Why pay transparency could give you a competitive edge

The winds of change are blowing through the world of work, and pay transparency is at the forefront. Building on the trends we saw in 2024, 2025 is shaping up to be the year that workforce expectations are compelling businesses to rethink their stance on openness regarding pay. 

This shift is not happening in isolation. In the UK, the increasing focus on fair and equitable compensation practices is amplified by the impending arrival of new European Union regulations on pay transparency.

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What does pay transparency mean?

At its core, pay transparency refers to the degree to which information about employee compensation is shared, both externally with job seekers and internally among employees. This can encompass a range of practices, from including salary ranges in job advertisements to openly communicating how pay decisions are made within an organisation. 

It's about moving away from opaque and often secretive compensation practices towards a more open and understandable system.

Why is pay transparency important and how to be strategic about it?

The importance of pay transparency stems from several key factors. Firstly, it directly addresses the growing expectations of the modern workforce. Professionals increasingly demand clarity and fairness in compensation, viewing it as a fundamental aspect of trust and respect from their employers.  

Secondly, transparency can be a powerful tool for attracting and retaining top talent. When organisations are upfront about pay, they can be more likely to attract candidates whose salary expectations align with the role, leading to a more efficient hiring process and reduced risk of costly mis-hires. For existing employees, transparency fosters trust, reduces feelings of inequity, and can boost morale and engagement.

Being strategic about pay transparency involves more than simply disclosing salary ranges. It requires a thoughtful approach that considers the organisation's culture, values, and overall talent strategy. Key strategic considerations include:

• Defining the scope of transparency: Deciding what information to share, with whom, and at what stage of the employee lifecycle.
• Ensuring internal equity: Reviewing and adjusting internal pay structures to ensure fairness and consistency before becoming more transparent externally.
• Communicating clearly and contextually: Providing clear explanations about how pay decisions are made, the factors influencing compensation, and the overall value proposition beyond just salary.
• Training and preparing managers: Equipping managers to have open and honest conversations about pay with both candidates and employees.
• Regularly reviewing and adapting: Continuously evaluating the effectiveness of transparency initiatives and making adjustments as needed based on feedback and evolving best practices.

Related: What is salary benchmarking?

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The UK context behind navigating EU pay transparency regulations

For businesses in the UK, the topic of pay transparency is particularly salient due to the upcoming EU Pay Transparency Directive. While the UK is no longer part of the EU, many UK-based organisations with operations or talent pools within the EU will be directly affected.  

Furthermore, this directive is likely to influence the broader conversation around pay equity and transparency within the UK itself, potentially leading to similar domestic pressures or even future legislation. Unsurprisingly, our latest Talent Trends - launching soon! - reveals that 62% of professionals support government legislation to mandate greater pay transparency, indicating a strong desire for systemic change.

The EU Pay Transparency Directive aims to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women. Key requirements of the directive include:    

• Pay transparency for job applicants: Employers will be required to provide information about the initial pay level or its range in job advertisements and before the job interview.
• Right to information for employees: Employees will have the right to request information from their employer on their individual pay level and the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value.    
• Reporting obligations for employers: Larger employers will be required to report on the gender pay gap.
• Joint pay assessments: Where gender pay gaps exceed a certain threshold, employers will be required to conduct joint pay assessments in cooperation with employee representatives.
• Strengthened enforcement and remedies: The directive includes measures to ensure effective enforcement and provides avenues for workers to claim their rights.

Given this backdrop, UK businesses, whether directly impacted by the EU directive or not, are increasingly aware of the need to proactively address pay transparency. The following talent trends data underscores why this shift is not just a regulatory necessity, but a strategic advantage in today's competitive talent landscape.

Talent Trends: The rising demand for pay clarity

The winds of change are indeed blowing through the world of work, and our data paints a clear picture: professionals are increasingly discerning, and transparency isn't just a nice-to-have – it's a must-have.

Consider this: a staggering 68% of job seekers say salary information is the most crucial element they look for in a job description. This isn't just idle curiosity; it's a fundamental need for clarity before even considering an application. Furthermore, in a "wait and see" mode, 89% of those not actively applying are still open to the "right opportunity". This means organisations could be missing out on a vast pool of potential talent simply by being opaque about pay.

It's not just about the money, although a good salary ranks as the most important factor for 84% of professionals. Our data also reveals that 45% of UK professionals prioritise finding a sense of purpose in their role. This highlights a desire for holistic alignment, where fair compensation is a key piece of the puzzle.

However, a significant disconnect exists. Over a third (37%) of professionals feel their senior leadership isn't transparent when it comes to sharing financial information, and 59% believe their organisation's salary structure lacks transparency. This lack of openness breeds mistrust and can hinder both attraction and retention.  

This demand for clarity has significant implications for how organisations approach hiring, job advertising, and internal pay structures. Listing salary in job ads is no longer a radical idea – it's becoming an expectation. As Andrew James, Managing Director at Michael Page London, advises:

[...]Businesses that clearly articulate what their ‘whole employee offer’ is – and how it aligns with candidate priorities – not only streamline the hiring process to save time and money, but also build strong local brand recognition. By focusing on applicants who match both the needs of the team and realities of the offer, organisations are far more likely to secure the right candidate and avoid costly mis-hires.

The "Expectation Gap" we identified last year continues to evolve. Now, it's not just about what both sides want, but how effectively those expectations are communicated. Transparency is the bridge that can close this gap, ensuring alignment from the very first interaction.

Ready to turn insights into action?

Watch out for our 2025 Talent Trends report launching soon for in-depth analysis and insights! This year we dive into the key questions that top candidates are seeking clarity on including salary, flexible working policies, GenAI guidance, company culture and values around inclusivity, and trust and transparency.

Register for our webinar, “The key to hiring talent: Why clarity is your competitive advantage” on Thursday 22nd May at 11am to hear from our panel of industry experts who’ll dissect what our new research means for you and your business.

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