In today’s evolving employment landscape, pay transparency is becoming increasingly important for businesses of all sizes. As more states implement pay transparency laws, companies are adapting to ensure they’re not only meeting legal requirements but also fostering a culture of fairness and equity by establishing pay ranges.

The Shift Towards Pay Transparency

The push for pay transparency has been driven by a combination of cultural shifts, and legal changes. Younger generations of workers expect transparency in pay, and more states have implemented pay transparency laws requiring employers to disclose compensation within job postings and/or when employees ask.

While some businesses may be adding pay ranges on a case-by-case basis, this ad hoc approach can lead to inconsistencies and potential issues down the line. Instead, you should consider building pay ranges for all current and future roles, ensuring pay aligns with the market and your overall compensation philosophy. Companies that are set up with comprehensive and consistent pay ranges in response to the shift toward pay transparency will also be better positioned to attract and retain top talent.

Lay the Foundation for Sustainable Growth

By establishing pay ranges, you’re setting the stage for scalable and equitable growth. This approach helps you avoid the need for temporary fixes and backtracking later on. Having pay ranges clearly defined impacts companies in meaningful ways that include:

1. Compliance with pay transparency laws

By proactively building a pay philosophy and ensuring that your salary ranges are consistent and compliant, you can avoid potential legal issues and fines associated with non-compliance.

2. Better-quality candidates

Job seekers are increasingly considering pay transparency when evaluating potential employers. By providing clear and competitive salary ranges, you can attract top talent to your organization.

3. Ease of scalability and forecasting

With well-defined pay ranges, you can reduce the workload on lean HR and recruiting teams who often must develop offers for each role on the spot or in reaction to negotiations. Those same pay ranges can be used by your finance team to help budget for future needs as your organization looks to scale.

4. Ensuring pay equity

Getting compensation right on day one is important for companies focused on pay equity. By using defined pay ranges and consistent guidelines to set compensation levels, you can reduce the biases that may come into play when setting compensation without guardrails.

Build Pay Ranges with Confidence

With compensation tools, you have the tools to build pay ranges that are informed by real-time market data, leveled for every job in your org, and aligned to your compensation philosophy to keep pay competitive, equitable, and within budget.

As you begin building pay ranges, consider:

1. What pay transparency regulations are relevant to your company?
2. What’s the impact on your current employees?
3. What should pay ranges be for new roles?
4. How will you communicate ranges with consistency?

Author Bio

Kyle Holm is VP of Total Rewards Advisory at Sequoia.

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