You may have heard of the growing wave of new laws across the country requiring companies to list salary ranges for each job description in their organization. To date, seventeen states, and a number of cities, have, or are on their way to enacting, some form of salary transparency legislation. Currently, the States include California, Colorado, Connecticut, Delaware, Illinois, Louisiana, Maryland, and Maine. The assumption is that more is on the way. It is now becoming a more common practice among large companies to publish salary ranges for all positions throughout the US.
In the past, disclosing your salary to another employee was often considered a major offense. In some companies, it could even lead to termination. However, over the past several years, work and workplace expectations have become common among workers at all levels. Just think about the much-published, great resignation, quitting silently. Growing life balance considerations have led employees to have second thoughts about ending remote work arrangements implemented during the height of the pandemic.
What is salary transparency?
The size of a company falling under these laws varies by jurisdiction. Depending on where your company does business, there may be specific requirements you should be aware of:
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- Companies covered by the legislation must include reasonable salary ranges on job postings.
- Companies may be required to maintain job title and compensation records for each employee for as long as they are employed, and in some cases for three years after they leave the company.
- It may be necessary for qualifying employers to submit a report to the state annually with clarifying detail such as median, and average. hourly pay rates for each job category, separated by race, ethnicity, and sexual orientation.
- Employers may also be required to notify employees of promotional opportunities.
Why salary transparency important to Credit Managers
With changing times, comes changing expectations.
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- It may be more likely that new applicants will want to know a position's salary even before applying. Going away are the days when a prospective employer will ask an applicant for the salary in their current or last position as a prerequisite for an offer.
- It may be that existing workers will sense that a company disclosing salary ranges, is a more attractive place to work. Transparency leads to a sense of fairness and equity.
- Knowing position salary ranges can be motivational for employees who wish to progress in their careers. Since a promotion may require significant training, education, and personal effort, an employee can better gauge their personal benefit.
- It is important to know how this may affect employees within your department. This is a good time to ensure there is salary equity among your staff members who are in the same position with similar experience. They may be in different positions considered to be equal in ranking, but salary inequities exist between positions, gender, age, or race.
- Understand how your department's staff compares with positions at the same level in other company departments.
- To keep capable and tenured staff, it is important to know if your company's compensation structure is competitive within your industry and with other local employers.
What you can do
As we approach 2023, it is a good time to take the following actions:
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- Meet with whoever at your company is responsible for employee compensation management. Determine what actions have been taken, what is in progress, or what is planned, related to compensation transparency.
- Review the salary range for each position within your department to identify any inequities.
- Since the roles in your department are somewhat specialized, work with your HR department to seek out professional salary benchmarking data, such as those published by Credit Today or Robert Half.
- Look at other company departments to determine if your staff's compensation is in line and equitable.
Conclusion
It appears the trend requiring companies to provide salary transparency is going to become a standard practice that is expected by applicants and employees. Be prepared to address any inequities within your department, and company. Work with your management to ensure your company remains a competitive choice. The cost of salary adjustments may be far lower than detracting top talent and losing valuable employees.
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