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News

Report: Pay Transparency Is Not the Only Factor in Talent Retention

By:
S.J. Steinhardt
Published Date:
Jul 19, 2023

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There is more to retaining talent than pay transparency, according to a recent report commissioned by Payscale, Inc., a compensation data, services and software provider.

The data showed that those variables include a company’s future outlook, fair pay perception, workplace culture and manager relationships.

“Overall, we find that bright future has the largest impact (39 percent decrease) on retention, followed by fair pay perception (27 percent), then company culture (22 percent) and manager relationship (21 percent), with pay transparency having the least impact (1 percent) compared to other variables,” the report stated.

“Although employees are slightly less likely to leave their jobs now than during the Great Resignation, there is and will continue to be an increase in demands from employees, and companies must directly address and understand what they can do to meet those requests in order to retain their workforce,” said Lexi Clarke, chief people officer at Payscale, CPA Practice Advisor reported. “Employees are most likely to put in their notice if a company’s long-term viability is questionable or if they perceive that their pay is unfair; publishing pay ranges to job ads alone does not communicate fairness and may not be enough to drive retention.”  

The report found that compensation strategy and pay communications are essential components of pay transparency. Pay transparency decreases intent to quit by 30 percent when analyzed in isolation, but increases job-seeking behavior for Generation Z by 3 percent, perhaps due to younger workers being more motivated to change jobs for a larger salary, especially if they see higher pay ranges advertised.

“To build transparent pay practices, you need a compensation strategy that makes sense for your business, robust internal and external pay equity analysis, committed manager training, and meaningful pay communications with employees,” said Ruth Thomas, pay equity strategist at Payscale, CPA Practice Advisor reported. “The objective should be for every employee to know their pay is fair and why it’s fair. Employers must go a step beyond posting salary ranges to really show they value their employees, while also proving that the company has a positive work culture and a bright future.”

The retention report analyzed crowdsourced data from over 578,000 U.S. workers who took Payscale’s online salary survey between March 2018 and March 2023, according to CPA Practice Advisor. To determine the impact of select variables on retention, researchers employed a logistic regression model.

A separate report by Payscale found that, due to recent legislation, pay transparency is becoming standard practice to compete for new hires. Almost half of all employers (45 percent) now include salary ranges in job postings.