Five ways pay transparency can boost talent acquisition

Not necessarily. You need to disclose a salary range before the first interview. Some EU countries, like Ireland, require this in job ads, but most leave it to your discretion.

You can't ask about past salaries, but you can still negotiate salaries, provided you're clear about the criteria (e.g., education, skills, experience). You can offer more than the disclosed range if justified by your pay criteria.

You must disclose the base pay range, but you should also inform candidates about other rewards (e.g., benefits, bonuses) and the criteria for receiving them.

By not asking about current salaries, the EU Pay Transparency Directive can help raise pay for undervalued candidates. For others, it may contain salary inflation by tying rewards to clear criteria rather than market pressure. In the US, we haven't seen a clear trend towards pay rate inflation in states that introduced salary transparency rules.

Implementing the EU Pay Transparency Directive is an opportunity to reassess the skills needed in a fast-changing economy, their value, and the rewards they should command. This will help you develop clear criteria for pay rates and communicate the rationale to candidates and employees. Start by thoroughly reviewing your remuneration policy and understanding the key factors that influence pay decisions. This will help you clearly identify the specific skills and behaviours you want to reward.

Key decisions include whether to include pay levels in job ads and how wide to set ranges. These choices must balance clarity, flexibility, and talent attraction.

The more information you provide, the better your chances of attracting suitable candidates. Minimum disclosure might seem to offer more negotiation room, but it could also confuse or deter candidates who wonder why you're withholding pay information.

Practical steps include outlining different approaches. The assessment should focus on feasibility and effort, as well as what minimal disclosure says about your company's culture and values.

Existing salaries are no longer the starting point for pay and benefits negotiations, so it's crucial to rethink how you discuss rewards. This can be challenging, but it's also an opportunity to start a constructive conversation about your total package and the criteria behind decisions. You can also explore how candidates can build their careers with your company, develop their skills, and advance up the pay scale.

Clarify who determines and approves the criteria for setting pay, along with any guideline exceptions. Are decisions backed by reliable data, particularly regarding pay equity impact? How much flexibility do recruiting teams have, and who approves it? How can you ensure pay offers and negotiations comply with requirements and support your internal pay philosophy?
A good starting point is mapping the RACI (Responsible, Accountable, Consulted, Informed) framework. This will clarify expectations for all relevant stakeholders and prevent gaps or misunderstandings.

Foster close collaboration between reward, talent acquisition, and HR teams in setting and communicating pay criteria. This creates a consistent narrative about pay and progression that candidates and employees receive, no matter who they speak with. In practice, each stakeholder should clearly understand their responsibilities and how to work together. It's also important to involve line managers in the governance chain and secure their buy-in for pay and hiring decisions affecting their teams.