How are Companies Addressing Pay Transparency?
May 17, 2021
Sixty-seven percent of organizations report pay transparency* is increasing in importance at their organizations, and 4% say pay transparency is of highest importance. However, only 14% of organizations have approached pay transparency beyond a “moderate” level. These are among the key findings captured in the Pay Transparency Study conducted by WorldatWork, with underwriting support from Mercer. Pay and rewards openness, the impact of compliance on approaches and the tactics involved with communicating about pay and rewards are covered in the study.
“As organizations address potential areas of unintended bias with pay systems, it’s reassuring to see that pay transparency is becoming more of a priority,” said Scott Cawood, president and CEO of WorldatWork. “Workplace equity is a complex issue, with pay transparency just one facet. This survey, along with other recent research, illuminates how critical it is for compensation and TR professionals to stay current on the evolving conversation in order to effectively build strategies that foster workplace equity at their organizations.”
Other Key Findings
- Only 14% of organizations have approached pay transparency beyond a “moderate” level: 4% have nonexistent approaches, 35% have minimal, 46% have moderate, 13% have significant, and 1% have extreme transparency;
- More than 60% of organizations say managers are not trained to effectively deliver pay communications;
- 42% of employers do not share information about how jobs are valued and compensated within the organization;
- When pay equity adjustments are made, 53% of organizations explicitly communicate to the employees that the increase is the result of a pay equity adjustment; 30% bundle it with other pay increases without explicit communication on the adjustment;
- Compliance runs the gamut: 22% of organizations are not subject to pay transparency regulations, 32% are subject to minimal laws that affect practices, 38% have few laws to comply with but they’re manageable, 9% are subject to several laws and are difficult to manage.
“Pay transparency, along with pay equity and pay strategy, plays an important role in delivering an authentic employee experience, which directly impacts employee engagement,” said Tauseef Rahman, Principal at Mercer. “As organizations strive to balance business demands with changing workforce expectations around pay, it poses challenges as well as opportunities for both employers and employees to thrive in today’s economy.”
WorldatWork collected survey data for the surveys from its members in October 2019. The survey report was based on 478 respondents. The demographics of the survey sample and the respondents are similar to the WorldatWork membership as a whole. The typical WorldatWork member works at the managerial level or higher in the headquarters of a large company in North America.
WorldatWork, the Total Rewards Association, is the leading global nonprofit organization for professionals who are engaged in the critically important practice of Total Rewards. We serve those who are responsible for cultivating inspired, engaged, productive, and committed workers in effective and rewarding workplaces. We guide them in the design and delivery of Total Reward programs with our education and certification; idea exchange; thought leadership; knowledge creation; information sharing; research; advocacy; and networking.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.
*Definition of pay transparency: The degree to which employers are open about what, why, how, and
how much employees are compensated, and allow employees to share pay‐related information with others. This concept can extend beyond base pay to include variable pay and other rewards components as well as other facets and/or means to rewards (e.g., promotion, recognition, development, performance assessment).