Pay transparency is reshaping work

Rising expectations among regulators, investors and employees are making pay transparency an increasingly strategic priority for employers, writes Sandra Healy

Clear windows with a blue sky behind

Pay transparency is becoming a strategic priority, driven by rising expectations among regulators, investors and employees.

As focus on fairness and accountability grows, transparent pay practices are now being viewed as essential to managing risk and building employee trust.

In the UK, for example, which is no longer bound to adopt the European Union’s (EU) Pay Transparency Directive, momentum behind pay transparency is nevertheless gathering pace.

Recent signals from the UK government—including The King’s Speech in July 2024 and ongoing consultation on fair pay practices—point to potential legislation on salary transparency in job ads, restrictions on asking for salary history and stronger rights for workers who wish to request pay comparisons.

This shift marks a move away from traditionally opaque pay practices, and towards a more open and accountable framework.

As the UK moves in this direction, employers will need to prepare by auditing pay structures, setting clear and consistent pay criteria, and ensuring managers are equipped to discuss pay confidently and fairly.

Inclusio’s data insights on pay transparency and fairness, representing the voices of over 10,000 employees, reveal a striking disconnect: just one in three people feel they understand how pay decisions are made in their organisation.

For leaders, this isn’t just a communication failure; it is a structural risk to talent retention, brand reputation and regulatory compliance.

Gender, pay gaps and fairness at work

Inclusio asked employees to provide confidential feedback on what they think and feel about pay transparency, career progression and gender pay gaps at work.

Thousands of responses showed clear trends: people care about fairness, but not everyone feels empowered or informed. Gender plays a significant role in shaping those views.

The data reveals not just dissatisfaction, but also clear behavioural intentions and disengagement risks where employers fail to take action.

Existing perceptions of fairness, both in pay systems and talent contribution processes, have a profound impact on employee motivation, performance and retention.

Managers and leaders must be prepared to address the implications of increased transparency, as data shows most organisations are starting at a low base of trust in pay systems and processes.

Pay transparency: in the dark

There are several insights that have come out of the survey.

  1. Most people feel left in the dark about pay transparency, with only three in five (average score: 3.1 out of 5) feeling informed about how pay decisions are made. This is the same across all genders, demonstrating that lack of transparency is a general issue, not just a gendered one.
  2. Women feel the pay gap more deeply. Eighty-nine percent of women say they would be concerned if they found a pay gap at work (vs. 79% of men). Increased transparency has implications, particularly for women. More women would be concerned if gaps were to come to light when compared to men.
  3. The promotion process is not seen as fair, particularly by women. Just 33 percent of employees believe their career progression is fair and equitable. However, men rate fairness slightly higher (3.4 out of 5) than women (3.3 out of 5).
  4. 5 percent of men say they “don’t know” what they would do if they discovered they were underpaid. Men may not speak but this doesn’t mean they are satisfied. There is a risk that men may disengage silently.
  5. Women are more likely to take action if pay gaps are identified: 64.3 percent of women said they would raise a pay gap with a manager, if identified, and 24.8 percent would look for a new job. Women are far clearer in the actions they say they will take in this scenario. Managers need to be prepared to address issues as they arise; otherwise, data suggests a quarter of women would be prepared to take their talents elsewhere.
  6. Non-binary employees are most at risk of disengagement. Thirty percent of people of other gender identities would leave if they felt underpaid, but just 56 percent said they would speak up, and 14.8 percent said they would do nothing if underpaid.

What this means for employers

Increased transparency may serve to reassure employees and build trust in the psychological contract with their employers. However, if disparities and inequities come to light, data suggests there are gender differences in how employees are likely to respond.

There are several steps companies can take to mitigate potential talent risks:

1. Be more transparent about pay and promotion decisions

Most people feel left out of the loop. Clearly communicate how compensation is determined and provide visibility into the criteria for promotions and bonuses.

2. Help employees understand their rights and options

Most people don’t know what they would do if there were a pay gap. Provide workshops or training, especially for men, on how to identify and address pay inequity. Normalise    conversations around pay with HR and your people managers.

3. Build inclusive support structures and support all genders equally

Non-binary employees are the least likely to speak up and the most likely to leave. Ensure non-binary and underrepresented gender identities feel heard and safe escalating concerns. Include intersectional lenses (e.g., gender + race) in future analyses.

4. Close the perception gap in career fairness

Women consistently feel they have fewer opportunities than men. Monitor and address career progression gaps with special attention to promotion rates and feedback loops to ensure equity in advancement opportunities.

Pay transparency: proactive steps

Some companies are already taking practical steps to address pay transparency challenges. These include:

  1. Publishing internal and external pay equity audit results;
  2. Disclosing salary ranges in job ads;
  3. Equipping managers to talk confidently about pay;
  4. Setting measurable KPIs on progression fairness; and
  5. Listening to the voices of their employees.

Sandra Healy is founder and CEO of Inclusio