Requirements for salary disclosure are coming, but less than 20% of Canadian employers have implemented pay transparency strategies, according to Mercer survey
The report, based on responses from more than 1,000 companies worldwide, finds that pay transparency is quickly becoming a requirement for organizations across the world — critical not only to comply with local regulations in certain countries but also to attract and retain employees.
In Canada, over the last two years, four of ten provinces – British Columbia, Newfoundland & Labrador, Ontario and Nova Scotia – have legislated or plan to introduce new requirements for salary disclosure. Companies are starting to respond, yet only 16% have implemented a pay transparency strategy, while 41% have strategies in development and 22% plan to develop their strategy within the next year.
“A large portion of Canadian organizations are not yet thinking about transparency beyond legal requirements, showing a prevalent compliance-centric approach. But Canadian employees are savvier than ever about compensation, even though employers have been reluctant to share,” said Christie Rall, Partner, Transformation with Mercer Canada. “Organizations need to proactively prepare for continued legislation around both candidate and employee transparency and align with their shifting expectations.”
The survey found that while 77% of companies cited compliance as a key driver of their pay transparency strategy, more than 50% of companies noted increasing employee satisfaction and aligning with company values as additional leading drivers.
“Organizations should keep pay transparency at the forefront of their planning in order to create a competitive advantage to attract and retain talent and build a more inclusive culture,” added Rall.
Nearly seven out of 10 employers (69%) across the world agree that pay transparency is an expectation of candidates. In all regions, expectations for pay transparency are higher among candidates than employees, reflecting the growing demand for open compensation practices in the talent market.
While employers acknowledge the rising expectations around pay transparency, there is still a significant readiness gap. Less than one-third (32%) of organizations said they feel prepared to meet global transparency requirements.
Looking ahead, companies plan to significantly increase their level of sharing of hiring pay ranges on job postings. Currently, 60% share hiring pay ranges but this is expected to rise to 94% globally in the next two years.