COMP NEWS – A survey of nearly 6,000 compensation professionals has shown that organizations are shifting their pay structures to meet new equity and transparency laws, though not all are happy about the changes.

Traditional pay grades remained the most common form of pay structure for organizations entering 2024, but many were considering market-based pay ranges — segmented either by individual jobs or by groups of comparable jobs — to meet equity and transparency goals, according to a recent Payscale report.

 

The vendor’s late 2023 survey of more than 5,700 compensation professionals, most of them from the U.S. and Canada, found that more than half said their organizations targeted pay ranges either presently or in the future. Another pay structure model, the step structure, was cited by 31% of respondents as a future target for their organizations and by 22% as both a current and future target.

 

A plurality of respondents said their organizations priced pay by targeting the middle of the market, but Payscale said it found that top-performing organizations were more likely than their lower-performing counterparts to pay above-market. Paying above-market rates was also more common among smaller organizations with fewer than 100 employees.

Though pay structures are changing to be more transparent, most respondents confirm that they’re primarily doing so to abide by new pay transparency laws. Some companies were not advertising jobs in locations that required such transparency.

Generally, most respondents to Payscale’s survey said they were posting pay ranges either to comply with applicable laws or had done so regardless of legal requirements. In 2023, only 15% said they were not posting or advertising jobs in locations that mandated pay transparency, and 11% said they had refrained from doing so while they worked on their pay practices. Both percentages declined when respondents were asked about their 2024 plans.

 

While transparency has grown thanks in part to legislation, the manner in which organizations approached the subject varied, Payscale found. For example, nearly 70% of organizations said that they shared individual pay with employees only, and only when required to do so. Only 6% said individual pay was shared within departments, and even fewer shared this information organization-wide or publicly.

To read more about the survey on shifting equity and pay transparency structures, click here.

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