Giving pay transparency the right foundation 

What story is your organization telling with pay transparency?

Financial services firms are under increasing pressure to disclose pay structures, whether due to government regulations such as the EU Pay Transparency Directive, or due to rising employee expectations. But simply sharing salaries and compensation details isn’t enough. Without a solid foundation—clear job architecture, updated grading and a well-defined skills framework—and a strong narrative, transparency can backfire, exposing inconsistencies, fueling employee dissatisfaction and eroding trust.

Many firms view pay transparency as a compliance exercise, a box to check to avoid legal risks. According to the 2024 Mercer Global Pay Transparency Report,  over 80% of financial services and banking companies say they share pay philosophy or strategy, pay policies and target incentives. 

Financial services and banking are ahead of this curve in terms of transparency. That same report shows nearly half of companies in the financial services sector anticipate increasing the level of pay information only where legally required, while 47% plan to share pay information internally or externally in a more standardized way. 

However, for 75% of companies, compliance is still the key driver for pay transparency—and that’s a missed opportunity. Organizations that take a more strategic approach have an opportunity to turn pay transparency into a powerful tool for attracting and retaining top talent. When jobs, career paths and compensation structures are clearly defined, transparency helps employees see their future within the organization. It reinforces fairness, strengthens employer branding and improves workforce engagement—and as a result, productivity. 

Regulation may be the loudest voice in the conversation around pay transparency but it isn’t the only one. Employees are demanding clearer, fairer pay structures and companies that fail to deliver risk losing talent to competitors that do. 

In the financial services sector, the 2024 Mercer Global Pay Transparency Report  has found that two-thirds of companies recognize that employee expectations around pay transparency are growing. Nearly 90% of Gen Z workers openly discuss pay with colleagues (e.g. current salary level, bonus amount, salary increase, promotion increase) and almost half of job seekers say they won’t even apply to a company that doesn’t disclose pay ranges upfront. 

This comes at a time when the industry is facing an escalating talent shortage. In the US alone, more than 270,000 finance and insurance jobs remained unfilled at the end of 2024. The competition for skilled workers is fierce, with financial services ranking among the top sectors for projected job growth. According to the December 2024 employment outlook from ManpowerGroup, 40% of firms in the industry plan to expand their workforce, making it one of the most aggressive hiring markets outside of tech.

For employees, fair pay is often a deciding factor—the second most important reason they choose to stay with an employer, climbing from fourth place in just two years. Transparency alone isn’t enough. Employees don’t just want to know what they’re being paid; they want to understand why—how their compensation compares to peers, how career paths influence earnings and how they can grow within the organization.

Companies that treat pay transparency as more than a compliance issue stand to gain a significant edge in the talent stakes, Mercer research has found that employees who believe they are paid fairly are 85% more engaged and 60% more committed to their organization. 

Pay transparency only works well when you have a well-kept house. If employees see wide pay gaps between similar jobs—or unclear paths for advancement—they are more likely to feel frustrated than reassured by transparency.

A well-defined job architecture eliminates this risk. It establishes clear job families, sub-families, levels and career progressions, ensuring that employees and candidates understand where they stand, what they can achieve and what’s required to move forward. This structure gives employees a sense of direction and stability, making transparency a positive force rather than a liability.

The good news is that financial services firms are already ahead of other industry sectors in adopting job architecture. According to Mercer’s 2024/2025 Global Job Architecture Report on Banking and Financial Services , more than 90% use it for compensation and benefits decisions, and 71% rely on their compensation teams to manage it.  

For transparency to be effective, firms need to ensure their job architecture remains current, fair and fully integrated into compensation practices. Without this, transparency efforts risk doing more harm than good—exposing problems rather than solving them.

A strong job architecture will ensure that compensation reflects real value. Integrating skills into job structures is a way financial services firms can create pay systems that are not only transparent but also fair and future-proof.

Skills-based compensation is gaining traction in the industry, where 67% of firms update their skill data at least once a year. Our 2024 Skills Snapshot Report for Banking and Financial Services  found 83% of financial services firms now factor skills into career development, while about half use them for succession planning and rewards. Companies that recognize and compensate employees for evolving expertise—not just job titles—will create more equitable and motivating pay structures.

Again, financial services are ahead of the curve, as they are slightly more likely than the average to link skills to job architecture—14% are doing so (vs 13%) and 41% plan to implement in the next year (vs 38%) according to our 2024/2025 Global Job Architecture Report on Banking and Financial Services . Those numbers still leave plenty room for improvement and scope to gain advantage over the competition.

According to our 2024 Financial Services and Banking Pay Transparency Survey , 53% of financial services firms conduct pay equity studies but only 38% of firms actively use job architecture to address disparities and close gaps. By linking pay directly to skills and job levels, firms can reduce bias, justify compensation decisions and strengthen employee trust in the system.

Pay transparency alone doesn’t guarantee full fairness but a job architecture that integrates skills can—in pay, job evaluation processes and career pathing. Companies that make this connection will not only meet compliance requirements but also create a workforce that is engaged, mobile and confident in its earning potential.

Pay transparency may start with compliance but it definitely shouldn’t end there. For financial services firms, it presents an opportunity to build trust, enhance employee experience and gain a competitive edge in the war for talent. But transparency without structure is a risk—without a clear job architecture, firms may expose inconsistencies instead of reinforcing fairness.

The time to act is now. Financial services leaders should prioritize job architecture updates to create a transparent, fair and competitive workforce.