Home Business The Significance of Transparent Payroll Processes in Building Trust Among Employees

The Significance of Transparent Payroll Processes in Building Trust Among Employees

by Olufisayo
Transparent Payroll Processes

Transparent payroll processes refer to the extent to which a company is open about the remuneration current and potential employees receive. Companies may share information about how they calculate salaries, salary ranges, and even individual salaries.

Transparent payrolls are popular among employees. A 2022 report from Beqom, a compensation software firm, found that 60% of US employees would start working for a new company if it were more transparent about salaries than their current employer.

GenZ, the youngest generation to enter the workforce, is the most comfortable discussing salaries – 89% of its representatives are willing to communicate openly about the subject, compared to just 53% of boomers.

Tools for compensation transparency

Modern-day employees expect greater control when it comes to remuneration, such as tools to calculate hourly wage and payroll systems with self-service portals. Those empower employees to access details about benefits, revenue information, and pay stubs. Employee self-service is becoming a trend because it increases satisfaction and reduces the burden on HR departments.

Salary transparency laws in different states

As of 2024, it is mandatory to disclose salary information in just under a dozen US states. Colorado employers must include salary range information in job descriptions under the 2021 Equal Pay for Equal Work Act. Connecticut requires employers to provide a salary range for any job positions they advertise. The law stipulates that employees get information on salary ranges when they switch to a new position.

Companies in Maryland have been required to share salary ranges for job positions since October 2020. However, this is only if the candidate requests to know the range.

In Nevada, employers must disclose salary ranges to job candidates and employees applying for a new position or a promotion.

Transparency cultivates trust

CNBC reports that more and more employers are opting to share remuneration in their job ads, which isn’t a surprise: when you know what you’ll be getting paid, you trust the company more. Transparency cultivates trust, leading to a healthier work culture that employees want to remain part of. Existing employees appreciate knowing how much they’re getting paid compared to their coworkers.

Employers compete to provide higher starting salaries and perks

The move to embrace transparency has sparked competition for more benefits and higher starting salaries. According to a recent payroll transparency survey by ZipRecruiter, more employers are also including a variety of perks, non-cash benefits, and flexibility options. The survey revealed that more than 70% of employers post salary information in job listings. On ZipRecruiter, salaries are listed for up to 60% of job postings.

As knowing the salary when applying for a job becomes normal, employees can benefit from increased awareness of additional perks. According to data released by the US Bureau of Labor Statistics on March 13, 2024, benefits comprise 29.4% of compensation for private industry workers. For civilian employees overall, the percentage is 31.4%.

Building trust in the workplace

Trust enables leaders to have a meaningful impact on employees. It enables team members to achieve desired results collectively and empowers them to exceed expectations. Practicing relational intelligence is key for trust to develop. This is the ability of a leader to build strong, lasting relationships with others.

A 2023 Deloitte study shows that trusted businesses outperform their counterparts by up to 400%. 79% of workers who trust their employer are less likely to quit and more motivated to work. Trusting employees have 41% lower rates of absenteeism, are 260% more motivated to work, and are half as likely to look for another job. At the same time, around a quarter of employees don’t trust their employer, and most employers overestimate the degree of trust in the workplace by as much as 40%.


How can you build trust among employees?

Pay transparency is an excellent way to build trust. For trust to develop, employers must practice relational intelligence to create a relationship-oriented culture of excellence.

How do transparent payroll processes help create trust?

When employees know others’ salaries and feel their payment is fair, they are convinced the company recognizes their worth and are more likely to stay.

Which states have salary transparency laws?

Washington, Colorado, California, Connecticut, Rhode Island, New York, Nevada, Maryland, Illinois, and Hawaii have salary transparency laws in place. A few other states are considering passing such laws.

Photo by Money Knack on Unsplash

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