Salary Transparency: Is Your Organization Ready?
By Edgility Consulting
Summer 2023
At the start of 2020, several organizations did an about-face regarding existing business practices. They were either forced or chose to reshape policies, oftentimes allowing employees to work from home, increasing the number of sick days, or taking a closer look at equity practices.
Fast-forward to 2023 when many organizations are advancing several new modifications, not only with respect to remote and hybrid work but also with respect to salary and benefits transparency. In a recent LinkedIn article highlighting salary transparency, many states are legislating this for any job opening. In part, this trend recognizes that gender, race and wages are deeply intertwined, with salary transparency a path to provide greater equity. In certain cities, like New York, in fact, it’s becoming the law to publish salary ranges. However, many organizations still oscillate when disclosing salaries or withholding them. Smaller organizations and non-profits, in particular, may feel unprepared, unsure or unaware of the value to publishing salaries, while embracing equity and inclusion practices in other parts of their hiring processes. Historically, organizations have expected candidates to negotiate salaries, which has disproportionately affected women and people of color who either negotiate lower salaries or don’t get the higher salaries they negotiate.
The following provides some guidance about why salary transparency matters:
First, Publishing Salaries Benefit Women and People of Color
Employers and potential hires often expect to engage in a bargaining period regarding pay during the interview process. Lack of a transparent, consistent and equitable approach to salary negotiations are a substantial part of the reason why wage gaps persist. A woman or person of color asking for a raise or higher starting salary may solicit a different reaction than a White male.
In a study done by the University of Virginia, the research revealed that in instances where hiring managers were presented with people of color attempting to negotiate higher salaries, hiring managers responded unfavorably carried an implicit bias that they should be happy with the compensation offered. The study results showed that white and black candidates were equally likely to try to negotiate their salary. However, evaluators who scored high for racial bias believed that black candidates had negotiated more often than white candidates. This false perception, likely based on the biased evaluators’ expectation that black candidates would and should settle for less, led them to penalize black candidates for negotiating by granting fewer salary concessions. In fact, each time a black candidate was perceived to have made an offer or counteroffer, participants high in racial bias gave them about $300 less in starting salary, on average. By contrast, evaluators who scored low on racial bias had more accurate perceptions of candidates’ negotiating frequency and granted more equitable salaries as a result.
This implicit bias demonstrates the invisible forces that continue to impact equitable and fair wages and compensation and perpetuate the wage gap for women and people of color. One solution to help offset such bias is including salaries in the job description and otherwise publishing salary data in advance of interviewing.
Second, Salary Transparency Can Attract a Strong, Diverse Talent Pool
61% of Americans say they are more likely to apply for a job if the salary is published. “Organizations might be hesitant to show their hand upfront and show where they fall in the marketplace. However, imagine if you miss out on a candidate over the difference, of say $20,000, who can have a big impact on an organization over several numbers of years. Naturally, most nonprofits and charter schools are thinking about budget, but it’s also critical to look at the big picture and the amount of impact someone can have over time. Salary transparency can signal what organizations think candidates are worth.” shared Ron Rapatalo.
Third, Salary Transparency Increases Employee Satisfaction and Trust
Glassdoor published a report citing that 70% of employees believe that salary transparency is good for employee satisfaction. More transparency around salary may have a positive
impact on business performance too, according to employee sentiment. Nearly three-quarters (72 percent) of employees believe salary transparency is good for business. What does this mean? Employers may want to consider the risk of losing talent when there is less transparency around pay levels and how pay is determined: Nearly half (49 percent) of employees feel they must switch companies in order to obtain a meaningful change in compensation. In a competitive job market (whether by geography or technical expertise like accounting, salary transparency can make a meaningful impact on staff retention.
Publishing salaries will motivate organizations to dive into their compensation practices and closely examine how salary impacts hiring and overall employee satisfaction. Additionally, it will help narrow the gender and race wage gap. Salary transparency will be a necessary lever to attract and retain a diverse talent workforce.
Founded by Allison Wyatt and Christina Greenberg, Edgility is a talent services firm that helps mission driven organizations bring practice and structure into alignment with their values. Through compensation and talent management consulting and executive search practices, Edgility partners with clients to build intentional equity. Learn more about Edgility here.
This post is part of the America Achieves Talent Summer Series. America Achieves is a national nonprofit organization founded in 2011 to strengthen democracy by building educational bridges to the middle class and re-establishing the link between work and opportunity.
In early 2023, America Achieves selected Bolster, Edgility Consulting and LER Consultants (LER) and DGW Consulting Group (DGWCG), all nationally recognized talent sourcing and executive leadership firms, to participate in a philanthropically funded national talent pipeline pilot project known as the Collective Impact Talent Initiative. The Collective Impact Talent Initiative builds upon America Achieves’ work with equity-centered economic growth and workforce regional coalitions through the Commerce Department’s Build Back Better Challenge and Good Jobs Challenge, both of which were part of the Biden Administration’s American Rescue Plan. The Collective Impact Talent initiative, with its partners, provides inclusive, place-based regional coalitions from across the country, from upstate New York and Central Valley California, to Virginia and Texas, among others, with individualized and capacity-building support to source, recruit and hire the key diverse talent needed to drive the regional coalitions’ innovative and bold visions of equity-centered economic growth and workforce development. The Collective Impact Talent Initiative is grounded in the belief that coalitions and their work are only as good as their teams and people. You can learn more about the Collective Impact Talent Initiative by going to catalyzeblog.americaachieves.org/talent_initiative or by emailing catalyze@americaachieves.org.
