Pay Transparency: What It Is and Why Job Search Site Indeed is Pushing For It

“Salary is one of the most important pieces of information that job seekers value when looking at a job, and having more insight into expected salary ranges is one of the top pieces of feedback that we receive from job seekers,” Indeed posted on its website this summer. “We encourage all of our employers to include a salary range in their job description. Jobs posted without employer-provided pay data may result in an Indeed estimate to be displayed.”

Indeed is just the latest among fierce advocates of pay transparency — the practice of posting salary ranges and estimates within job descriptions. Increasingly, companies, individuals and locales are underscoring the importance of pay transparency.

Why is pay transparency so important?

From a job seeker’s perspective, pay transparency has numerous benefits. In fact, it can even guide their job search. Without this crucial information, job hunters can feel like they are wasting their time on a grueling hiring process, only to discover that the offer doesn’t meet their expectations.

According to research in Harvard Business Review, “Studies indicate that, at least in the short term, pay transparency may have some important benefits for employees and their employers. For example, pay transparency has positive impacts on employees' perceptions of trust, fairness and job satisfaction and has been found to boost individual task performance.”

For employers, pay transparency plays a key role in attracting top talent. This is especially important in light of the Great Resignation and War for Talent, when employers need to step up their game to recruit and retain quality workers. This goes a long way in improving their brand and reputation.

Pay transparency laws.

Several states and cities have established laws regarding pay transparency. The following states currently have some form of pay transparency laws (or are home to certain cities that do). Bear in mind that these laws vary considerably in terms of what they entail. (This list is being updated regularly.)

• California
• Colorado
• Connecticut
• Maryland
• Nevada
• New Jersey
• New York
• Ohio
• Rhode Island
• Washington

Making pay transparency effective.

As HBR notes, while the intention may be well-meaning, pay transparency practices aren’t always as effective as they should be. For example, some employers post huge salary ranges in job descriptions, making it difficult for job seekers to estimate what they can expect to receive. Moreover, the practices could affect work cultures, driving a sense of competition among employees who learn how much their colleagues earn.

This is why organizations must be careful in their approach to pay transparency, making sure they are tying their strategy to their overarching business objectives and incorporating it into a holistic talent management program. Pay transparency alone won’t change the culture — it must be one piece in a comprehensive approach.

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This article reflects the views of the author and not necessarily those of Fairygodboss.

Are you pushing for pay transparency in the world of work? Share your answer in the comments to help other Fairygodboss members!