Our 2025 State of People Strategy Report found that pay transparency in the US is waning since its main character moment in 2022. While 59% of surveyed European HR professionals told us their company is still going strong with transparency, just 23% of their US counterparts could say the same.
In this article, we’ll take a deep dive into the latest data on compensation transparency. We’ll explore why pay transparency has dropped off, why that matters, and how to introduce equitable pay structures in 2025.
The Latest in Pay Transparency Data
Compensation transparency took center stage when state-level legislation in the US mandated companies in certain states to include wage ranges in job postings.
California was the first state to introduce pay transparency laws in 2018. By 2024, Colorado, Connecticut, the District of Columbia, Hawaii, Maryland, New York, Nevada, Rhode Island, and Washington had all passed compensation transparency laws, too.
Meanwhile, in Europe, stricter transparency legislation came into force in 2023. The new regulations require European Union companies to disclose salary information and address any gender pay gap that exceeds 5%.
So far, good news for job applicants — and anyone who believes in equal pay for equal work.
But our survey highlights a widespread hesitation among organizations. Since 2022, the number of HR professionals who think their company is doing a great job with compensation transparency has dropped dramatically. In 2022, 22% of HR professionals rated their company’s compensation transparency efforts as excellent, while only 8% said the same in 2024. The number who said their company is doing poorly with these initiatives has more than tripled in that same time.
Globally, nearly half (45%) of the HR professionals we surveyed said their companies only share pay band information with finance and HR. Less than one in three (32%) said current employees know their own pay band, and just 3% said employees can find out how much their colleagues earn.
In Europe, the numbers are more promising — likely because of the introduction of stricter regulations. In our survey, 59% of European HR professionals rated their organization’s pay transparency as excellent — versus 23% in the US.
European HR teams also rate their managers’ ability to talk about pay more highly. When compared to the US, European HR professionals say their managers are very prepared to:
- Discuss the relationship between raises and performance (46% vs. 20% in the US)
- Explain how the amount available for raises is determined (42% vs. 16%)
- Talk to employees about perceived pay inequality (33% vs. 9%)
- Review how employees’ pay compares to that of their coworkers (37% vs. 12%)
Why Pay Transparency Has Fallen Off
So, what’s going on? Given the increasing number of states putting pay equity into law over the past two years, why aren’t more companies publishing pay ranges? Here are our theories:
1. The job market is tighter.
In 2022, the Great Resignation put pressure on US employers to cater to the demands of job seekers, like putting compensation information in job listings. But these days, to quote Suzanne Lucas (AKA the Evil HR Lady), “The white-collar market in the US is tight. When people are more desperate for jobs, they are willing to apply for jobs without posted salary ranges. It's a matter of taking what you can get.”
2. Businesses are experiencing rapid change and uncertainty.
In the words of Matt Raskin, former senior people strategist at Lattice, “There are a lot of shifts happening right now in the US. Politically, in terms of different roles, the expansion of AI — there are so many things happening that are changing how we think about salaries and pay ranges. I think that uncertainty is driving a bit more reluctance in terms of pay transparency.”
Gianna Driver, an advisor at Lattice, also said US-based companies may not have the bandwidth to embrace more complex strategies that support transparency:
“Educating employees on the nuances of compensation, such as understanding why not everyone is at the 90th percentile, requires time and resources that many companies just don't have right now.”
3. Companies have found ways to avoid disclosure.
We’ve also seen organizations finding ways to avoid disclosing pay ranges in job ads — for example, remote-first tech companies claiming that open roles are “not eligible to be performed” in states with mandatory salary disclosure.
Meanwhile, in Europe, pay transparency is increasing. We asked Maria Lavin, a senior HRBP in a Spanish consulting firm, to share her thoughts on why Europe is leading the US.
“Regulation is probably a key factor,” she said. “In Europe, we’re very aware of diversity as a driver. Diversity KPIs are a constant focus for HR teams in Spain.”
How Pay Transparency Benefits Everyone
It’s worth considering whether or not this drop-off in pay transparency matters. Does pay transparency really make a positive difference?
For many employees, the answer is a pretty conclusive yes.
Benefits for Employees
Reduced Discrimination
Most obviously, pay transparency reduces discrimination. “If the job ad says 80K, everyone is on the same page and you can't secretly offer women 70K and men 90K,” said Lucas.
The research bears that out. According to a 2023 article published in the Harvard Business Review (HBR), salary transparency does help to tackle pay disparities across gender, ethnicity, sexual orientation, and other dimensions. For example, pay transparency in public US academic institutions has reduced the gender wage gap significantly and nearly eliminated it in some states.
Higher Employee Engagement
Our 2024 State of People Strategy survey found companies committed to increasing compensation transparency had much higher employee engagement (72% vs. 39%). So, even if salary increases aren’t possible under today’s market conditions, transparency can still boost your bottom line.
"I think trust can positively impact employee engagement. When we trust our employer, it does a lot for employee performance and engagement,” said Raskin.
Joaquin Migliore, director of people experience at Superside, agreed. “Transparency makes employees feel like you trust them and that you aren’t hiding things from them, which can lead to a heightened sense of ownership and ambassadorship — two key drivers of engagement,” he noted in our 2025 report.
“Performance conversations also become fairer and less compensation-oriented because we all know the implications of promotions and internal mobility, which allows managers to focus more on the actual performance trends instead,” Migliore explained.
Benefits for Employers
But fair pay practices don’t just create a more equitable workplace for employees. Pay transparency brings major benefits for employers too.
Employee Retention
A 2022 HBR article based on Gartner research reported that the perception of a fair employee experience improved employee retention by up to 27%. Employees, in general, prefer to work in an environment where work is fairly recognized and compensated, and where their efforts are tied directly to their rewards.
Improved Hiring Efficiency
Lucas pointed out that pay transparency “saves everyone time — why spend time interviewing a candidate for a job they would never take?”
Raskin agreed that pay transparency is an effective way to make sure “you’re attracting the right talent based on what you can afford and how you pay. It also helps ensure that you're paying appropriately, given the talent you want and the strategy you’ve put together.”
Operational and Financial Acumen
Raskin also observed that compensation transparency raises the overall organizational understanding of how salaries work, how ranges are set, and how to think about pay. "Transparency helps ensure that, financially and operationally, compensation becomes a more common language,” he said.
“Pay is still a very taboo topic. For an organization to develop more capabilities around compensation — its philosophy, how to build ranges, and understanding what those ranges are — building that financial or operational acumen is really beneficial.
“It helps employers be smarter about finding appropriate market ranges for roles, considering the current climate. I think it does a lot to improve the overall acumen of an organization, its leaders, and, therefore, the entire organization.”
Competing for Talent
Lavin observed that, for organizations in the European Union, pay transparency is becoming a regulatory requirement. Implementing a pay transparency policy before it’s forced upon you is therefore the smart strategic play:
“It means you’ve done your preparatory work, which will position you well when it comes to attracting new hires, engaging your employees, and competing for talent.”
The Risks of Pay Transparency
“Leaders might be hesitant to fully embrace pay transparency without the necessary infrastructure and education in place, fearing it could lead to misunderstandings or dissatisfaction among employees,” Driver commented.
Indeed, many employers are cautious about pay transparency. And, while we may be confident that being open about compensation — and the resulting improvements in pay equity — is an objectively good outcome, there are potential downsides that should be acknowledged.
Cost Concerns
Some fears are overblown. For instance, employers who worry that their overall payroll will increase astronomically can probably relax. An empirical study into the impact of wage transparency laws published in Econometrica found that transparency actually lowers overall employee wages. By being transparent, employers will pay more to the inequitably underpaid, but they can also negotiate more convincingly with employees who could previously talk their way into disproportionate raises.
Employee Attrition
That said, there is a bigger risk for employers — those employees who can no longer negotiate their salary higher may simply leave. This is a particular concern if employees feel that pay is no longer correlated with performance, but rather tied more closely to role and/or tenure.
For guidance on how to create an equitable pay structure that still allows you to tie compensation to performance, check out our guide Pay-for-Performance: How to Motivate and Reward Your People.
Employee Discontent
Employees may discover serious discrepancies in pay across their teams. Fortunately, HR can change that by reviewing and revising salary bands so work is rewarded equitably.
However, even if unfair pay is fixed, the damage may already be done: Employees may choose to take their talents elsewhere after finding out a colleague is being paid significantly more for the same work. But that’s the cost of unfair pay practices.
To avoid these significant losses, companies will need to take a closer look at the overall talent management and compensation strategies they have in place, before introducing pay transparency.
How to Implement Pay Transparency
If you’re ready to roll out a more open and equitable pay structure, what’s the best way to proceed? Here’s our step-by-step guide:
1. Get clear on the fundamentals first.
Pay transparency needs to build on an existing, well-designed compensation strategy, Raskin explained. To build that foundation:
- Establish your current benchmarks and goals. Raskin advised employers to start by understanding what they’re trying to accomplish when it comes to pay transparency. Is the goal to improve pay equity? To meet regulatory requirements? To become an employer of choice?
“Getting a clear internal sense of where you are and where you want to be will guide the next steps,” he suggested. “If the goal is to create pay transparency, you might start by asking: At the company level, do we have clarity on our purpose, strategy, direction, and priorities?”
He suggested you might also want to run a pulse survey to understand how your employees feel about the current level of pay equity and transparency in your organization.
- Review your talent management program. Once you’ve established your goals and audited your current pay ranges and structures, take a closer look at how you manage talent. “At the talent level, ensure there’s role clarity, and clarity around outcomes, so you can benchmark work accurately to the right level. Increasing clarity helps ensure accuracy in defining the work, which is essential to building compensation ranges,” said Raskin.
- Consider your approach to performance management. Finally, examine your performance management strategy to make sure it aligns with your compensation and talent management practices.
"Pay transparency should be rooted in good people practices,” explained Raskin. “How and when we set goals, how we discuss performance growth, and how consistent we are — all of that matters as well. As an employee, it’s not just about knowing your pay range; it’s also about being fairly assessed, set up for success, given feedback to improve, and evaluated equitably."
2. Get on the same page as your managers.
As our data shows, 42% of surveyed HR professionals believe that their managers are underprepared for pay transparency conversations with employees.
But only 15% of managers agreed that they aren’t ready. The vast majority said they feel at least somewhat prepared to discuss compensation with their teams — including more controversial topics like perceived pay inequity.
Valentina Gissin, chief people officer at Garner Health, suggested that this disparity of opinion comes from differing views on what it means to be prepared for conversations about pay:
“For managers, the goal is to handle the issue at hand reasonably well. And they’re probably right that they can do that. For HR, the goal is to handle the issue at hand both well and in the way HR would want, and therefore consistently with how all other managers in the company would do it. HR knows it has not equipped managers to achieve that goal.”
Now would be the right time to make sure that your managers are fully prepared for pay conversations — and crucially, that they can discuss pay in a way that aligns with your organizational values and compensation philosophy.
“Managers are perfectly capable of managing pay discussions, provided that HR provides clear and transparent guidelines on three key points: Company philosophy, pay bands by role, and how the company determines where employees fall within the salary band,” observed Melanie Naranjo, chief people officer at Ethena, in our report.
“Hoarding pay discussions within the HR team is an ineffective strategy. It leads to feelings of divisiveness between employees and HR, limits manager accountability regarding having tough discussions, and puts far too much work on HR teams.”
For detailed guidance on briefing managers effectively, check out our workbook HR’s Guide to Compensation Transparency.
3. Communicate effectively so employees understand the full picture.
Raskin urged employers to make sure that their team understands how they make decisions about compensation and total rewards. For instance, if your organization offers a mid-level pay range, but top-tier benefits, then you need to make sure that employees and managers are both aware of that decision.
Managers also need to communicate to their teams exactly what they need to do to be successful, how to progress their compensation within established ranges, and how to move into a higher pay range.
4. Use compensation software.
It’s harder to share pay ranges with transparency when those ranges and salaries are tracked in secret HR spreadsheets. Compensation software can be really helpful here:
- Getting access to relevant salary benchmarks can help you speak knowledgeably to employees about how your pay scale compares to the market — and adjust your ranges if need be.
- A platform that connects performance and pay data makes it far easier to pay for performance. Plus, you can track salary history and see where your top talent lands in their salary band, which means you can ensure your best performers receive an appropriate raise during your compensation reviews.
- By making salary bands more accessible, compensation software makes the process of implementing pay transparency far easier.
5. Ask for help.
Pay transparency can be a challenging and complex process. But, as Raskin pointed out, “It’s always okay to get some help. Sometimes bringing in an outside consultant to help think through your goals, hopes, and dreams can be hugely beneficial.”
Pay transparency is part of a wider strategy.
Pay transparency is more than a compliance requirement or a passing trend — it’s a critical strategy for building trust, engagement, and equity in the workplace. While the US faces challenges in maintaining transparency amid economic shifts and regulatory loopholes, Europe’s progress may offer HR leaders a roadmap.
As Raskin noted, embracing pay transparency is not just about complying with regulations. It’s about creating a culture that feels fair, equitable, and engaging for every member of the team. It’s just one part of a wider people program that incorporates “your talent philosophy, your total rewards, how you manage talent and performance, and all the different considerations.” Instead of being “laser-focused only on pay transparency,” he advised that HR leaders “think about where it fits into everything else.”
Organizations that successfully implement pay transparency will be better positioned to attract and retain top performers — in 2025 and beyond. For more insights into the current people trends impacting HR teams and business leaders globally, check out our 2025 State of People Strategy Report.
