Is Pay Transparency a Strategic Lever We Can Pull to Gain the Trust of Our Workforce?
Compensation has been viewed traditionally as a taboo topic in which only you and your employer can be aware of what your pay is, what salary range was offered to you, and all other terms of the compensation package. However, trends have shifted towards employers being more open about the compensation packages they offer, and there even has been some regulatory pressure for employers to disclose this previously private information of what you can earn for the work that you do. Regardless of the past, companies need to decide what transparency means to them and ask themselves: Is pay transparency a strategic lever we can pull to gain the trust of our workforce?
The first part of the question is what truly aids in making the decision of using pay transparency as a strategic lever. Pay transparency, as defined by Payscale (2023), is "the practice of openly sharing information about how pay is set, such as salary ranges, pay differentials, and compensation policies that ensure fairness. Pay transparency is inclusive of pay communications such as training managers on explaining pay decisions to employees." Companies use these elements of pay transparency often to source, recruit, and retain their talent as it improves the employee's perception of the company on the ground of fairness and equity. Pay transparency is not just posting the salary range and giving the numbers employees want to see. It is giving the WHY and HOW behind the pay decisions that are made. For example, Jenna sat down for her year-end review and was told she was getting a 6% salary increase. Although Jenna was pleased with this increase in her salary, she feels out of the loop as to why they chose this value for the increase, and what she did to deserve a raise. Knowing this information helps Jenna feel more secure and confident in this raise. Additionally, it tells her what her employer values in top-performing talent so that she can work toward that for next year's review and potentially get another increase in her salary.
However, if employers are not consistent with their pay rules and reasonings, there is risk involved and that trust is likely not being built. This is why training your managers to have difficult conversations, especially surrounding the topic of compensation, is vitally important. Any misconstrued or misunderstood piece of communication involving the employee's compensation can result in huge issues including distrust, retaliation, attrition, decreased motivation, and so much more. This goes to show the importance of streamlined and organized training and communication plans for management or anyone who has a hand in compensation conversation.
A study done by Korn Ferry shows that "65% of organizations in Korn Ferry's recent Global Total Rewards Pulse Survey said they expect pay transparency to be the biggest challenge to their rewards strategy in 2026 and 2027 (Korn Ferry, n.d.)." The topic of pay transparency has had and will continue to have a large impact on organization's people strategy, and so I pose a question:
In the future, will pay transparency be enough to build trust, or will employees expect employers to demonstrate pay equity as well?
Citations
“Pay Transparency in the Workplace: A Comprehensive Guide.” Official Talent & Organizational Consulting Partner of the Los Angeles Olympics, Korn Ferry, 5 Sept. 2025, www.kornferry.com/insights/featured-topics/leadership-articles/pay-transparency-in-the-workplace.
“Pay Transparency: Salary Ranges, Laws & Communication Strategies.” Payscale, 2026, www.payscale.com/topics/pay-transparency.
