While many large publicly-traded companies have made strides on making their pay practices more transparent, numerous smaller and private firms have not, says Don Lowman, Korn Ferry global leader of the firm’s Total Rewards business. These firms often make pay decisions on an individualized basis, leading to significant discrepancies in salaries among workers who have the same or similar roles. The firms, Lowman says, know that if they disclose more details about their pay practices their own employees may well start asking some uncomfortable questions, for which there may not be a credible response.
Experts say that companies hoping to can run out the clock on pay transparency regulations will be disappointed. “Regulations are likely to get more restrictive and companies will have to release pay information they don’t want to,” Lowman says.
Ultimately, a lack of transparency could hinder an organization’s ability to attract and retain top talent, McMullen says. “Pay transparency creates a more level playing field for both talent and employer,” he says. Employers seem to agree, to a point. A majority of firms surveyed believe that pay transparency will ultimately lead to more equity and be a benefit to the firm’s overall business and people strategy. However, 51% say increased pay transparency will lead to higher wages and a majority of organizations believe this will be a disruptive process with their current employees.
In other survey results, the average raise in base salary will likely be lower in 2024 than it was in 2023. Economies worldwide are slowing down, fewer people are threatening to quit unless they get big pay bumps, and most importantly, the inflation surge has waned in many parts of the world, says McMullen. Soon there won’t be much difference in raises between mid-level managers, CEOs, or anyone else. In nearly every country, 2024 expected raises will be within a half percentage point no matter the employee group. Experts caution that salary expectations for 2024 could change if inflation or economic expectations change considerably over the coming months.
To learn more about Korn Ferry’s Total Rewards capabilities, contact us or download the 2023 pay survey report.