Conventional workplace etiquette has long discouraged discussion of salary between employees, ostensibly to avoid comparison, in-fighting and unwarranted demands for pay increases. 

However, over the years, pay transparency proponents have argued that the distancing from pay transparency has led to increased pay disparity and inefficiencies in hiring processes that harm both companies and prospective employees.

“To me, at a very basic level, it’s wasting your time as an employer and the time of the person applying if you aren’t being transparent about the salary or other things that you’re expecting,” said Rachel Bruns, chief engagement officer for America’s Service Commission and a vocal supporter of pay transparency policies. 

Pay transparency in the hiring process, as well as clear goals and expectations for how employees can advance within the company, can help to align everyone on company goals and ensure everyone is compensated fairly.

What is pay transparency? 

At its very basic premise, pay transparency policies let both current and prospective employees know what the earning potential is for different positions and how that potential is calculated. 

Melissa Ness, CEO of Connectify HR, said they typically see companies take one of three approaches to transparency policies: No sharing of any pay information, the sharing of salary ranges for roles and new hires or the sharing of salaries of every role and how those choices are made. 

“It’s all in how you do it, I think, that defines whether they’re successful or not,” Ness said. “So getting really clear about what you’re doing in terms of decisions and making sure it’s well documented or trained with leaders.” 

As of April 2025, according to HR Dive, 22 states have banned using an applicant’s pay history to set compensation. According to the Poster Compliance Center, 13 states require companies to list ranges in job advertisements, four require companies to disclose pay scales upon request and four prohibit employers from punishing employees who discuss their wages. 

For groups who have historically been underpaid, such as women or people of color, access to this information can encourage them to ask for more compensation than they might otherwise, disrupting the cycle of pay gaps between people of different identities doing similar work. Current employees remain informed of their earning potential. Leadership and rank-and-file employees build trust to ensure everyone will be compensated fairly for quality work. 

Who benefits from pay transparency? 

The February 2026 jobs report showed the U.S. lost 92,000 jobs and the unemployment rate increased to 4.4%. 

In an uncertain economy, job seekers want certainty wherever they can find it. Applicants want to understand what a company can offer them from the beginning. A lengthy hiring process may result in an applicant walking away from the opportunity if the salary range doesn’t meet their needs, leaving both the job seeker and the employer back at square one. Even worse, it could discourage qualified potential employees from applying at all. 

“This shouldn’t be an end-of-a process conversation,” Bruns said. “Between 70% and 80% of applicants say they do not apply for a position if it doesn’t have a salary listed. They don’t want to waste their time.”

Set salary ranges also allow employers to maintain their financial strategy for payroll costs. 

“If companies are just hiring and negotiating with the individual, I don’t think it’s good for the long-term sustainability of an organization to be potentially paying people based on individual negotiated rates,” Bruns said. 

A report from the National Women’s Law Center showed the benefits of pay transparency for businesses. The perception of pay transparency in a workplace decreases employees’ intent to leave by 30%. Listing pay ranges on a job listing led to more job applicants for 70% of organizations and a 66% increase in the quality of applicants. 

The report also showed that employees who are aware of how their pay compares to their colleagues’ may be compelled to work harder, leading to company-wide efficiency gains. If companies use pay transparency as an opportunity to clarify roles and expectations within those roles, employees have a better understanding of how they can advance within the company while fulfilling the needs of their employers.

Clarity is key

Ness explained that companies that are successful at implementing pay transparency policies are those that clearly define company roles and expectations. 

“A lot of companies don’t have very clear job descriptions and if they did at one time, they’ve altered because people shift and change what they do,” she said. “Once your roles are clear, then your salary bands can become more clear.” 

That role clarity protects companies by establishing clear expectations for how employees are supposed to perform. Employees understand what they need to do to move up to the next level, and it reduces speculation or misinformation about how other employees are getting compensated. 

Ness recommends companies be very clear on what is informing the salaries they decide to share, whether they are based on the market, the cost of living or performance incentives. Ensuring managers can effectively communicate the why behind these decisions builds more trust within the organization, she said. 

“A lot of people thirst for this in their work. Not just what they do each day, but how the company defines success and what’s their future potential,” Ness said. 

Bruns’ organization began rolling out salary transparency policies when they decided to require it from companies that post on their service job board within the AmeriCorps network. They gave them a year to make the transition and clearly outlined the reasoning behind it. 

“We were very intentional about why we’re expecting this, how it would benefit them and how it would benefit their community,” Bruns said. 

She sees the biggest incentive for pay transparency is its ability to help both companies and employees grow and prosper. 

“At the end of the day, we want organizations in our community to be thriving and productive, and everyone doing the best that they can to meet their mission or purpose, whether it’s a business or nonprofit,” Bruns said. “We want everyone thriving, and I think the way that we do that is transparency in terms of pay, because that’s going to help organizations recruit and employ the best people for those positions and ensure that employees working in those positions are confident and productive and focused on their work.” ν

Disclosure: Business Publications Corp. is a client of Connectify HR.