As Pay Information Becomes Public, Employers Brace for Change

A new report from Willis Towers Watson (WTW) finds that the majority of North American companies are sharing pay program information with their employees. This development has been driven in large part by regulatory changes around the code (73%), though other factors like values and culture (47%) and employee expectations (46%) have also played a role.

Following legalization like the EU Pay Transparency Directive, the WTO survey found that many companies are already sharing different types of pay program information, although some information is more accessible than others. For example, a big majority (74%) of respondents reported sharing employees’ job levels, while just 58% said they share variable pay opportunities. Sixty-five percent reported sharing how individual base pay is determined, respectively.

An even greater number of companies already share pay ranges with candidates. Seventy-five percent of respondents reported doing so for external candidates, and 69% for internal candidates. What’s more, in the U.S., the sharing of such information correlates little with legislation requiring companies to do so: 86% of U.S. companies communicating pay ranges with candidates do so across the country, regardless of state or provincial regulations.

While pay sharing is already widespread, the study’s authors predict that sharing individual employee pay ranges and how they’re determined will become more common as more pay transparency legislation is passed in North America.

Increased pay program transparency has led many employers to expect different behavior from employees. For example, 72% of employers said they expected employees to ask more questions about compensation. Fifty-seven percent reported anticipating more requests for pay negotiations, and 43% said they expected off-cycle pay changes for existing employees.

Employers’ expectations, however, may not match up with reality. The two most common employee questions are about pay positioning (80%) and pay management (72%), followed by visibility (56%) and compensation program terminology (44%).

According to Lindsay Wiggins, WTO North America Pay Equity co-leader, it makes sense for employers to worry that increased transparency will lead to employee discontent, especially following a period where many companies disproportionately hired workers higher on the pay range. However, she thinks such reactions can be mitigated. “By strengthening pay policies and HR/manager guidance to support pay decisions upon hire, for a promotion and during the annual review cycles, employers can reduce the risk of pay inequity,” Wiggins said.