Recent pay transparency laws are pushing many employers to change their practices, but workplace culture may take longer to catch up. One way to gauge your organization’s progress on the road to transparency is to assess how employees and managers talk about compensation.  

If you’re “prepared with the right tools, the right data” to answer employees’ questions and have candid conversations around pay, you may be getting closer to trust-building pay transparency, said Katie Stukowski, vice president of solutions consulting at Salary.com, at SHRM25 in San Diego.  

The value of transparency is “more about the conversation” HR leaders and managers have with employees “than it is about the legislation” mandating that organizations post salary information.

Pay transparency compliance is easy, according to California employment attorney Heather Bussing of Bussing Law, who joined Stukowski on stage. “Make your words and actions match and solve the problem,” Bussing said.  

People associate laws with annoyance and red tape, but Bussing pointed out that pay transparency laws are in place to solve problems.  

“It’s important to understand that pay transparency is part of pay equity,” Bussing said. “And pay equity is part of discrimination law.”

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Some elements of pay transparency, such as including salary ranges in job listings in certain states, may not be optional, but organizations will differ on the “spectrum of how comfortable they are” with transparency, Stukowski said.

Transparency and Culture

Employees, however, value transparency. “Eighty-eight percent of all employees, no matter their generation, are looking to join companies that actually have a culture that infuses transparency,” Stukowski said. Culture is especially important to Generation Z employees, according to Forbes.  

“Pay transparency is about being able to answer the questions that your employees or the people you’re looking to hire have around — who you are as a company,” Stukowski said. “What’s their opportunity to earn? What’s their opportunity to grow? And, more importantly, what’s your culture?”

Nonetheless, “pay is still ingrained in every single conversation and every single choice that your employees are going to be looking to make,” she said.

HR leaders also can’t forget that “your employees have the data” to understand the market rate for their position, Bussing pointed out. They’re also discussing their salaries — and it’s illegal to tell employees they can’t do so, Stukowski noted.  

“Even though employees have access to the data, we shouldn’t put that on them,” Bussing said. After all, they won’t know the particulars of how pay grades play out in your organization. “The one driving the narrative has to be the employer,” she added.

What does shaping that narrative look like in practice? First and foremost, “you should have some form of pay philosophy,” Stukowski said, emphasizing the logic behind why employees are paid what they’re paid and how it’s related to the job market.  

These conversations are crucial, but “it’s a very tough thing to train managers” to discuss salaries effectively, she said. Instruct managers to tell employees, “I don't have those answers now, but I will get them for you,” she advised. Emphasize having a calm, constructive, and informed conversation. Then, managers should “walk them through how the position that they’re in is graded and what those compensatory factors are.”

Even so, HR leaders sometimes “become the scapegoat for when the answers aren’t given in the way that employees are looking for,” Stukowski said. It may not be realistic to count on every manager, but instead, consider tapping a few people “who can have those conversations better.”

Despite what you may think, “employees often don’t necessarily need to be told you’re going to change my salary to be exactly what I want it to be. They’re going to be comfortable because you actually were happy to have a conversation,” she said.

Acquiring and Leveraging the Right Data 

Additionally, “you can’t base transparency off of data that you’re not collecting or you don’t have enough data to support,” Stukowski said.  

“Most of your executives, especially if the CFO is in the room, all they care about are dollars and cents,” she said. However, “the right data ... removes the ability for them to actually argue.”  

So how should HR leaders aggregate the information they need to move toward equitable pay and have tough conversations with leadership?

First, assess which positions are comparable, Bussing explained. That doesn’t just mean benchmarking against the same job titles but assessing the actual “work, skills, effort, and responsibility” of each position to decide which to compare, she cautioned.  

“If you’re doing a pay equity analysis based on job titles — that are based on pay — you are not comparing work with pay,” Bussing said. That method gives you “a self-licking ice cream cone.”  

Extend this analysis to every protected characteristic or category to “show the statistical correlation between protective factors and pay,” she said. You should observe gender equity for comparable men’s and women’s salaries.

You should then investigate whether the inevitable pay gaps you find “are justified by legitimate business decisions, and that includes experience, performance, where they live, cost of living,” and budget, Bussing said.

“Having a pay gap is not illegal,” Stukowski said, “if you can have the data to account for why that gap might exist.”

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Beyond Transparency Basics

Given how much the job market has changed, many organizations have begun to undertake compensation studies. “If you haven’t reviewed your pay ranges since the pandemic, throw them away,” Stukowski said.  

Yes, that can mean starting over.  

“We need to redo our job descriptions. We need to think about the nature of the work. We need to then benchmark those to external data and then look at where our employees are paid comparably,” she said. “And then, let’s use that to create what the new ranges should be, because it’s not just about being internally equitable, it’s also about being externally competitive.”

It’s not enough to understand your organization’s practices,” Stukowski said. “There will be times you need to hire based off the market. But then you will need to understand: What does that mean for your internal pay? And how do we make strides to continually close that compression gap that will always be there?”

All of this is labor-intensive. “But it’s worth it,” Bussing said, “because you’re going to end up with a better culture, fair pay, and zero risk because you’ll have pay equity.”

Eventually, “transparency builds trust, fairness builds trust, and people want to stay” at your organization, she said.