Once upon a time in the workplace, sharing information about how much money you make was seen as taboo, so people were hush-hush about their earnings. Salary transparency was unheard of and those who talked about compensation were seen as rude braggarts.
Times have changed, and with Gen Zers increasing their presence in the workplace, pay conversations are no longer seen as taboo. In fact, they’re becoming more and more normalized: According to a survey conducted by Bankrate, 42 percent of Gen Z workers have talked to colleagues about their earnings—compared to 31 percent of those in Generation X and 19 percent of Baby Boomers.
But the desire to discuss pay doesn’t end there: Job seekers want to work for companies that are just as transparent about pay as they are because when organizations don’t make compensation data public, this talent assumes they aren’t being paid what they’re worth. A Payscale study found that a whopping 50 percent of workers are willing to leave a job if they believe they’re not being paid fairly, so failing to practice salary transparency can have a devastating impact on retention.
And the impact of pay transparency doesn’t end there. The following are five good recruitment reasons to adopt a salary transparency strategy at your organization.
5 Benefits of Pay Transparency for Early in Career Hiring
Since younger workers are so comfortable with sharing their own salaries, it’s not surprising that they want to work for organizations that value pay transparency. In addition to appealing to young talent, the following are five benefits of pay transparency for early in career hiring.
1. Increasing Retention
When employees suspect they're not receiving fair compensation, this can ruin their experience at your organization—and make them much more likely to look for employment somewhere they believe they'll be paid what they’re worth. Salary transparency can help put workers' minds at ease and increase your chances of retaining them.
2. Closing Pay Gaps
Despite the strides underserved groups have made in the workplace to gain opportunities, there are still sometimes disparities in compensation that need to be addressed. When companies make salary transparency part of their culture, it helps to correct any gaps in pay because all employees know what they're supposed to be making. In order to retain talent from underrepresented groups, companies will need to correct any salary inequities that may exist.
Also, when salary information is out in the open, it can help companies better position themselves to reach their DEIB goals because pay transparency becomes part of their employer brand, which increases the interest of job hunters from diverse groups. As a result, it's not enough to adopt salary transparency in the workplace; companies need to make it clear to the public that underserved communities are compensated fairly.
The Early Talent Sentiment Report
3. Reducing Salary Negotiations
Salary transparency can help to streamline hiring because candidates in the funnel go through the process being aware of what they'll be making if they land the job, so there's no need to engage in salary negotiations—a process that can be quite lengthy. Also, when candidates know what they’ll be making up front, they can decide if they want to work for a company before even applying for a position. This saves you the hassle of dealing with candidates dropping out of the hiring funnel when they find out how much they’ll be making later in the process.
4. Promoting Employee Cohesion
Making workers' salaries public can go a long way toward cutting down on toxic workplace politics that people may engage in when under the impression that their colleagues are earning more for unfair reasons. Without jealously-fueled rivalries based on perceived compensation slights, employees can become more unified and focus on working together to complete the tasks at hand. This can create a deeper sense of teamwork that helps increase productivity and innovation.
5. Increasing Employee Satisfaction
When there’s no salary transparency in an organization, many employees may make assumptions about how their compensation measures up to what their colleagues earn—and if they assume they’re making less, it can fan the flames of negativity and feeling unappreciated. When workers know that they’re being treated fairly, they become more satisfied with their job, which leads to a happier and less stressful workplace environment.
If you’re concerned about Gen Z hiring, salary transparency is a must. Not only will this practice help you attract the early in career talent you need, it will also help retain these workers and reap numerous other recruitment benefits.
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