Most employers still unprepared for pay transparency, report finds

New report shows pay transparency efforts remain compliance-driven

Most employers still unprepared for pay transparency, report finds

Most employers worldwide are still unprepared for pay transparency, with their current initiatives largely driven by regulatory compliance, a new report finds.

Aon surveyed nearly 1,500 employers across the world to assess the overall progress of organisations when it comes to pay transparency.

It found that only 19% of organisations consider themselves ready for pay transparency, while 58% say they're "getting ready" for it.

By region, North American employers reported the highest level of readiness, with 25% saying they're prepared for pay transparency in the workplace.

On the other hand, the Asia-Pacific region reported the highest level of unpreparedness, with 48% saying they're not ready for it.

Lisa Stevens, chief administrative officer at Aon, said their findings indicate a "concerning lack of progress" when it comes to pay transparency.

"Pay transparency is no longer a buzzword. It's a baseline expectation from employees and a regulatory imperative across an increasing number of jurisdictions," Stevens said in a statement.

"Organisations that fail to act face risks not only in compliance, but in their ability to attract, retain and engage talent."

Pay transparency remains compliance-driven

Despite the potential workforce benefits, the report found that regulatory compliance remains the top driver behind pay transparency.

In fact, the report found that 60% of organisations are taking a geographically targeted approach to pay transparency, and are implementing it in areas where compliance is required.

Improving the employee value proposition or talent appeal emerged as the second most common driver of pay transparency, closely followed by the desire to align with organisational values.

The findings come in the wake of growing legislation mandating pay transparency, such as in other US states like California and Ontario, Canada, where employers will have to include salary information in publically advertised jobs.

The European Union's Pay Transparency Directive will also take effect next year, where EU companies will be required to share information on salaries and take action if their gender pay gap exceeds five per cent.

More than just a 'legal hurdle'

But employers are told that looking at pay transparency as more than just a legal box to tick can be highly beneficial for employers.

"Pay transparency is here to stay," said Kelly Voss, head of rewards and career advisory for North America at Aon, in a statement.

"Organisations that treat it as a business imperative, not just a legal hurdle, will be better positioned to build engaged, resilient workforces."

According to Voss, clear communication and manager training will be crucial in pay transparency efforts.

"Employees are navigating economic uncertainty and growing concerns about fairness. Clear, consistent communication and manager training are critical to transparency efforts," she said.

"Without them, even well-intentioned strategies can fall short."