Pay Transparency: How Employers Can Break the Taboo

Earlier this year, the British Columbia government announced new pay transparency legislation to address systemic discrimination in the workplace and move closer to equal pay for equal work. The province said it would undertake consultations with Indigenous organizations, public and private sector employer groups, business and union organizations, equity-seeking organizations and groups that work to create equal opportunity for women, as well as employers who’ve already established pay transparency policies. However, in Ontario, there are no laws requiring employers to be transparent around pay when hiring.

Several U.S. states including California, Colorado, New York City, and Washington, have also introduced pay transparency laws to address the gender wage gap, and have been calling for Canada to do the same. Many employers across North America are posting salary ranges for job openings, even in regions where it’s not required by law. This practice not only addresses discrimination in the workplace, it helps organizations remain competitive and attract the right candidates for certain roles.

What is Pay Transparency?

Pay transparency is the practice of sharing salary and compensation information between employers and employees, or even the general public. Companies that practice pay transparency disclose salary ranges in job descriptions and provide overall compensation plans to employees, which gives employees an idea of what they can expect. It also helps them make informed decisions about job opportunities and salary negotiations, and holds employers responsible for fair compensation practices.

According to Statistics Canada, women working full-time and part-time make 89 cents for every dollar men make.  More organizations and government agencies are considering pay transparency in an effort to bridge the gender wage gap and promote equality and fairness in the workplace.

Pros and Cons

Salaries have been a touchy subject for companies and for some, disclosing compensation is still considered taboo. Some studies even find that pay transparency may lower compensation overall, even as it removes inequities. Regardless, there’s a growing movement around this practice.

When salaries are hidden, biases can influence pay decisions, leading to disparities based on race or gender. In this case, pay transparency can help reduce discrimination by identifying wage gaps based on these factors. The practice also promotes fairness. By sharing information about compensation, workers can ensure they’re being paid fairly for their work and hold their employers accountable to take corrective actions to create a more equitable workplace. This builds a stronger sense of trust and fairness between employers and workers, helping companies attract and retain employees that value transparency in the workplace, which can improve morale and job satisfaction.

Preparing a New Policy

Implementing pay transparency requires a strategic approach that should take several factors into account, such as legal requirements, employee expectations, and company culture. Begin with establishing a philosophy around compensation that aligns with your business objectives and values. This should include transparent policies regarding how your company determines compensation.

Create clear and concise job descriptions that outline responsibilities, experience, skills, and knowledge required for each position. This provides a clear understanding of the qualifications and expectations for each role. Then add salary ranges and structures. Disclose this information for each position and provide a clear explanation of how salaries are determined, which helps employees understand how their salaries compare to others in the company and provides a transparent basis for negotiations.

Monitor and address any wage gaps to ensure all employees are paid fairly for their work and experience. Conduct regular pay audits and make necessary adjustments to salaries. Also consider educating employees on how your company’s salary structure works and how they can negotiate their salaries.

Overall, implementing pay transparency can be an effective way for companies to promote fairness, reduce discrimination, and improve communication with employees. It does, however, call for a strategic approach. Contact us so we can work together to create solutions that work best for you and your organization.

Suggested Reading

How pay transparency can help close wage gaps in the workforce

Pay transparency legislation spreading across U.S.

Additional Resources

Statistics Canada | Measuring and Analyzing the Gender Pay Gap: A Conceptual and Methodological Overview

B.C. moves toward pay transparency measures