Don’t fear pay transparency

Don't Fear Pay Transparency: The Case for Salary Disclosure

“If your pay is so competitive, why not tell us what it is?”

If you have spent any time on the web or LinkedIn recently, you are likely to have come across discussions surrounding pay transparency. The topic is fueling intense debate in the recruitment sector, and it's not just job seekers pushing for change-governments and lawmakers are taking action as well.

And it is not just spoiled-for-choice candidates putting pressure on employers to disclose salaries upfront. While employees have long advocated for better working conditions, flexibility, and benefits-especially post covid, pay transparency remains one of the last frontiers. Broadcasting exactly what everyone earns still feels inconceivable. “The European Commission’s most recent data shows that the gender pay gap in the EU is 14.1 per cent and is closing at a snail’s pace,” says Christian Wigand, a spokesperson from the European Commission. Clearly more needs to be done.

The Shift Towards Pay Transparency

In a significant move on International Women’s Day, the UK government launched a pilot scheme requiring participating employers to disclose salaries in job adverts and eliminate salary history questions during the recruitment process. And Germany has gone even further- since 2017, employees in companies with over 200 staff had the right to know what their colleagues earn.

Imposed salary transparency could help to dramatically reduce the gender pay gap, according to research by HEC Paris Business School. Researchers found that, over the course of two decades, radical transparency, whereby salaries of all of the participating 100,000 academics were posted online for universal access, reduced the gender pay gap by up to 50 per cent.

Yet many employers are still offering candidates “£competitive”. Is making the switch to pay transparency really a good idea? What are the risks and benefits if you decide to take the plunge?

The Benefits of Pay Transparency

Closing the gender pay gap

Pay transparency has been shown to impact gender pay gaps positively. Italy’s Code of Equal Opportunities Between Men and Women, introduced in 2006, mandated pay gap reporting every two years for companies with more than 100 employees. Italy now has one of Europe’s smallest pay gaps at only 4 per cent.

The new pilot scheme in the UK also aims to level the playing field for women. Studies show that listing a salary range on job adverts and not asking candidates to disclose their salary history enables women to negotiate pay on a fairer basis. If you are looking to close pay gaps in your own organisation or attract more talented women, pay transparency is a step you cannot afford to skip.

Attracting and retaining to talent

While we have all seen the headlines about candidates prioritising flexibility over salary, there is no doubt that money still talks. It is especially effective in catching the eye of individuals who are already quite happily employed but could be tempted by something that stands out to them; in other words, these quality candidates would otherwise need to be headhunted. Of course, this only works if your salary and benefits really are competitive, so do your benchmarking homework first.

Boosting employee trust and engagement

Transparency fosters a culture of ’ trust, engagement, and morale. When employees understand salary structures and career progression opportunities, they feel more valued and motivated.

Publishing clear pay bands also encourages internal career development, helping employees visualize their growth within your organisation. This can increase retention and reduce turnover, as employees are less likely to seek opportunities elsewhere when they see a clear path forward.

Encouraging Healthy Competition

When employees have clarity on salary structures, it can inspire productivity and a results-driven mindset. A transparent approach aligns teams toward common goals and ensures fairness in compensation, ultimately benefiting both employees and the organisation.

Avoiding Poaching Risks

Some employers fear that transparency will make it easier for competitors to lure their top talent with slightly higher offers. However, studies show that companies that embrace pay transparency do not experience an exodus of employees- and amid the Great Resignation, we should not apply the lens of the ’80s and ’90s, when it was enough to offer great incentives.. Instead, transparency fosters loyalty by demonstrating fairness and respect for employees.

A case in point is Iceland, where companies with over 25 employees have been required since 2018 to prove they offer equal pay for equal work. Organisations that comply receive certification, while those that fail to correct pay disparities face fines. Canada introduced a similar policy in 2021 for companies with 10 or more aiming to close all pay equity gaps by 2024.

However, this brings us back to the truism that pay is not everything – especially not now with talent in limited supply. If you focus on building your unique employee value proposition, there is no need to get into a bidding war with your competition.

The Bottom line: Transparency Builds a Better Workplace

Salary transparency benefits employees and employers alike. It ensures fairness, boosts trust, and attracts top talent while helping to close the gender gap.

For organisations looking to build a strong employee brand, transparency is no longer optional-it is a competitive advantage. By adopting fair and open pay practices, businesses can foster a more equitable and motivated workforce. 

Redline Group’s mission is to enable high-technology companies to build world-class teams through knowledge-led recruitment. For more information from a trusted partner with over four decades of experience, don’t hesitate to contact us on 01582 450054 or email info@RedlineGroup.com or view our latest job opportunities by clicking here.