Pay Transparency Is Not Enough

Originally Published by Inc. 

New pay transparency laws have been passed in states across the country. Is the solution to workplace equality as simple as passing laws that require pay transparency? While this is one step in the right direction--giving leverage to employees and addressing pay inequality across gender and race--it really is just that: one step. Even New York Mayor Eric Adams admits "no law is perfect," and employers are already finding loopholes.

The modern-day trends of The Great Resignation, Quiet Quitting, and Quiet Firing all point to a larger theme of changing demands from both sides of the hiring line. If we zoom out to the bigger picture, the way we work needs to be modernized with systemic change. The employer/employee relationship is calling for a new social contract to be established that will mutually benefit all.

Real change begins with each step we take to bring more humanity into our workplace. One way we can do that is through what I refer to as the Greenhouse Model. The framework is rooted in what it means to be happy and authentically whole, so people are better equipped to weather life's highs and lows, allowing them to grow themselves and the company. There are four necessary greenhouse conditions: alignment, belonging, accountability, and commitment. When we look at pay transparency through the lens of these conditions, we can see that it can be done in a way that humanizes work in a sustainable way. 

Pay transparency alone will not solve the inequalities present in our workplace or fix what's broken in the way we work. Toxicity doesn't just disappear because employees can see that someone else in their department is getting paid more or less than them. 

What's Inside the New Social Contract that is Being Demanded?

It starts with what we can bring from the greenhouse elements to create a workplace where people actually want to show up for more than the paycheck -- a place they can believe in and feel they can be authentic.

Instead of prolonging the outdated workplace that is aligned for the few, employees are demanding clarity in communication, a sense of fairness, and workplace cultures that are more inclusive to and for all. This will help evolve companies to be more accountable by having clarity on what people are getting paid, what titles are being handed out, and how pay incentives and promotions are determined. It's ripe with accountability for all.

Unsurprisingly, as we've already seen, some companies are trying to skirt the new law by inserting broad pay ranges, removing top-paying positions from job boards, or using an outside firm for hiring. Companies using these tactics are basically not committed to creating workplaces where everyone feels a sense of belonging. As a job seeker, the best talent may start to use things such as pay transparency as a filter for the organizations where they want to work. It's an outward sign of accountability to a job candidate.

The Organizations that Embrace Pay Transparency & Use it to Narrow Gender & Race Pay Gaps can Attract Top Talent.

For employers, pay transparency may seem to be a hassle at first. Still, if done well, it can help streamline your hiring processes and, more importantly, be a competitive advantage to attract and retain talent. In a tight U.S. job market of two open positions for every person who is unemployed [Bureau of Labor Statistics], this can make a difference. In a recent Indeed survey, "80% reported that being paid fairly is a top consideration when accepting a new job," and "75% said they are more likely to apply for a job if the salary range is listed in the posting." And even more alarmingly, this survey uncovered that "55% of respondents lost motivation when they learned they were being paid less than their coworkers" and "50% said their trust in the company decreased."

Pay transparency is just one of the measures that can help improve the employer/employee relationship. Progressive employers understand we need to make new social contracts to build mutual trust, showing they're being mindful of everyone's interests. [Answering both questions: What's in it for me? and What's in it for all?].

We know that companies that treat people as investments rather than expenses have consistently outperformed the S&P 500, even in turbulent economic times. When employees feel cared for, they're 3.2 times more likely to be happy at work and 3.7 times more likely to recommend their company to others [LinkedIn]. Being transparent with pay will show people you value them, but don't just stop there. Create a culture of accountability, alignment, belonging, and commitment, so you have the right conditions for all greenhouses--the company itself and the people within--to grow together. 

learn more about creating positive cultures that will attract & retain top talent.