Pay Act goes into effect on January 1, 2025! Beginning in January, Illinois employers with 15 or more employees will be required to disclose pay scales and benefits in job postings, and announce and post all promotion opportunities to current employees within 14 business days of posting the job externally. This is a step forward in closing the gender wage gap. In Illinois, closing the gender wage gap would translate into a 16 percent increase in women’s earnings, totaling $20.5 billion. It also means 1.1 million children would benefit from equal pay, potentially reducing the poverty rate for children with working mothers by 43 percent.

In short, salary transparency is a powerful tool for promoting fairness, trust, and engagement in the workplace. It can contribute to more equitable compensation practices, attract top talent, and foster open communication about pay. To learn more about salary transparency and your right to fair pay, visit www.equalpayillinois.org. Also, be on the lookout for our salary transparency campaign in January, where you can get involved and help spread the word!