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A wave of pay transparency regulations in different parts of the world are expected to go into effect over the next few years, but the majority of employers are unprepared to meet the new requirements.
Around 71% of organizations say their pay transparency readiness has improved over the past year, according to a survey of 1,4000 companies globally from professional services firm Aon. But only 19% of organizations consider themselves ready for pay transparency. Around 26% say they’ve conducted a pay equity analysis in the past 12-18 months, and just 9% have confidence that their managers fully understand pay policies and can discuss compensation effectively.
“Clear, consistent communication and manager training are critical to transparency efforts,” Kelly Voss, head of rewards and career advisory for North America at Aon wrote in a statement accompanying the report. “Without them, even well-intentioned strategies can fall short.”
Pay transparency has slowly been catching on in the U.S. Since the start of this year, Illinois, New Jersey, Vermont, Minnesota, and Massachusetts have joined other states like Colorado, California, New York, and Maryland in mandating pay range disclosures in job postings, among other salary-related provisions, according to ADP. And while North American survey respondents posted the highest percentage of companies who believed they were ready for pay transparency—25%—around 59% of companies said they were still “getting ready,” and 16% said they were not ready.
Large employers, however, should think long and hard about being more proactive about their pay transparency progress. Especially considering a European Union pay transparency regulation goes into effect in 2026. It will require companies with 100 employees or more to conduct equity reports, and disclose any gender pay gaps of more than 5% for people in the same level across an organization. It will also allow employees to request information about how their pay measures up to employees at the same level within their organization. And while 12% of companies surveyed in the Europe, Middle East and Africa region said they were ready for pay transparency, 62% said they were still getting ready, and 26% said they were unprepared.
“Pay transparency is no longer a buzzword. It’s a baseline expectation from employees and a regulatory imperative across an increasing number of jurisdictions, yet our data shows a concerning lack of progress,” Lisa Stevens, chief administrative officer at Aon, wrote in the report. “Organizations that fail to act face risks not only in compliance, but in their ability to attract, retain, and engage talent.”
Brit Morse
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