Starting January 1, 2025, Illinois will require employers with 15 or more employees to include pay scale and benefits information in all job postings, and there’s a high likelihood that other states follow. Here are five ways pay transparency can affect your recruitment and retention efforts:
A Stronger Candidate Pool.
Most job seekers today support transparent pay policies and prefer to work for companies that implement them. According to SHRM, 70% of organizations that list pay ranges on job postings say it’s led to more applications, and even more importantly, 66% say the quality of their applicants improved.
Increased Negotiation around Non-Cash Benefits.
With applicants exposed to pay scales up front, the focus of hiring negotiations is shifting more toward non-cash benefits where managers have more discretion. Flexibility, vacation time, and career development opportunities remain key selling points.
Lower Employee Turnover.
Data shows that employees who are confident they are being compensated fairly are more likely to be satisfied in their current roles. According to PayScale, organizations with transparent pay policies experience 17% lower turnover rates.
An Increased Need for Performance-Based Incentives.
HBR reports that while pay transparency brings more equitable pay, it also results in flatter and less performance-based compensation. To keep employees motivated and productive, it’s essential to clearly communicate how performance is being measured and to provide a mechanism for salary increases beyond transparent pay ranges.
An Enhanced Employer Reputation.
Nearly three in four workers say they have more trust for organizations that provide pay ranges in job postings. Earlier this year, we shared the importance of building a strong employer reputation, and supporting pay transparency is a great way to highlight your organization’s integrity while also attracting job seekers who share your values.
