A new survey by WTW reveals that a broader cultural shift, not just regulations, is compelling employers to adopt greater pay transparency. While most firms are communicating pay ranges, fewer are disclosing the details of how pay is determined.
The poll of 388 US-based companies found that 82% of employers are either communicating, planning, or considering communicating pay ranges with employees, and 79% are doing so with external candidates. However, less than half of the respondents said they share how base pay is determined or progresses. Even fewer share how pay ranges are designed or managed, or an employee’s position within a given range.
The drivers of change
Regulatory requirements were cited by over two-thirds of employers as a driver for their pay transparency efforts. Company values and culture were a factor for 44%, while employee expectations were cited by 41%.
According to Lindsay Wiggins, WTW’s North America pay equity co-leader, these are signs of a “broader cultural shift” around communicating pay. This shift is happening even among companies not directly affected by the EU’s pay transparency directive. Wiggins notes that companies are recognising that increased pay transparency is becoming a new reality that can support their employer brand and create a competitive advantage in the talent market.
A previous WTW survey in 2024 of over 500 North American employers found that most had already implemented pay transparency, primarily due to regulatory requirements. Other reasons included company values and employee expectations.
Going beyond compliance
This trend is echoed by other industry reports. An Aon study found that only 19% of global organisations felt prepared to be transparent about their pay practices. A separate report by Mercer found that only 19% of US companies had a pay transparency strategy in place, even though most planned to share pay information.
Experts advise that employers should adopt a broader pay philosophy that goes beyond simply complying with disclosure laws. This includes establishing clear criteria for determining initial pay, as well as pay for performance, such as merit-based increases and bonuses. Benchmarking against industry peers and using market data can also help to clarify an organisation’s pay bands.