Transparency: Another word for trust 

When we trust people, we turn to them for help and support, especially in difficult or challenging situations. Those people become a rock we can lean on to regain our footing or a safe foundation to launch into something new. This is particularly true in the workplace, where companies are often asked to fulfill the role of foundational support. Most employees want to create a relationship with their organizations that is built on trust, from which they can safely innovate and grow.

But what is trustworthiness, exactly? In the workplace, trust is predicated on honest, clear, proactive communication — what we commonly call transparency. Unfortunately, according to Mercer’s most recent Global Talent Trends survey, employees’ trust has dropped drastically in the past two years. And in many ways, this comes down to a problem of transparency.

Over the last few years, pay transparency has become a central topic for organizations. Initially, it was seen as an issue or checkbox that needed to be dealt with, similar to other compliance-related topics. Pay transparency can be seen as a burden or as an opportunity, and seeing it as an opportunity to win trust may not be as obvious for many organizations. 

Transparency is a powerful force for earning trust. According to Mercer’s 2023-2024 US Inside Employees’ Minds Survey, employees who believe they are paid fairly are 85% more engaged and 60% more committed to their organization. That makes a substantial difference in the workforce. If employees are both more engaged and committed to the organization, this means lower attrition, which results in:

What does all of this have to do with pay transparency? It comes down to a very simple question: Will employees be more engaged and committed to an organization they believe pays them fairly? The answer is undoubtedly “yes”. By creating the conditions for the employees to trust the organization, a company is establishing a foundation that can be relied upon. If, conversely, an organization is dragged into transparency and doesn’t do the work to prepare their data and employees effectively, that transparency could backfire spectacularly.

While there are many factors that people consider when evaluating whether to join or stay with their employer, being open about pay from the beginning, and engaging in open, honest dialogue around it, certainly gives an organization an advantage over organizations that don’t.

Companies must also cultivate transparency around skills and career pathing. Artificial Intelligence is already having a tremendous impact on our society and how we work. Much of the discussion around AI centers on how it can bolster human activity and eliminate non-value-added tasks. But AI is also having a transformative effect on how we think about and manage skills themselves. If, due to AI, work will be done differently, then how it is organized and distributed must also be done differently. Likewise, “good performance” will be defined by different skills because there are new expectations and new opportunities.

Research from Mercer’s 2024 Global Talent Trends survey indicates that 98% of companies, due to the influence of AI, are planning to conduct work redesign in 2024, and the primary topic involves redesigning career models and pathways. The realization is growing that jobs will no longer do exactly what they once did, and companies will need to keep up. So how do they keep up?

Job architectures, or “talent inventories,” have been around for a while, but not every company has them. With the changes AI is bringing to work, these inventories are going to become even more urgent. Companies will need to better understand what talent they do and don’t have—and moreover, what that talent can actually do. Skills-based job architectures, many of which already exist in technical industries, will become more and more the norm. Creating a taxonomy with skills is a more elusive task, but equally important. According to Mercer’s recent Inside Employees’ Minds survey, employees who say their employers provide them with the skills they need to succeed are 50% more committed to the organization. Yet currently, only 29% have linked relevant skills to jobs.

Therefore, this also becomes a matter of transparency and trust. Employees want to trust they have a future at their organization, a way forward. They will not know that unless there is a clear path to follow that identifies the skills they can collect along the way.

Changes around AI and pay transparency are inevitable and will affect us all. Looking at Mercer’s Inside Employee Minds survey, 68% of employees say they already know their pay range despite only 26% of employers openly communicating them to employees. More concerning is that 61% have already researched the pay ranges through other job postings, and this means they are looking at what competitors — who are posting pay ranges — are paying. Transparency is already arriving, and the only question is how organizations will adapt.

In fact, 57% of Gen Z employees say they currently share their compensation information with colleagues. This means that employees are already formulating their own ideas of what is fair based on what a competitor is willing to show and what colleagues are willing to share without the original organization’s context. The organization no longer controls the conversation of what fair pay is and why it is fair — and fair pay, according to Mercer’s Global Talent Trends survey, is one of the top two reasons people stay with an organization.

Transparency, like trust, is not easy and requires both time and focus to build. To increase both across your organization, you will want to begin with a close look at your culture and start formulating an intentional plan. What does “transparency” mean for your organization? Where is your organization strong or falling short? What corrective or proactive actions might you consider to increase transparency around work and pay? What might that time horizon look like? Are you hoping to show pay ranges internally to managers in the next six months, then employees in the next twelve months, and externally a year later?

Next, get your house in order and start assessing the policies, procedures, data, and documents you will make available. Mercer refers to this as a “Readiness” phase, and it means examining and assessing everything related to your pay program: promotion guidelines, administration guidelines, general policy documents, handbooks, census files, compression testing, pay equity testing, etc.

Assessing these items in advance will give you time to revise them before they become available more broadly. It will also help clarify to employees what is going on. Once the readiness is complete and the strategy is set, it is time to figure out the communication and rollout plan — anticipating potential questions and helping employees to understand and interpret what they will be shown. Next stop: full transparency.

Transparency is inevitable, so the only viable option is to be prepared. But transparency is more than a burden — it is also an opportunity. Employees are looking to create a relationship with their organizations built on trust, and if they cannot find one with their company, they will look elsewhere. Transparency, done thoughtfully and thoroughly, is a valuable chance to earn their trust and loyalty — and keep them thriving with you for a long, long time.