What are the benefits of pay transparency?

 

For many years, organisations have kept salary information a closely guarded secret. Not only might displaying salary when advertising jobs lead to pay inflation at job-offer stage, so the theory goes, it could also cause existing employees to feel underpaid and request increases.

Yet there are many reasons why displaying salary details and expectations in job adverts, and engendering a wider culture of pay transparency, makes sense. Perhaps the most compelling reason is being able to attract the right people to a role, says Emily van Eyssen, founder of Remote Recruitment.

“Not being upfront about salaries in job adverts can cause all sorts of problems,” she says. “Candidates might assume the pay is too low and not bother applying, or they might go through the entire process only to walk away when they realise the salary doesn’t match their expectations. It wastes time for both sides.”

Gartner’s 3Q24 research, published in December 2024, backs this up, reporting that 72% of candidates in the final quarter of 2024 said they were more likely to apply for a position if the job description included the role’s salary. This had increased from 62% in early 2023.

Anthony Poole, partner in talent solutions at Aon, says: “Increasingly, it is a social issue: future talent and in particular younger generations demand transparency. Advertising a salary range can build trust and demonstrate openness and a commitment to equality, which are valuable aspects of the employer value proposition.”

Conversely, failing to disclose salary details can damage an employer’s brand, says Ronni Zehavi, chief executive officer (CEO) and co-founder at HR technology firm HiBob. “Candidates may perceive a lack of transparency as a sign of pay inequity, making the company seem less trustworthy or competitive,” he says. “Providing clear salary information in job adverts builds trust and credibility, helping businesses stand out in a competitive job market and secure the best talent efficiently.”

In an age when online reviews of employers are commonplace, a negative experience around salary expectation can prove damaging, says Ethan Diver, a solicitor at Taylor Walton Solicitors. “It is certainly possible that applicants who have bad experiences arising from a lack of pay transparency will post negative reviews about the employer,” he says. “There is not a lot that employers can do about this either, particularly as the Equality Act 2010 prohibits employers from requiring employees to keep their salary confidential.”

Talent attraction advantages

But there are also practical benefits for employers from a recruitment perspective. Data from Michael Page’s 2024 Talent trends report, published in April 2024, suggests 60% of UK organisations find hiring challenging, with 49% citing mismatched salary expectations as a key factor. Sophie Gorvett, operating director at Michael Page, says: “While salary isn’t the only consideration for job seekers, having upfront discussions around pay can help businesses manage expectations, streamline recruitment processes and reduce the risk of losing out on strong talent.”

Caroline Fischer, UK country manager at recruitment firm Welcome to the Jungle, says its own figures found that roles with public salaries saw 60% more applications in 2024 than those without, up from 40% in previous years. “Jobs that list salaries receive significantly more applications than those that don’t,” she adds. 

But this can also lead to benefits in creating a more egalitarian workforce, and reducing the potential for gender salary gaps. “Our data shows that female candidates set their minimum salary expectations lower than male candidates, even when they have the same years of experience,” she adds. “This gap widens as seniority increases: while there’s no difference at entry level, female candidates expect 5% less at junior-mid level, 7% less at mid-senior level, and 11% less at senior-expert level. Without clear salary information upfront, these disparities can persist, reinforcing existing pay gaps.”

Transparent corporate culture

A wider commitment to pay transparency can also help create a fairer corporate culture, which can help to create an environment in which people want to work. “Committing to pay transparency is fundamental to building a fair workplace,” says Zehavi.

“Employees want to know their employer is working to eliminate pay disparities in gender, ethnicity and age. They also want to know how their compensation measures up to comparable roles with similar experience levels. Creating cultures of fairness and equity is key to attracting and retaining top talent, driving productivity and engagement, and leading the future of work.”

Being open and honest around an organisation’s approach to salaries can help to build trust with employees, says Chris Britton, people experience director at employee engagement firm Reward Gateway Edenred. “Even if people don’t like the answers, knowing the workings out and how you get to the numbers shows a level of openness which people will respect,” he explains. “Having trust and transparency is a healthy set of ingredients for a high-performance culture.”

This is also the direction of travel being adopted in other countries, including through the 2023 EU Pay Transparency Directive (PTD). While this does not apply directly in most of the UK, it is possible that it may need to be implemented in Northern Ireland, and multi-national employers in Great Britain will come under pressure to treat their UK employees consistently with those in other European countries, says Hannah Grayson, senior associate in the employment team at law firm Lewis Silkin.

“It introduces a requirement for employers which have 100 or more employees to report on various gender pay gap statistics and introduces several individual rights, including to request information, a requirement to advertise pay ranges, and a prohibition on asking job applicants about their current and past pay,” she says.

Employers must disclose information on initial pay or its range in any published job vacancy notice, prior to the job interview or before any employment contract is concluded, she adds.

Salary benchmarking

For employers looking to go about implementing pay transparency, a starting point is to benchmark how well the organisation compares, factoring in role level, job function, location and the type of firm. Justine Woolf, director of consulting at Innecto Reward Consulting, says: “Benchmarking salaries is an art. [Employers] need to make sure that [they] are referencing data that reflects the talent pools [they] are fishing in, and ideally should come from sources that have robust methodologies that ensure [they] are comparing apples with apples.”

But it is also important to avoid relying entirely on market data. “Using other factors such as a market median range, experience levels and performance levels gives a more rounded view of the benchmark,” she says. “A lot of organisations use a sliding scale; for example, between 80% to 120% of the market range, as this builds in opportunity for growth, stretch roles and development.”

Once an organisation has explored the wider market, it must then look at their own people analytics, says Zehavi. “Conducting pay gap analyses on similar roles within the [organisation] will tell the business where changes need to be made, ready to communicate with managers,” he says. “This [organisation]-specific compensation information will help firms identify any gaps, enabling them to create a data-driven action plan that rectifies any inconsistencies on a rolling basis.”

An important principle to remember is to price job roles rather than people to avoid perceptions of unfairness or bias. 

There are signs that organisations may be moving towards a more transparent model when it comes to pay. “In 2023, on Welcome to the Jungle UK, only one in five job listings included a public salary; by 2024, this had risen to nearly one in four,” says Fischer. “Greater transparency signals an [employer’s] commitment to fairness and equity; values that resonate with today’s workforce.”