Payfederate

Pay Transparency Goes Global: What the EU Directive and Canada’s Equal-Value Laws Mean for Compensation Teams

Michael Dressler, Director of Business Development, Payfederate®

TL;DR:
Pay transparency has become a global compliance topic, but it is not one law with different accents. It is at least three distinct legal models, built on different logic, asking employers to answer different questions. Understanding which question you are actually being asked is the first step to answering it well.

Pay Transparency Isn’t One Law — It’s Three Different Approaches

In the United States, pay transparency has mostly meant range disclosure: employers post a job, and a salary range for that specific job goes with it. As of 2026, 18 U.S. states plus Washington, D.C. require some form of salary range disclosure in job postings, with thresholds and triggers that vary by state.

In the European Union and in Canada, the legal question is different. It is not “what does this job pay,” but “why do these two different jobs pay what they pay, relative to each other.”
That is the principle of equal pay for work of equal value, and it requires employers to justify pay differences between jobs that may look nothing alike on the surface — a warehouse worker and an administrative coordinator, for instance — using consistent, objective, gender-neutral criteria.

This distinction matters because the two models require different infrastructure to comply with. Range disclosure is simple as long as an employer has defensible ranges. Equal-value legislation is a job-evaluation exercise, and it reaches much deeper into how compensation decisions are made and defended.

The EU Pay Transparency Directive, in Plain Terms

Directive (EU) 2023/970 was adopted in 2023 and requires all 27 EU member states to have implemented national legislation in force. Its core obligations include:

The directive applies to an estimated 190 million workers across the EU. Despite the scale, most organizations are early in their preparation: a Mercer survey of more than 1,600 multinational organizations across 60 markets found that only 9% of Europe-based employers had a fully implemented pay transparency strategy in place.

Sources: Directive (EU) 2023/970, Official Journal of the European Union

Canada Has Been Asking This Question for Decades

Canada’s approach will look familiar to anyone reading the EU directive closely, because the underlying principle — equal pay for work of equal value — is not new there. Ontario’s Pay Equity Act has required it since 1987, and a federal Pay Equity Act extended similar obligations to federally regulated employers more recently.

The mechanism is a structured, gender-neutral comparison system. Employers identify “job classes” that are predominantly female or predominantly male, then evaluate every job class using a consistent set of factors:

If a female-dominated job class scores as equal in value to a male-dominated job class but is paid less, the law requires the gap to be closed. Critically, the two jobs being compared do not need to be similar in duties. They need to be comparable in value once evaluated against the same factors.

Why “Equal Value” Is a Harder Compliance Problem Than “Post the Range”

Range disclosure can be satisfied with good market data and a defined pay structure. Equal-value legislation asks for something else entirely: a defensible, factor-based rationale for every meaningful pay difference in the organization, applied consistently across roles that may sit in completely different functions.

That rationale does not come from a salary survey. It comes from job architecture — the underlying framework of job families, levels, and evaluation criteria that determines how roles relate to one another in the first place. 

Without a structured, factor-based evaluation methodology, there is no consistent way to answer why one job is paid more than another, only ad hoc explanations that will not hold up under regulatory or employee scrutiny.

Model Core Requirement What It Compares Legal Basis (examples)
United States Disclose a pay range for the posted job The same job, across candidates State statutes — 18 states + D.C. as of 2026
European Union Justify pay differences using objective, gender-neutral criteria Employees doing equal or equivalent work Directive (EU) 2023/970
Canada Compare female- and male-dominated job classes of equal value Different jobs, evaluated on comparable value Federal and provincial Pay Equity Acts (e.g., Ontario, since 1987)

Sources: Rippling, Pay Transparency Laws by State: A Guide for Employers

Job Architecture Is the Infrastructure Behind the Answer

This is where job architecture stops being an HR best practice and starts being compliance infrastructure. 

A well-built job architecture — consistent job families, clearly differentiated levels, and a documented evaluation methodology — is what lets an organization show its work: here is how we defined this job’s scope, here is how we compared it to others, and here is why the pay difference is objectively justified.

Job architecture maturity is already trending in this direction, independent of any single law. According to Mercer’s 2024 Global Job Architecture Pulse Survey, more than three-quarters of organizations have already established a job architecture, and companies whose job architecture fully meets their business needs report an average 5% additional shareholder return per year. Separately, Deloitte’s Global Job Architecture Practices Survey found that 72% of organizations already use job leveling guides or a similar tool to define the criteria for each level.

Sources: Mercer, Job Architecture: Building Structure into an Evolving World, 2024 Global Job Architecture Pulse Survey; WorldatWork, The Keys to Building an Effective Job Architecture.

The organizations best positioned for EU- and Canada-style compliance are not necessarily the ones with the most sophisticated market pricing. They are the ones whose job architecture can already answer, in a documented and defensible way, how any two roles compare in value.

Getting Ahead of It

For compensation teams operating across multiple jurisdictions, a few starting points tend to matter most:

  1. Take stock of your current job architecture:
    Are job families, levels, and evaluation criteria documented and applied consistently, or do they vary by business unit and manager judgment?
  2. Separate the two compliance questions:
    Range disclosure and equal-value justification are different problems; a plan built only for one will not satisfy the other.
  3. Run an internal equal-value analysis before a regulator or employee does:
    Identify pay gaps between comparable job classes now, while there is time to remediate methodically.
  4. Document the methodology, not just the outcome:
    A defensible evaluation system needs to show its criteria and how they were applied, not just a final pay range.
  5. Treat U.S. range-disclosure compliance and EU/Canada equal-value compliance as one connected system:
    Both resting on the same underlying job architecture, rather than as separate, parallel projects.

 Pay transparency legislation will keep evolving, and different jurisdictions will keep asking different questions of employers. The organizations that adapt with the least friction will likely be the ones that already have a job architecture built to answer “why,” not just “how much.”

Connect with Payfederate

Understanding which pay transparency question your organization is being asked — and building the job architecture to answer it — is easier with the right foundation in place. 

Learn more at 1135556.us12.myftpupload.com/.

Pay Transparency Laws Are Expanding in 2026: What HR Teams Need to Prepare For

Michael Dressler, Director of Business Development, Payfederate

Pay transparency is no longer a future conversation. It’s already reshaping how compensation decisions are made—and more importantly, how they’re questioned.

In the past, compensation could operate with a degree of opacity. Salary bands existed, but they weren’t always visible. Pay differences could be explained internally, if needed, but rarely surfaced at scale.

That’s changing.

As pay transparency laws continue to expand in 2026, visibility is becoming the default. And with that visibility comes pressure—not just to comply, but to be consistent. From what we’re seeing in conversations with HR leaders, the challenge isn’t understanding the direction. It’s understanding how prepared their current systems and structures actually are.

Compliance is the starting point. Engagement is the opportunity.

While pay transparency laws are expanding, many organizations are beginning to see this shift as more than a compliance requirement.

Meeting regulatory expectations, such as publishing salary ranges or updating policies, is necessary. But transparency also changes how employees experience the workplace.

As visibility increases, so does engagement. Employees have more context. They ask more questions. They expect clearer answers. This creates a more dynamic environment where compensation is no longer a back-end process, but an active part of ongoing conversations.

For HR teams, this presents an opportunity.

Organizations that approach transparency proactively are using it to:

In this sense, compliance becomes the foundation, not the end goal.

Pay transparency, when approached thoughtfully, can strengthen both employee engagement and organizational alignment.

This isn’t just about compliance anymore

It’s tempting to treat pay transparency laws as a regulatory requirement. In practice, the impact runs deeper. Transparency changes behavior.

Candidates are coming into conversations with clearer expectations. Employees are comparing roles more openly. Managers are being asked to explain decisions in real time, not after the fact. And once those questions start coming, they don’t stay isolated. They spread across hiring, internal mobility, and retention discussions.

That’s why compensation in 2026 is becoming less about managing pay cycles and more about managing trust.

Where organizations feel the pressure first

Most companies don’t start from a clean slate. Compensation structures evolve over time. Roles change. Hiring decisions get made under pressure. Adjustments happen incrementally.

Individually, those decisions make sense. Collectively, they can create inconsistencies.

Pay transparency doesn’t create those inconsistencies—it exposes them. Some of the most common areas where this shows up:

None of this is unusual. But once compensation becomes visible, it becomes harder to manage quietly.

Pay transparency laws are accelerating the timeline

In 2026, more regions are formalizing expectations around pay visibility.

That includes requirements such as:

What’s important isn’t just the specifics of each regulation. It’s the direction they point to.

Transparency is becoming standard. And organizations that treat it as a future problem are finding themselves reacting instead of preparing.

What HR teams need to get right now

From what we’re seeing, preparation doesn’t require a complete overhaul. It requires tightening the areas that already exist—but aren’t fully aligned. A few priorities stand out.

1. Salary ranges need to hold up under visibility

Publishing a salary range is one thing. Being able to explain it confidently is another.

HR teams need to ensure that ranges are:

If those elements aren’t clear, transparency creates more questions than answers.

2. Job architecture becomes the backbone

This is where most compensation challenges start. If roles aren’t clearly defined, compensation decisions become harder to standardize.

Strong job architecture helps:

It also makes conversations easier. Because when roles are clearly structured, compensation has a clear reference point.

3. Managers need to be part of the solution

One of the more practical challenges with pay transparency is how it plays out in conversations. Managers are often the ones expected to explain compensation decisions. But in many cases, they don’t have full visibility or context.

That creates friction. To prepare for transparency, organizations need to ensure managers have:

Without this, even well-structured systems can fall apart in real interactions.

4. Systems should simplify, not complicate

A lot of compensation processes still rely on multiple tools and manual alignment. That worked when visibility was limited. It doesn’t work when decisions need to be explained quickly and consistently.

Compensation management systems in 2026 need to:

If HR teams still need to pull information from different places to answer basic questions, transparency becomes harder to manage.

The real challenge: perception

Transparency doesn’t just expose data. It shapes how that data is interpreted. Two employees might have different compensation for valid reasons.

But if those reasons aren’t clear, the difference feels unfair. And once that perception sets in, it’s difficult to reverse. This is why preparation isn’t just about getting the numbers right.

It’s about making sure the story behind those numbers makes sense.

What’s changing in compensation in 2026

The shift we’re seeing isn’t dramatic. It’s practical. Organizations that are moving ahead are focusing on:

It’s less about transformation and more about alignment.

Final thought

Pay transparency laws are expanding. But the bigger shift is the expectation behind them.

Organizations are being asked to operate with more clarity, more consistency, and more confidence in their compensation decisions.

That can’t be solved with policy alone. It requires structure, systems, and a clearer way of working. Because once compensation becomes visible, it stops being just an internal process.

It becomes a reflection of how the organization operates.

If you’re evaluating how prepared your organization is for expanding pay transparency laws and the broader shift in compensation in 2026, it helps to look at how others are approaching the same challenges. 

Connect with Payfederate for a clearer view of how to bring more consistency, visibility, and control into your compensation processes.

Cracking the Code on Pay Transparency: Why It Matters More Than Ever

Boyd Davis, CEO Payfederate

Let’s Talk Money — Openly.

Not long ago, pay was treated like a company secret. Only a handful of people knew who earned what, and the rest of the team worked in the dark, hoping they were being paid fairly. But times have changed. The push for pay transparency has moved from a nice-to-have ideal to a business imperative.

At Payfederate, I’ve seen how fast the tides are turning. Between new regulations, shifting employee expectations, and the growing pressure to attract and retain talent, organizations can’t afford to stay vague about compensation. And frankly? They shouldn’t want to.

Let’s dive into why open compensation strategies are the future—and how your company can lead the charge without chaos.


The Transparency Tipping Point: What’s Driving the Shift?

You’ve probably felt the heat. Governments around the world are enacting new pay transparency laws, and employees are becoming increasingly comfortable discussing their salaries—both online and in the office. Add to that the growing scrutiny from job seekers, and suddenly, opacity isn’t just outdated—it’s a liability.

Here’s what’s pushing the shift:

The Business Case for Open Compensation

Being transparent about pay isn’t just about compliance. Done right, it’s a strategic move with measurable impact.

Let’s connect the dots:

When employees understand how pay decisions are made—and believe the system is fair—they’re more likely to stick around. Trust is the foundation of engagement, and transparent compensation strategies help build that trust.

Think of it like a restaurant with an open kitchen: you’re more likely to trust what’s being served when you can see how it’s made.

A structured, visible job architecture reduces room for subjective decision-making. Layer in skill-based pay and salary benchmarking tools, and you get a system where people are rewarded based on what they bring to the table—not who negotiates the loudest.

Listing salary bands in job postings filters in serious candidates and filters out mismatched expectations. It also sends a strong signal: “We value your time and fairness.”

Transparency forces clarity. It nudges HR teams to get their compensation house in order—to define career paths, align roles with compensation benchmarking, and use the right talent management software to manage internal equity.

Where to Start: From Chaos to Clarity

If the idea of opening up your compensation practices feels overwhelming, you’re not alone. But the good news? You don’t have to go from zero to full sunlight overnight.

Here’s a practical path forward:

✅ Audit Your Compensation Landscape

Map your current roles, pay bands, and gaps. Tools like enterprise compensation management software can help consolidate and analyze this data so you’re working from a single source of truth.

✅ Develop Clear Job Architecture and Career Mapping

Start with defining role levels, responsibilities, and growth paths. AI job matching and career mapping can help you align roles with market expectations and internal fairness.

✅ Establish Transparent Pay Bands

Use salary benchmarking tools to inform your ranges. Don’t just look at industry averages—consider geography, skills, and internal equity too.

✅ Train Leaders to Communicate Pay Confidently

Pay transparency fails when managers aren’t prepared to talk about it. Give them the tools and training to explain how pay decisions are made—and how employees can grow into higher bands.

✅ Use Compensation Management Software to Scale

Modern platforms (yes, like Payfederate) let you manage pay across roles, regions, and business units—without spreadsheets or chaos. They help you make data-backed decisions and create an audit trail that keeps you compliant.


My Take? Transparency Is a Trust Strategy

At the end of the day, pay transparency isn’t just a compliance box to tick—it’s a cultural signal. It tells your employees: “We’re not just about performance. We’re about fairness.”

In a labor market where loyalty is earned, not expected, openness about pay can be your superpower. But like any powerful shift, it takes intention, structure, and the right tools.

So, whether you’re just beginning to untangle outdated pay practices or looking to refine your compensation strategy, remember: every step toward transparency is a step toward trust.

Ready to lead with clarity?
 At Payfederate, we help organizations simplify how they manage roles, pay, and talent—so they can build cultures where fairness isn’t just a promise, it’s a practice.

👉 Curious how you can operationalize pay transparency at scale? Let’s talk.

Is Bad Salary Benchmarking Worse Than Not Benchmarking at All?

Boyd Davis, CEO Payfederate

Employees aren’t just working for pay—they’re investing in the relationship they have with the organization, trusting that they’ll be fairly compensated. When that trust is broken, it’s incredibly hard to restore. Salary benchmarking is a key tool in ensuring that compensation is aligned with market expectations, but if done poorly, it can be worse than not doing it at all. Organizations that lack benchmarking often pay very close attention to signals from the market and employees.  On the flip side, organizations with flawed benchmarking can be lulled into a false sense of security and overlook risks to their talent.  The best solution is to benchmark effectively.

Many organizations rely heavily on salary surveys to benchmark their compensation strategies. While this is a standard practice, I’ve noticed that not all salary benchmarking processes are created equal. Too often, I’ve seen companies fall into common pitfalls that not only skew compensation data but can also erode employee trust, leading to retention issues. In this blog, I’ll walk you through some of the most frequent mistakes organizations make in salary benchmarking and how to avoid them.

The Pitfalls of Salary Benchmarking

Pitfall 1: Job Matching with Inaccurate Descriptions

One of the earliest mistakes happens when companies fail to accurately match their jobs to the appropriate benchmark positions. This may sound simple, but it’s crucial that job descriptions reflect the actual work being done. If you’re using outdated or poorly written job descriptions, the benchmarks you choose will inevitably miss the mark, distorting your understanding of the market rate for specific roles. This mismatch creates salary ranges that are either too high or too low, eroding trust between employees and leadership.

Pitfall 2: Infrequent Benchmarking

The labor market is dynamic, shifting at different rates for different jobs. Some roles, especially those in tech or niche industries, may experience rapid wage increases while others remain relatively stable. If you’re not benchmarking salaries at least annually, you risk falling behind the market. In today’s competitive hiring landscape, this can make it hard to retain and attract top talent.

Pitfall 3: A “One-Size-Fits-All” Approach

Many companies make the mistake of applying the same merit increases across all job categories. The reality is that some roles see faster market movement than others. By treating every position the same, some employees may receive raises that far outpace the market while others fall behind. This not only affects your bottom line but also risks alienating high performers in roles that are seeing fast wage growth.

Pitfall 4: Relying on a Single Data Source

A single salary survey can only tell you so much. Relying on one source of salary benchmarking data is risky, as it can be affected by changes in survey sampling or outliers that skew results. Best practices dictate that multiple data sources should be used to get a clearer picture. At Payfederate, we provide real-time job posting data to supplement traditional salary surveys, ensuring our clients have a comprehensive view of market trends.

Pitfall 5: “Set It and Forget It” Job Architecture

Many organizations use a job architecture to group roles by career level, function, or area. While this structure provides much-needed clarity, it should not remain static. The labor market is always evolving, and it’s important to revisit your job architecture periodically to ensure it reflects current market conditions. A static structure can lead to misalignment between job families, leading to compensation inequities.

Avoiding the Pitfalls

  1. Adopt a Compensation System of Record

Relying on spreadsheets may offer flexibility, but it introduces complexity and makes it difficult to properly visualize, analyze, and compare compensation data. By adopting a compensation management system like Payfederate, your organization can seamlessly assess new market data, track current and proposed pay ranges, and evaluate their impact on employees. This kind of technology ensures you stay aligned with market trends and make well-informed decisions.

  1. Utilize Multiple Data Sources

Traditional salary surveys remain invaluable, but they shouldn’t be your only source of truth. Using a combination of industry-specific and regional data helps round out your view of the market. Tools like Payfederate offer real-time job posting data that can augment traditional salary surveys, ensuring your compensation benchmarking is robust and accurate.

  1. Leverage External Expertise

Smaller organizations often lack the internal expertise to conduct effective salary benchmarking. Engaging a compensation consultant can fill that gap, offering best practices and access to specialized data. Hiring external help is often more cost-effective than purchasing additional data sources and brings fresh insights that could greatly improve your compensation strategy. For trusted consultants, you can explore resources like the Payfederate Consulting Directory.

  1. Make Benchmarking a Continuous Process

Too many companies fall into the trap of conducting compensation benchmarking every two or three years. This cadence is too slow to keep up with a rapidly evolving labor market. Benchmarking should be an annual, if not continuous, process. Spot checks, especially when there are internal escalations or sudden market shifts, are crucial for keeping compensation aligned with both internal goals and external realities.

The Bottom Line: Benchmarking Is Hard, But Essential

Benchmarking salaries is a complex process, but it’s one of the most important things a company can do to maintain employee trust and stay competitive in the market. By avoiding common pitfalls—like inaccurate AI job matching, infrequent benchmarking, and reliance on a single data source—you can levy compensation benchmarking tools and create a compensation strategy that’s both fair and aligned with market trends.

At Payfederate, we’ve built a platform that simplifies the process of compensation benchmarking, providing real-time data, supporting multiple data sources, and continuous monitoring to ensure your company stays ahead of the curve. If you’re ready to elevate your compensation strategy, Payfederate is here to help.

Let’s talk about how we can make your compensation strategy more competitive.
Ready to elevate your approach?

Visit Payfederate’s website to discover how our solutions can streamline your compensation management and keep you ahead in today’s market. Click here to explore.

Pay Transparency will Drive Big Changes in Compensation Management 

Boyd Davis, CEO Payfederate 

I published my first article highlighting the importance of pay transparency almost 2 years ago, but I’m aware the trend is still emerging.  Most of the news coverage is on new states adding laws, employer resistance, or crazy salary ranges. However, it’s clear to those of us in the compensation community that transparent pay ranges for employees and job seekers are inevitable. This will have a significant impact on compensation management solutions and practices.  WorldatWork, the leading professional organization for total rewards professionals, asked me to share how pay transparency would impact compensation management more strategically.  Please read the article and tell me what you think at boyd@plum-elephant-113077.hostingersite.com.  Better yet, take a look at our solution to the new compensation challenges by booking a demo here. 

Read the article at WorldatWork 

Mastering Pay Range Discussions: A Guide for Recruiters

By Sam Reeve, CCP, ​GRP

In the evolving landscape of job recruitment, the introduction of pay transparency has posed unique challenges and opportunities. Recruiters are now often tasked with setting realistic expectations with candidates regarding pay ranges. This guide aims to navigate recruiters through the nuances of these compensation management discussions, ensuring a fair and transparent approach that aligns with organizational goals and candidate expectations.

Understanding Pay Transparency in the Modern Workplace

Pay transparency is more than a trend; it’s becoming a norm across various industries. This shift demands a clear understanding from recruiters on how to communicate pay ranges effectively. Candidates now, more than ever, are inclined to aim for the higher end of these ranges. Understanding this mindset is key to successful negotiations.

Establishing the Framework for Pay Ranges

Pay ranges are typically structured into three levels: entry-level, mid-level, and expert level. The placement within these ranges depends on a candidate’s experience, skills, and the prevailing market standards. This structure serves as a starting point for recruiters to align offers with both market rates and internal equity.

Step-by-Step Guide for Recruiters

Step 1: Preparation

In preparation, it’s imperative for recruiters to work closely with HR and the hiring manager to gain a comprehensive understanding of the specific pay ranges for each role. Knowledge of the competitive pay rates within the market is crucial. This collaboration ensures that recruiters are well-equipped to handle salary discussions with precision and insight, aligning organizational policies with market realities. This collaborative effort is fundamental in setting the groundwork for successful salary negotiations.

Step 2: Communicating with Candidates

In the initial communication, it’s essential to clearly articulate the pay range in job descriptions. Recruiters should emphasize that careful placement within this range is crucial for maintaining pay fairness among the internal team. This clarity in the early stages helps manage candidate expectations and upholds the principle of equitable compensation within the organization.

Step 3: Candidate Evaluation

Evaluating a candidate’s experience and skills objectively is critical in determining their placement within the pay range. This assessment should be unbiased and based on clearly defined criteria that align with the role’s requirements and the organization’s compensation philosophy.

Step 4: Setting Expectations in Interviews

During interviews, recruiters should not only clarify the salary offer but also paint a comprehensive picture of the overall workforce experience at the company. It’s vital to communicate the array of benefits, career development opportunities, and the positive work culture, helping candidates see the full spectrum of advantages beyond just the pay.

Step 5: Managing High Salary Expectations

When handling candidates aiming for the top of the pay range, it’s essential to balance their expectations with the company’s compensation and job structure. Recruiters must clearly convey that an employee’s position in the pay range directly correlates with their abilities and performance in the role. Ensuring that individuals demonstrate their competence for their pay levels is vital for maintaining team cohesion and adhering to the organization’s principles of equitable pay. Misalignment can lead to team disruptions and a breach of pay fairness.

Step 6: Responding to Counteroffers

Dealing with counter offers requires tact and a firm understanding of the company’s pay practices. Recruiters should be prepared to explain why an offer is fair and how it aligns with internal standards, while also being open to reasonable negotiations.

Step 7: Feedback Loop with the Compensation Team

Recruiters should maintain a continuous dialogue with the compensation strategy team, especially if they encounter recurrent issues like qualified candidates perceiving the pay range as too low. This feedback can prompt HR to conduct competitive pay analysis and adjust ranges if necessary.

Wrapping Up

As we reach the conclusion of this journey, it’s clear that your role as a recruiter is crucial in navigating the complexities of pay range discussions. You’re not just offering a salary; you’re shaping the first chapter of someone’s career story with your organization. Through your understanding, transparency, and empathy, you create a foundation of trust and respect. This guide aims to empower you in this process, ensuring that every conversation you have is not just informative but also deeply respectful of both the candidate’s aspirations and the company’s values. Remember, your approach can leave a lasting impact, turning what could be a mere transaction into a meaningful beginning for someone’s professional journey.

A New Pay Transparency Playbook

Steve Goldberg, HR Tech Industry Analyst, Advisor, Top 100 Influencer

Introduction

It is common these days for the words ‘trust’ and ‘authenticity’ to be featured in an employer value proposition. After all, they are emblematic of the values underpinning a corporate culture. The reasons for their prevalence are varied, but one could assert this reflects an effort to mitigate workforce sentiments such as a lack of control or lack of feeling valued. These feelings, when present, might well be a function of the Covid era having destabilized or at least disrupted the lives of both employees and businesses. Aside from that challenging set of dynamics, one must also keep in mind that many organizations were already involved in “intentional disruption” when the COVID crisis hit, better known as some form of business transformation.

Whether reacting to the pandemic by aligning company culture and values with a new set of employee needs and expectations, or just seeking to improve organizational agility (a seemingly universal business goal), HR policies and practices have become anything but static. This trend of a very fluid HR / HCM operating landscape seems to only be accelerating. Other catalysts range from a change in workforce-related laws and regulations (such as around pay transparency or equity), or the need to pursue new sources of HCM-related competitive advantage. Whatever the impetus, more organizations are making investments in their HR data and technology infrastructure to stay well-calibrated within an ever-changing operating context.

New perspectives on pay transparency, and on salary surveys

Clearly, workforce-related laws and regulations have increasingly focused on pay transparency. To start with, 17 U.S. states have some form of pay transparency law on the books; and the states of California, Colorado, Connecticut, Maryland, Rhode Island, and Washington now legally require employers to disclose salary ranges on job descriptions. Moreover, as of November 2022, New York City employers must post salary ranges for every job posting! Specific compliance requirements typically include making salary ranges very visible, accessible, and well understood, with the latter obviously very dependent on effective people managers. Indeed, well-executed pay transparency programs, centered around salary ranges driven by salary or compensation surveys, are a rational, defensible way of explaining why jobs (or skills) are being valued the way they are. This applies both to other jobs internally and to external market pay practices and benchmarks.

With more and more organizations publishing salary ranges and having auditable processes for maintaining and communicating around them, it is easy to imagine salary ranges being leveraged even more broadly. This logically also applies to these being architected and maintained differently, particularly because of today’s much more fluid HR operating environments. So how can salary ranges be leveraged more broadly, likely necessitating a different approach to building and maintaining them; and can this new approach allow organizations to also take their commitment to pay transparency to the next level so to speak?

It’s simply a fact that the world of compensation benchmarking is gradually changing due to transparency requirements. One major way it’s changing is that salary surveys were always foundational to benchmarking and therefore the compensation decision process. Problems can easily arise though for organizations that are in a state of flux with respect to the relative importance of skills and jobs (as business plans and priorities change), and the corresponding supply and demand surrounding those skills and jobs. This is because market benchmarks from salary surveys may not reflect specific dynamics within that organization. For this reason, while salary and total compensation surveys will remain the gold standard for driving pay practices, these typical “market guideposts” are probably no longer serving as the total picture. Once that realization occurs, astute organizations will be looking at ways to also take into account the compensation included in their job postings and job offers in order to have a more real-time composite picture of pay considerations, basically a custom-crafted lens for each organization’s operating dynamics. 

Introducing the salary range system of record

As with traditional systems of record in the Fintech or HR technology arenas, the mission is usually to provide a very reliable, well-rounded picture based on related data points maintained in real-time. Along the same lines, the notion of a salary range system of record would provide guidance on external market salary ranges and benchmarks but also have data guidance as to where market practices should closely apply, somewhat apply, or not apply at all. When not closely applying, it might be due to unique job functions, roles, or skills deemed unusually vital for business success, or perhaps to geographic differentials at play. The salary range system of record can also reflect other types of nuances such as a new compensation vehicle that changes the mix of compensation elements based on different triggers. It can also consider a wider set of job performance or employee value indicators which should ideally cause adjustments to typical market practices.

The bottom line is that when a salary range system of record is deployed, ideally as part of an appropriately designed and built enterprise software platform, it serves to not only house and manage compensation survey data, but all other relevant data needed to achieve business goals, all the while being very transparent about what the data points and compensable factors are.

Conclusion

There are many opportunities for an organization to capture competitive advantage. Arguably one of the best is to make a fluid operating environment an asset vs. an impediment or significant challenge. It becomes an asset when a range of relevant data can be brought together to guide optimal decision-making, such as in the area that happens to be the largest expense item in almost every organization – compensation. This data must of course be extremely reliable, which is also largely the mission of a system of record. Furthermore, in the world of compensation, this can become a huge competitive advantage, especially when jobs aren’t standardly defined or the relative importance of those jobs and related skills are not constant.

The Author

Steve Goldberg’s 30+ year career on all sides of HR process & technology includes HR exec roles on 3 continents, serving as HCM product strategy leader and spokesperson at PeopleSoft, and co-founding Recruiting Tech and Change Management firms. Steve’s uniquely diverse perspectives have also been leveraged by HCM solution vendors and corporate HR teams, and in practice

leader roles at Bersin and Ventana Research. He holds an MBA in HR, is widely published, and is a featured speaker around the globe. Payfederate is an HR Tech advisory client.

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