Pay parity and transparency have become driving factors for many job applicants—here’s how HR leaders can make progress and keep their organizations competitive.
By Maggie Mancini
Despite the knowledge that pay equity is crucial to attracting and retaining talent in today’s competitive job market—even more important than the pay rate itself—34% of companies do not have a pay equity strategy in place, according to beqom’s 2024 Pay Equity Report. More than half of organizations even doubt that they comply with global standards. Further, 45% admit that their approach to pay equity—or lack thereof—is hindering their ability to attract top talent.
“Pay equity builds trust and morale, and many employees prefer knowing they are being paid fairly compared to their peers rather than having a slightly higher salary elsewhere,” says Marie-Camille Ropert, human resources business partner at beqom. “This has become a deciding factor for many job applicants, who now ask about companies’ fair pay practices. Good practices can help companies attract talent.”
Companies that regularly conduct pay equity analyses and proactively address problems foster a more inclusive workplace, she says. Pay equity practices demonstrate a commitment to fairness and equality, helping build workplaces where employees are paid fairly.
For organizations that are leading the way in the push for pay equity, HR leaders are making progress by leveraging a few key strategies, Ropert says.
- Companies are establishing more transparent compensation policies. This includes documenting and communicating how pay decisions are made and making this information accessible to all employees. This also includes conducting pay audits to identify and address pay disparities.
- Organizations are moving away from annual pay equity analyses. “Rather, organizations are considering pay equity in all their compensation-related decision-making processes,” she says.
- Leaders are becoming more proactive in providing equal opportunities for career advancement. HR leaders are routinely reviewing their hiring and promotion practices to ensure equal representation across their organizations.
- Companies that have achieved pay parity are focused on improving gender pay gaps. This is typically done by increasing the number of women in top-earning positions and the number of men in lower-earning positions.
“With pay equity and pay transparency legislation being implemented globally and on a state-by-state level in the U.S., companies are introducing more policies to tackle pay inequity,” she says. “With the push for pay transparency, employers need to be prepared. In regions such as the EU, Australia, Japan, Canada, and the U.S., legislation focuses on employees knowing their own pay levels and how their pay is determined.”
Transparency legislation in the U.S. and Canada mandates that applicants know their expected pay ranges. Further transparency is expected through the EU pay transparency directive, where employees should know the average pay of their peers, and companies must proactively remind their employees of their right to that information annually, she says.
The research also finds that pay transparency is one of the top ways that companies are advancing pay equity. With 85% of Gen Z employees unlikely to apply for a job without a salary listed, this push for pay transparency has helped organizations that want to be more open about their pay practices find the courage to do so and secure the budget to implement solutions that promote pay equity, Ropert says.
“With increasing pay transparency, companies don’t want any surprises at the end of the year,” Ropert says. “Interestingly, companies that have started publishing pay gaps monthly can see pay gaps reappear if they have not fully eradicated underlying biases. No one consciously decides to pay a certain demographic a lower salary for equal work, which is why these inequities are often hard to spot without data-driven support.”
She explains that high-performing women are often not paid at the same level as men with the same performance level, and women tend to be penalized more for performance that does not meet expectations than men. These issues can be difficult to detect without the right tools to effectively analyze them.
The report finds that 70% of companies have conducted pay equity analyses that uncovered wage discrimination, promotion disparities, below-market salary ranges, pay compression, and gender pay gaps.
It’s important for companies to be vocal about pay equity because sometimes there is a disconnect between employees’ perceptions of pay equity within the company and its actual pay equity practices.
“The more transparent companies can be, the better for everyone,” she says. “By setting clear, measurable goals for pay equity and tracking progress, employers can see where improvements are being made and where they need to focus more of their efforts. Communicating this progress helps employees understand the strides being made.”
Data-driven feedback allows organizations to identify trends and disparities and address them as they appear. For example, tracking whether people within a certain demographic are leaving specific job roles or locations at a higher rate than others may indicate a lack of inclusion in those roles. Once those trends are identified, organizational leaders can investigate what aspects of the role are causing higher attrition rates among that demographic and take corrective action, she says.
“Everyone wants to know they are being paid fairly, and if companies don’t communicate effectively, it is hard for employees to feel fairly compensated,” Ropert says. “We always say, ‘don’t let perfection get in the way of good.’ Start with what you have and work from there.”
