What Healthcare Leaders Need to Know About Pay Transparency
Understand how salary transparency impacts healthcare organizations. And get clear guidance to develop equitable pay systems that foster trust and fair pay.
Pay transparency is becoming unavoidable across industries—and healthcare is no exception. It’s rapidly becoming an operational reality for many healthcare organizations.
And it can be particularly challenging for those operating across multiple jurisdictions. “They’re managing different legal requirements, labor markets, and expectations of what ‘fair pay’ looks like,” says Liz Bickley, senior client partner and COO at Korn Ferry Healthcare.
Shortages of healthcare workers are a global problem, according to the World Health Organization, so retaining staff is particularly important in this sector. Compensation is one of the strongest drivers of retention. In Korn Ferry’s Workforce survey, 89 percent of healthcare respondents said pay and the work itself were their top two reasons (tied) they would stay in a role.
As salary ranges become more transparent, nurses, doctors, and other healthcare workers can compare their pay with that of new hires. If disparities appear, employee dissatisfaction rises and attrition risk increases.
While many healthcare professionals are drawn to the field by a sense of purpose, they still expect fairness in pay.
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“People come into healthcare because they want to make a difference,” says Greg Button, Korn Ferry’s president of Global Healthcare Services. “But that doesn’t mean they’ll tolerate inconsistency or opacity in how they’re paid.”
Read on to find out how to bring in pay transparency in a way that will become a benefit for your organization, helping attract and retain the best healthcare talent.
What Is Pay Transparency?
Pay transparency is the practice of making employee compensation information accessible to employees, candidates, the government, or even the public.
How that’s interpreted varies widely. For example, a company might:
- Include salary ranges in job postings
- Share pay bands and how raises are determined
- Allow employees to know what others in similar roles earn
- Publish the salaries of senior leaders
- Provide pay information for all staff to regulatory authorities
Why Is Pay Transparency Important?
The goal is to improve pay equity, which is broadly defined as equal pay for equal types of work.
But 57 percent of executives in a recent Korn Ferry survey admitted that they aren't sure that their pay decisions are equitable across similar roles.
Pay equity is vital to building a culture of trust and fairness. And today, more employees, shareholders, and governments are demanding pay equity and pay transparency implementation.
Pay transparency laws are now being rolled out around the world to enforce the issue. That’s because, despite decades-old equal pay legislation in many countries, significant pay disparities still exist.
For example, the US Equal Pay Act of 1963 was meant to ensure that men and women performing equal work received equal pay. Yet, more than 60 years later, gender pay gap data shows that women working in salaried, full-time roles in the US were paid only 82.7 percent as much as men.
What Are the New Pay Transparency Laws?
To try to address the gender pay gap, dozens of governments across the world have brought in or are developing a mix of pay equity (equal pay) and pay transparency (disclosure/reporting) laws, often bundled together or evolving in stages.
In some cases, the laws extend beyond gender reporting into other factors, such as ethnicity, disability, and sexuality. Below are some key regions with pay transparency laws.
What Are the Risks and Benefits of Pay Transparency?
Whether you’re legally required to enact pay transparency or not, the reality is that doing so can give you a strategic advantage. But there are notable pay transparency risks to consider.
While the benefits of pay transparency are significant, implementation sometimes can be a bumpy ride. Leaders and managers have valid concerns about pay transparency that need to be addressed before proceeding.
So what are the pros and cons of pay transparency? And how does pay transparency work in practice?
Benefits of Pay Transparency
Improves brand reputation
When candidates and employees can see how pay decisions are made, they’re less likely to perceive disparities as discriminatory. This helps with your brand reputation, improving your ability to attract and retain top talent.
Helps ensure fairness
Providing visibility into how compensation is determined, such as pay scales or compensation frameworks, can be a powerful way to show that your organization values fairness. This is particularly true if you have a clear plan to address any identifiable pay inequities.
Builds employee trust and productivity
When employees can see that their compensation is based on objective criteria, they’re more likely to trust their employers. This positively impacts productivity.
Attracts and retains talent with transparent compensation
Organizations that embrace pay transparency are viewed as more attractive, particularly by younger generations who prioritize openness and social responsibility.
Employees who feel that their compensation is competitive and equitable will stay with the organization longer.
How Pay Transparency Supports Talent Strategy
A Guide to Fair Pay: Attract Top Talent with Pay Transparency
Explore our pay transparency guide to learn how to implement fair pay, build trust, and attract top talent through fair compensation practices.
Pay Transparency Risks and How to Manage Them
Pay transparency can strengthen trust and fairness at work—but rolling it out without a clear strategy can create unintended challenges. Here are some common risks and how to manage them.
How to Implement Pay Transparency
Putting pay transparency into action isn’t a quick job. Here’s a step-by-step roadmap.
Steps to Implement Pay Transparency in Your Organization
- Audit Your Current Pay Practices
- A pay equity audit involves evaluating your existing reward strategy, structure, and processes to uncover hidden disparities and inconsistencies.
- Assess job sizing, grading, leveling, and pay policy so you can address issues prior to formal reporting or communications.
- Align Salary Transparency with Company Values
- Ensure transparency efforts reflect your company's core values and principles.
- Help leaders define what fair and transparent pay looks like in practice so there’s a shared understanding before decisions are made.
- Leverage Pay Tools and Resources
- Use analytic pay tools and leverage external benchmarking data to inform workforce planning, job architecture, and pay structures.
- Create clear and consistent compensation opportunities across the organization.
- Build a Transparency-Ready Job Architecture
- To develop a transparent job architecture, standardize roles, titles, and levels across the organization to ensure consistency and comparability.
- Link roles, skills, and progression to pay so decisions are clear, consistent, and easy to explain.
- Develop a Transparent Communication Strategy
- To foster a culture of trust and openness, inform employees about new frameworks and practices, as well as the reasoning behind them.
- Remember that clarity and consistency are key.
- Enable Managers to Have Compensation Discussions
- Give managers pay insights to help them understand the big picture, including how and why pay frameworks have been developed.
- Train managers how to have confident, open, and respectful pay and performance discussions with their teams.
- Create Employee Compensation Feedback Channels
- Establish channels for upward feedback and ongoing employee input, questions, and concerns regarding compensation.
- Encourage an environment of open dialogue, promptly address any issues raised, and be willing to refine practices accordingly.
- Monitor and Adapt
- Develop a clear pay transparency checklist to be sure your strategy is progressing as planned.
- Continuously assess and refine your pay transparency initiatives as needed.
The Path to Pay Transparency
Need more clarity? Our all-in-one guide to implementing pay transparency sets out a clear process to implementation.
And our expert-led webinar, It Pays to Plan: A Strategic Roadmap for Pay Transparency, discusses how transparent compensation practices can drive fairness, trust, and organizational success.
Implementing pay transparency isn’t just about compliance. It’s a powerful strategic tool to enhance employee engagement, improve brand reputation, and attract and retain talent.
As the movement toward transparency reshapes the workplace landscape, now is the time to act.
Why Korn Ferry for Healthcare?
Korn Ferry helps healthcare organizations find the right people and develop the workforce strategies needed for long-term growth.
With a dedicated healthcare practice and deep industry knowledge, we work across the full talent journey, from leadership strategy to workforce planning to total rewards.
We serve organizations across the healthcare continuum, including hospitals, health systems, payers, pharmaceutical companies, specialty care practices, and medical device companies.
Our healthcare specialists bring both industry depth and cross-industry perspective to every engagement, working closely with clients to solve complex people challenges.
We work with 10 of the top 10 academic medical centers, 10 of the top 10 managed care and health insurance firms, 20 of the top 20 hospitals, and four of the top five children’s hospitals
What's Next for Pay Transparency in Healthcare?
As regulations evolve and workforce expectations continue to rise, healthcare organizations need pay transparency strategies they can explain clearly and apply consistently. Those that act now will be better positioned to attract, retain, and build trust with the talent they need.
Start implementing these strategies now to strengthen your employer reputation and compete more effectively for talent in a challenging market.
Get in Touch
Find out how Korn Ferry’s Healthcare team can help you with pay transparency.
