Why pay transparency will give you a competitive advantage in 2022 and beyond

On September 27, 2022, the California Governor signed a broad pay transparency bill requiring employers to include pay ranges in all job advertisements, effective from January 1, 2023. The bill also requires employers to submit annual reports that include pay data on employees hired through labor contractors to the California Civil Rights Department (CRD). 

California is not the first jurisdiction to enact this law. Others include Washington (effective January 1, 2023), Colorado (currently in effect) and New York City (effective November 1, 2022). However, California also requires businesses to report on mean and median pay data to “better identify gender and race-based pay disparities,” among other things.

Whether or not your procurement and supply chain business falls under one of the above jurisdictions (or one of the others that we haven’t included in this short article) pay transparency plays an increasingly important role in attracting and retaining top candidates. In addition to compliance with the law, here’s why pay transparency will give you a competitive advantage in 2022 and beyond.

It creates a culture of trust

Trust matters, both in our personal and work lives. If your team feels like important aspects of the business are being kept from them, they are likely to suspect that something is amiss or they aren’t being treated fairly. Not only does this erode trust between the business and its employees it can also damage relationships between co-workers. If one employee feels another is receiving preferential treatment or is considered a ‘favorite’ by the business leaders this is likely to have a detrimental effect on employee relationships and morale. It’s also highly unmotivating and could result in employees looking around for alternative places to work. 

To promote transparency and build trust make sure that your policies relating to career progression and pay scales are consistent and are part of the ongoing employee communication and engagement process. There should be no ‘smoke and mirrors’ and your team should be able to clearly see how you arrived at the compensation package and how it is aligned with skills and performance as well as the overall business strategy. 

It helps you attract and retain the top candidates

Employees want to work for companies that are ethical and that have good values. This particularly applies to Millennials and Gen Z, who employers often struggle to attract. 

If potential and current employees can see that your business acts transparently, especially relating to something as important as pay, they will have more confidence in your ability to act in an ethical way across the board. 

If you need to attract a younger demographic to your business, or want to grow your team in general, give us a call. We are connected to some of the top procurement and supply chain talent and we would love to help.

It benefits your wider recruitment strategy

Many people find that the toughest part of writing job specs is aligning skills and expectations with the salary bracket and ensuring it is competitive in the current marketplace. If you have a solid and transparent pay strategy that is well-researched, consistent and well-communicated you can make sure every role matches the compensation package and every employee is awarded a salary that genuinely reflects their skills and experience. 

This approach can also help reduce your need to negotiate salary with candidates as you can be confident that you are offering the right package and you will have the data to back it up. Furthermore, good employee pay data management should make it easier to report to the Board on where, why and how compensation is being paid. This is probably your biggest business expense so having a firm grip on how the budget is being used strategically both in the short and long term can only be a good thing. 

As mentioned above, if the team at Bramwith can help you build the procurement and supply chain team you need to succeed, reach out to us today. No matter what stage of the recruitment program you’re at, we can help. 

Find out more about the SB 1162 Transparency Bill.