LinkedIn Report: Pay has always been a confidential topic in the workplace. Employers fear that disclosing too much information about employee salaries could cause wage disputes, limit their ability to negotiate, and encourage competitors to poach talent. Employers usually avoid the topic unless it’s time to make a candidate an offer or give an employee a raise. But leaving people in the dark can make candidates uneasy and employees distrustful: most people incorrectly believe they’re being underpaid relative to their market position.
And now that it’s easy to share and see aggregated salary information on sites like PayScale and LinkedIn, companies are facing more pressure to own the conversation on pay.
The benefits of pay transparency may outweigh these fears.
Not only does it set salary expectations with candidates early on, transparency also clears up misinformation that could be hurting employee morale and retention. That’s because, when left in the dark, most people tend to incorrectly assume they’re being underpaid. Most importantly, transparency can help ensure fair pay across gender, race, and all other demographics, creating a more trusting relationship with all employees.
That may be why more employers are starting to proactively share salary information—and why many are planning to in the near future: 27% of talent professionals say their company shares ranges with employees or candidates early in the hiring process, and a further 22% say they’re likely to start in the next five years.
This year, LinkedIn released a report showing a rise in business cultures that support transparency in pay scales across the company.
They also offer a seven-step guide to establish pay transparency within your organization:
See how your pay stacks up.
Conduct an internal audit to see how your pay compares to competitors and whether you have any major pay gaps across gender, race, and those in similar roles. If you do find significant inequities, detail a plan to fix them—whether by immediate raises or changes to your promotion policies.
Decide how transparent you want to be.
There are many types and degrees of pay transparency—you could share salary ranges on job posts, share ranges with employees (for their own role or all roles), or even publish exact salaries. Determine what’s best for your company and get executive buy-in before bringing it to employees.
Solicit employee input.
Get your employees involved in the process. Share your proposed policy details and expected results with them across multiple channels. Give employees several ways to provide feedback and share concerns, from anonymous surveys to live Q&As and one-on-one discussions.
Develop clear compensation criteria.
Before rolling out pay transparency, make sure you can clearly answer what factors determine an employee’s pay, such as years of experience or past performance. Qualify what it takes to be at the minimum, midpoint, and maximum of the pay range.
Train managers to discuss pay appropriately.
Talking about salaries can be uncomfortable. Training managers how to answer questions and explain compensation policies can make it easier for employees to have these conversations and feel good about them.
Take it one step at a time.
A phased multi-year approach can make for a smoother transition. Consider sharing your plans and training managers in the first year, giving employees the salary ranges for their own roles the next year, and then sharing the ranges for all roles in the third year.
Communicate clearly as you roll out the policy.
Ensure employees have all the details they need and continue to reinforce the rationale behind transparency. Tying your policies to your company’s core values can strengthen both. For example, you can connect pay transparency to values like honesty, integrity, diversity, communication, or accountability.
Pay transparency around the world:
Here are some percentages of professionals who say pay transparency is very important to the future of recruiting and HR:
- US – 52%
- India – 57%
- China – 61%
- Canada – 55%
- France – 50%
- Italy 49%
- Germany – 34%
Early adopters are leading the way.
As it becomes easier for people to see and share salaries on sites like PayScale, Glassdoor, and LinkedIn, more companies are choosing to own the conversation by sharing salary information themselves. Currently, 27% of talent professionals say their company is transparent about pay.
Of those 27%, 67% of them share salary ranges with candidates early in the hiring process, 59% share ranges with employees, and 48% share ranges publicly on job posts. As the transparency trend gains further momentum, these numbers are expected to grow.
Companies fear disputes, but those who share salaries see benefits.
Fear of upsetting employees is by far the most commonly cited reason for not sharing salary ranges. Companies often worry that people will immediately ask for the high end of a salary range or become unhappy after seeing what others make.
According to talent professionals who practice it, pay transparency makes the hiring process more efficient by streamlining negotiations. It also helps ensure fair pay across gender and race, which is why many governments have recently introduced pay transparency laws.
“Pay transparency removes the distrust people have,” says engineering leader Leslie Miley, who has worked for the Obama Foundation, Twitter, and Apple. “As an African American, I’m always distrustful because all the data supports that I’m going to be paid less. If you come out and say ‘this is what our salary is, these are the ranges,’ that’s going to build trust.”
LinkedIn Survey Note:
We surveyed 5,164 talent professionals and hiring managers who self-identified as either talent professionals who work in a corporate HR/TA department or hiring managers who have some authority over hiring decisions for their team. These survey respondents are LinkedIn members who were selected based on information in their LinkedIn profile and contacted via email between September 18 and October 10, 2018.
Behavioral Data Origin:
Behavioral insights for this report were generated from the billions of data points created by more than 590 million members in over 200 countries on LinkedIn today. This analysis was performed during October 2018.
Learn more about LinkedIn’s report here.