New regulations in the U.S., Canada and Europe require companies to be more
transparent about their pay practices
CHICAGO, Dec. 5, 2024
/PRNewswire/ -- Aon plc (NYSE: AON), a leading global
professional services firm, today released results from its 2024
North America Pay Transparency Readiness Study, revealing
that 75% of employers are not ready for pay transparency laws,
which are currently or will be in effect in 14 U.S. states and four
provinces in Canada by the end of
2025 and in all EU countries by the end of 2026.
Pay transparency laws aim to close the gender wage gap, and the
study highlights the challenges in reaching that goal. The study,
which includes survey results from 626 U.S. employers with
employees based both inside and outside North America, shows only 51% of employers
have conducted an independent pay equity analysis. Of those that
conducted this analysis, 84% identified pay equity gaps and
disparities. Only 34% of those employers that found pay inequities
have added additional funding to correct them.
"The rise of pay transparency and pay equity initiatives
reflects a broader cultural shift, particularly among younger
employees," said Brooke Green, Head
of Talent Solutions for North
America at Aon. "What was once considered impolite to
publish salary information has increasingly been recognized as a
practice that reinforces and exacerbates pay gaps. Employers who
align with these new regulations sooner rather than later will be
better positioned to address wage disparities, promote fairness and
empower employees to make informed career decisions."
Additional findings from the report include:
- 18% of employers say they feel ready for pay transparency.
- The industries with higher levels of readiness include: retail
& e-commerce (33%); financial institutions (21%); manufacturing
(20%); and professional & business services (20%).
- 63% of employers do not currently communicate salary ranges to
their employees.
- Of the 37% that communicate salary ranges, 61% only do so where
required by law, 23% throughout the U.S. and 16% globally.
- 81% of employers publish salary ranges on job postings,
indicating a gap in how employers communicate with their employees
and prospective talent.
- Of these 81%, 34% publish a portion of the salary range where
legally required, 20% list the full salary range by location, 18%
provide a portion of salary range by location and 10% publish the
full salary range by location.
- 69% of employers have not implemented a pay transparency
communication strategy.
"More than half the U.S. population lives in places with some
form of regulation, and more than 60% of Europe will be covered by the EU Pay
Directive," said Kelly Voss, head of
rewards and career advisory, North
America at Aon. "This, coupled with the growing compliance
concerns and the social movement toward pay transparency, is
spurring more employers to act and become more transparent with
their total rewards strategies. Those organizations that are out in
front will have a more compelling employee value proposition. This
will not only increase engagement among their current workforce but
will be more attractive to prospective employees."
To support employers in navigating pay transparency and
developing effective total rewards strategies, Aon recently
announced new features to its integrated Radford McLagan
Compensation Database. These enhancements expand the platform's
data and analytics capabilities, empowering HR and total rewards
leaders to benchmark compensation, evaluate plan design practices
and access actionable talent insights to drive better
decision-making.
"To keep pace, companies must have access to data and
intelligence to properly and consistently benchmark, evaluate and
define jobs around the world," Voss added. "This intelligence
readies organizations for pay transparency and helps them to both
remain competitive in local, regional and global job markets as
well as differentiate themselves among their competitors."
As pay transparency rises in importance, employers are making
plans for 2025 employee raises, portions of which may be used by
some companies to address pay inequities. Average overall salary
increase budget* for 2025 is predicted to be 4.6%, roughly the same
as 4.7% reported this year in the U.S., according to data from
Aon's Salary Increase and Turnover Study. This includes merit
increases, promotions and market adjustments. Aon also reported
20.7% of U.S. employees left their jobs, of which 11.8% departed
voluntarily in the first six months of 2024.
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the
better — to protect and enrich the lives of people around the
world. Through actionable analytic insight, globally integrated
Risk Capital and Human Capital expertise, and locally relevant
solutions, our colleagues provide clients in over 120 countries
with the clarity and confidence to make better risk and people
decisions that protect and grow their businesses.
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* Includes promotion increases, market adjustments, internal
equity adjustments and merit increases.
Media Contact
Robert
Elfinger
1-312-610-3182
robert.elfinger@aon.com
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SOURCE Aon plc