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Business

Pay disparity among workers with similar job titles hurts businesses

By Jack Campbell | |5 minute read

A lack of transparency, coupled with disparity in pay, is hurting businesses as employees are left unhappy.

Almost half (49 per cent) of workers in Australia believe their colleagues with similar job titles are paid the same as they are, according to HireVue’s 2023 Equity in Hiring Research Report.

This lack of equity in pay is harming the attraction and retention of employees, with 51 per cent of respondents claiming they’ve been turned off by a job due to a lack of pay information.

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Employers can’t get around this, as 40 per cent of workers have admitted to openly discussing pay levels with their colleagues. HireVue highlighted that Aussies are valuing pay transparency more than ever.

Incorporating pay transparency into the hiring process and keeping it throughout the employment cycle can help business leaders boost engagement.

According to Hays, some of the benefits of pay transparency are:

  • It’s important to employees.
  • Trust, morale, and engagement improve.
  • Motivation increases.
  • Bias is reduced.
  • Candidate attraction improves.

However, as with most things in life, there are also downsides to be considerate of. Hays listed them as:

  • Internal resentment could build.
  • Tunnel vision can impact morale.
  • Turnover can rise.

To mitigate these issues, communication must be upheld. This includes discussion of pay scales, providing context for employees. As transparency is the name of the game, this must be upheld beyond simply the distribution of pay.

HireVue noted that pay transparency can lead to better diversity. Equitable opportunities can lead to more equitable outcomes. However, this is not a “set and forget” policy – it requires ongoing attention and a truly equitable mindset.

“There is no quick fix for workplace equity. Instead, dedication, skill and long-term commitment are required from leadership teams to drive change in all areas of the business – starting with hiring,” said Tariq Shaban, senior assessments consultant at HireVue.

“Talent decision makers are the gatekeepers of opportunity, and by adopting practices that are grounded in evidence, these leaders have a chance to truly diversify their workforce. Perceptions of [diversity, equity, and inclusion] initiatives can vary significantly between employees and leadership. For a program to have lasting impact, it’s important to keep lines of communication open with organisations to encourage open and honest feedback.”

There is work to be done, as HireVue revealed that 37 per cent of respondents said they had been discriminated against during a hiring process. Of those who had been, 44 per cent put it down to age and 36 per cent to gender.

Meanwhile, 47 per cent have been dissuaded from applying for a role following an employer’s request for a certain number of years of experience, and another 37 per cent have been discouraged from applying for a role by the requirement for a specific educational level.

Addressing issues with inequality begins at the hiring process and requires ongoing care and attention. Without this, policy will fall flat and real change will be stalled.

Jack Campbell

Jack Campbell

Jack is the editor at HR Leader.