As pay transparency gains momentum in the U.S., a growing number of employers face laws restricting them from asking candidates certain types of salary-related questions. Salary history, for example, is off-limits in many states.

Talent Board’s latest benchmark research reveals that employers are finding their way around some of these restrictions. For instance, while 6% of the employers we surveyed in 2021 completely avoided salary-related questions, 80% did ask candidates about their salary expectations. Of course, not all of these employers were subject to transparency laws, but the figure is still telling.

Equally telling are the figures from the candidates we surveyed. (Each year, we survey many more candidates than employers about their recruiting experiences.) Last year, 33% of candidates told us they were asked about their salary expectations; 17% were proactively informed about the salaries of the jobs they were interested in without having to request this information; and 8% were asked what their most recent salary was.

Interestingly, among the candidates who were given salary information without having to ask for it, their perception of the fairness of their interviews jumped 30%. This is just one of pay transparency’s positive impacts on the candidate experience and employer brands.

The Benefits of Transparency

There’s plenty of debate surrounding pay transparency. What’s not up for debate is the fact that pay transparency is a competitive differentiator for employers looking to engage and hire new talent. As research shows, pay is one the top considerations for 63% of adults in the U.S when they’re looking for a new job, and more than half of all workers use salary to decide whether or not to even apply to a job.

Pay transparency also gives employers a powerful set of business benefits including greater diversity, improved productivity, and more cohesive workforce. A 2021 HRMorning article states, “Employees who know their colleagues’ pay perform better than those who don’t. When employees know they’re paid fairly, they naturally work harder. They feel the need to perform better and meet their goals to justify their pay to themselves, their colleagues and their managers. Pay secrecy has the opposite effect.”

Conversely, a lack of transparency puts employers at risk of losing valuable talent, a risk few can afford these days as workers continue to leave their jobs in record numbers. In fact, employees are 50% more likely to leave their company when pay transparency is lacking, and those who stay are more likely to think they’re underpaid even if they aren’t. So detrimental is a lack of pay transparency that nearly 60% of employees who are paid at their fair market value believe they’re paid below market; and an astonishing 42% who are paid above market believe they’re paid below market. These faulty perceptions can be highly corrosive to employee productivity, engagement, morale, and retention.

Despite the evidence in favor of pay transparency, employers continue to be divided in their responses to it. Some embrace it. Others resist it. Some have even chosen not to promote jobs in states that have passed transparency laws, so they can avoid opening up about their pay rates.

No matter which side of the debate your company is on, there’s no putting this genie back in the bottle. So, ready or not, pay transparency is coming!

For more insights into what distinguishes a great candidate experience, download our latest research report. And be sure to check back here soon for my post on Key Takeaway #10 from our 2021 benchmark research, “The Business Impact of the Candidate Experience: Referrals.”

Be safe and well.

Kevin W. Grossman, Talent Board President

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