Pay transparency, equity compensation & employee retention: Current trends

With governments around the world introducing legislation on pay transparency, companies offering equity compensation may need to embrace openness if they are to achieve their objectives around employee retention.

That was one of the key messages emphasized by Nancy Romanyshyn, Senior Director, Total Rewards Strategy and Solutions, with pay transparency solutions specialists Syndio, during our recent webinar on the current state of the employee equity compensation landscape.

With the discussion taking J.P. Morgan Workplace Solutions’ Trends In Equity Compensation: 2024 Report as its launching point, Nancy was one of several panelists who offered insights and highlighted the need for companies to accept the drive for pay transparency as a reality, regardless of whether legislation is already on the books or in the pipeline in a given jurisdiction, and to act accordingly.

What is pay transparency?

Before going into detail, let’s be clear on what we’re talking about. In basic terms, pay transparency involves companies making open declarations about salary ranges and other compensation elements (e.g., equity) for various roles and positions. This can mean being required to make pay rates public and also elaborating on the process whereby the specifics of compensation packages are determined.

The overall objective is to eliminate possible biases and discrimination in relation to employee compensation, and to encourage a payment culture based on fairness and equality, while also factoring in the value of work associated with specific roles.

How widespread is legislation on pay transparency?

Many states in the US have introduced pay transparency legislation or are expected to do so in the future. Meanwhile, the wide-ranging EU Pay Transparency Directive has been approved by the European Parliament and member states are obliged to implement its terms by June 2026.

Against this backdrop, speaking during our webinar, Nancy stressed how important it is for businesses to take control of and implement their own pay transparency policies in advance of being compelled to do so by legislation and how this approach could impact positively on employee retention.

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Nancy also stressed that nowadays some employees can find out much of this information themselves anyway.

“With all the information that’s available to employees now, I like to joke that they are compensation analysts. They go online, do their own research, and can find information on just about any component of their pay. All anyone has to do is go on Instagram and look up pay transparency or negotiating salary and you’ll see a lot of people posting and giving advice about things you should be asking for and questions you should be asking. And they’re not wrong. It’s just that they’re not talking about your company,” she said.

That being the case, Nancy believes it is wiser for companies to choose transparency rather than leave a void that could be filled with possibly ill-informed speculation that might impact negatively on morale.

“I think it’s really important for employers to get out in front of whatever stories might be told either about your organization or about specific roles and what individuals think they should be paid. Be transparent, explain things fully. Say here’s the whole package of what you can have, here are all the benefits, here’s the program and what it offers you. Show them the success stories. Those are the things that have been most effective in terms of retention,” she said.

Pay transparency and employee retention

“At the end of the day, employees don’t necessarily need or expect to be paid the most, they mainly want to know that they’re paid fairly. That requires you to have a consistent process that you can be transparent about in terms of your people understanding fully the rewards you give them,” she said.

Nancy added that employers should try to put themselves in the shoes of their employees when deciding how to share this information.

“Just put them at the center and think about what are the questions they might ask? How can we show how much we value them? That matters because that’s what you’re communicating with your total rewards programs,” she said.

Nancy also made a point of stating that while the trend towards pay transparency is partly driven by a desire to tackle discrimination, it does not necessarily follow that Employee A should always be paid the same as Employee B. Again, the key is for companies to embrace openness and be willing to explain salary differences for given roles.

“The ideal approach is to just be an adult about it and explain, well, we are paying Joe more than Sue because of this specific skill set. It’s okay to say things like that. You just need to make sure that all of those decisions are made because of the business need, not because Joe is a better negotiator than Sue, or Joe was hired at a time when you had more budget. Those are the types of distinctions I think everyone’s going to have to get very clear on,” she said.

Want to learn more?

To hear all of Nancy’s comments and those of the other panellists, access the on-demand webinar here.

Also, Nancy was a guest on our Prosperity at Work podcast and that episode is available here.

What next?

Workplace Solutions provides businesses of all sizes with an all-in-one equity compensation management solution. We handle all equity award administration so you have more time to focus on your company’s journey. Get in touch today to find out how we can assist you.

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