I can picture the various reactions on your faces. Some employees are grinning from ear to ear. Employers are most likely cringing. Others come from a generation that believes it is taboo to talk about your pay, and then there are other people who are proud to publicize what they make.

Pay Transparency is a topic that has become increasingly popular recently, and there are various feelings around it. It truly is a two-sided coin. Employees feel it is positive because it protects them from discrimination. It also helps to uncover pay equity issues and to know if they’re paid market value for their role. Employers may be more concerned with losing a competitive edge, or small businesses fear that they may lose employees or candidates because they can’t pay what the larger companies can.

Employees and employers need to understand that you cannot take wages for face value. Many factors equate to total compensation. However, the most significant factor is where you live and the cost of living. So, if you live and work in Florida, you can’t expect to be paid California wages for a similar job. We also need to consider that total compensation includes other items outside salary. Things like time off, flexibility, remote work options, health insurance, disability, life insurance, and paid holidays; all those things and more make up total compensation. And they should be a consideration when considering compensation between two employers.

Until recently, most private organizations have been able to make their own decisions regarding pay transparency. Now, we’re seeing state mandates make their way across the U.S. for pay disclosures in recruitment. So, some of you (Colorado, Connecticut, Maryland, Nevada, New Jersey and Ohio, California, Rhode Island, and Washington and NYC) have already or will be forced into pay transparency for open positions. I imagine these mandates will continue to expand across the country.

So, what does this mean for you?

For some states, you must post the range you intend to pay in job ads. For others, it means you must disclose the salary information to an applicant when asked or before talking about compensation. You’re not likely to get away with posting something like $50,000+ or an unrealistic range of $0 - $500,000. You are expected to post what you are willing or intend to pay.

This means you need to know what you’re willing to pay for the job you’re hiring for. Now, most small businesses have gotten into the bad habit of winging it, with no real thought behind wages. This is precisely how discriminatory pay practices weasel their way into your company. So, you must be intentional about wages. Market value matters, geographic location (cost of living) matters, and so does what you can afford – that’s the reality. That’s most likely the most daunting challenge for you today, especially as wages rise like never before in every industry.

Having a plan, taking the time to work out the details, and setting standards in your pay practices will help you. It will reduce the stress you feel around compensation. It will help you to create and maintain equitable practices. So, when situations like pay disclosures or employees asking for a pay raise come up, you will have already thought through this and know how to handle it. That’s the difference in taking an intentional approach. And keep in mind that employees have a right to talk about their wages. This is not something you can prohibit, or you'll find yourself in violation of the NLRA.

I can’t stress enough the importance of having a structured compensation plan in your business. Pay transparency is just one of the reasons why. It doesn’t need to be complicated. You can get started today with Hi-Wire HR. We are dedicated to supporting small businesses with their HR needs, and we’re able and happy to create a comp plan that works for your business.