Pay transparency obligations key driver of reward strategies: report

For a long time, many organizations have treated compensation like a black box — tightly controlled, poorly explained, and off-limits for real discussion. A recent global survey underlines how exposed that stance has become. 

The Korn Ferry survey of thousands of organizations in more than 140 countries found that two-thirds see pay transparency as a key driver of change in reward strategies over the next couple of years, but only one in four clearly explain the what, why, and how behind their pay decisions. 

Jason Foster, professor of human resources and labour relations at Athabasca University, says the gap between public pressure and internal readiness comes down to behaviour at the top.

“It’s a combination of organizational inertia and, I think, some fear among senior leadership,” he says. “Because when you’re open about something and say, ‘This is my rationale and the calculation that we use, this is how we’re sort of basing it,' that leaves you open for criticism.” 

Foster also believes that one of the biggest things that senior leadership worries about is employees talking to each other about their compensation. 

“I think that’s a fear that’s overblown — they need to find a way to get past that in certain leadership styles, to try and adopt a more open kind of approach,” he says. 

Generic total rewards philosophies outnumber tailored strategies 

The survey also shows most organizations — three out of four — leaning on generic, market-aligned philosophies rather than building differentiated strategies tied to real business and talent needs, with only 15 per cent saying their total rewards strategies are tailored to their organization’s unique needs. Only 17 per cent say people managers believe rewards strategy is tailored to business and talent priorities, while only eight per sent say managers agree it’s effectively communicated and understood. 

For Foster, that’s the wrong instinct to have in an era of transparency where employees can compare notes in seconds, and he believes that reward design now has to start with conversation, not spreadsheets. 

“If you really are tailoring your package to your business model, the work that you do, the people you have, and what skills and contributions they’re bringing, I feel that only comes out of dialogue,” he says. 

The problem is that many leaders have never been equipped to have those conversations, says Foster. Employees may be called key stakeholders in official communications, but the survey shows only about half of organizations have employees actually involved in shaping reward strategy. 

“This kind of process isn’t innate, it’s a learned skill,” he says, adding that HR should treat it as a discipline that can be taught to senior leaders. “The majority of leaders see the value of their people as important assets to the organization, but they just don’t have the skill set to navigate that conversation.” 

Working with employee feedback 

Figuring out how to take employee feedback but also make it strategic and roll it back out obviously takes time, says Deirdre Chong Smith, Director, Compensation at Eckler.

“You don't want to be changing your benefits program every year or having to revamp your compensation strategy every year, but it’s about making sure that you've included your employees,” she says. “Whether this happens through employee engagement surveys or as part of performance reviews and pulse checks, make sure that you listen to the employees — it's not just how is compensation is set up, but at the employee level it’s 'How can we progress employees faster, how do we develop careers, how do we spend our training budget in fair and equal ways to make sure that we have good, solid career development?'” 

Chong Smith says that Eckler conducted its own survey of HR priorities in 504 Canadian organizations in the summer of 2025, which revealed that the top priorities revolved around total rewards and manager enablement to talk about pay with employees — salary benchmark surveys, updating job descriptions, more compensation training and resources for people leaders, and enhancing total rewards.

That gap between the demand for transparency and generic total rewards strategy becomes more dangerous as employers add skills-based and performance-linked models, as employees already anxious about fairness see another layer of rules they don’t understand.

Foster warns that any change to how pay is determined must be transparent about trade-offs. “You’ve got to approach this with an awareness that any kind of change, but particularly change around compensation, is going to spark unease,” he says. “Don’t whitewash them, you explain to them how it’s going to be different.” 

Transparency rules changing the market norm 

In Ontario, where new job posting rules have dragged pay ranges into public view, Chong Smith has watched the same tensions play out, and she says the old “trust us” line is no longer viable.

“An employee joins the firm, they say, 'We have competitive salaries,' but what does that actually mean?” says Chong Smith. 

“Many organizations have taken it upon themselves to do a lot of internal education, and so that's training and job evaluation, how grades are made, how pay is decided, what a market peer group is, and just even going about how companies set that pay, because it was all in a bit of a black box,” she says. “There's been a lot of work towards that, but I think that a lot of organizations waited until they absolutely had to, because they were doing a lot of that right-sizing internally.” 

Chong Smith also says that market expectations are dragging in organizations that technically sit outside the province’s pay transparency rules.

“Crowdsourced salary sites and social feeds are now full of candidates calling out employers who refuse to post ranges, regardless of their legal obligations,” she says. “That pressure is even harsher for charities, not-for-profits and funded agencies, which can’t bluff their way through with inflated numbers — they know they’re going to have to be honest about what they can afford.” 

Chong Smith argues that honesty is the starting point, but not the whole answer. If an employer can’t win on salary, it has to compete with a total rewards story that’s specific and believable. 

“Even though pay is transparent and that's what's mandated, there are all these other components of total rewards that aren’t mandated but can be still communicated, and organizations have to take that into consideration,” she says. “I think that's where a key difference with strategy is coming into play —not only stating the salary range, it’s all of the other things that an organization offers to enrich the whole rewards package — having those pieces built into the communication once you get someone in the selection process, it becomes more important.” 

AI ‘useful tool,’ but shouldn’t make decisions

Over all of this hangs the AI question. The Korn Ferry survey shows strong interest in using AI for benchmarking, communications and analytics, even as employees question whether machine-made insights can ever feel fair.

Foster is clear about where he draws the line: “Don’t have the AI make the decisions — people make decisions on behalf of people,” he says. “If you want to turn to AI to help you clarify your communications and your thinking, it can be a useful tool, but don’t go in hoping that AI is going to make a decision for you.” 

For Foster, rising legal obligations around transparency are the excuse leaders need to do what they’ve avoided for years. “Using transparency compliance as your entry point into a rethinking your total rewards, seeing it as an opportunity, not as an obligation, is the key,” he says. “Instead of just meeting regulations, how can we use that to improve — it feels to me like it’s two steps and they’re both very practical.” 

Chong Smith sees the direction just as clearly.

“If anything, pay transparency is only increasing, so with the additional level of attention and outcry of ‘Why aren't you posting your salary ranges?’ speaks to the market norm of becoming more transparent,” she says. “So even if organizations aren't required to be compliant to compete, they might need to start to be transparent and have additional disclosure where possible to keep up with the market and be just as transparent as everybody else — otherwise, they might find themselves not recruiting from as wide of a slate.” 

Chong Smith notes that it may require a mind shift to being open and transparent about pay and total rewards, but it’s the way things are going. “People are going to be open and transparent anyways, so [organizations] really have no choice sometimes but to get in front of it,” she says.