{"id":20572,"date":"2025-09-05T15:15:49","date_gmt":"2025-09-05T14:15:49","guid":{"rendered":"https:\/\/benefex-dev.local\/en\/2025\/09\/05\/why-pay-transparency-matters-for-both-employees-and-employers\/"},"modified":"2025-09-05T15:15:49","modified_gmt":"2025-09-05T14:15:49","slug":"why-pay-transparency-matters-for-both-employees-and-employers","status":"publish","type":"post","link":"https:\/\/benifex.com\/en\/why-pay-transparency-matters-for-both-employees-and-employers\/","title":{"rendered":"Why pay transparency matters for both employees and employers"},"content":{"rendered":"

In 2019, something unusual happened in Brussels. There was suddenly a consensus: the gender pay gap wasn\u2019t going to close on its own, and the European Commission was urged to take action. The #MeToo movement a few years earlier had shifted how we talk about power structures, the pandemic exposed inequalities in healthcare \u2014 a sector dominated by women \u2014 and a new generation with entirely different expectations around fairness and transparency entered the workforce. Public attitudes toward pay equity had changed, making the political landscape more open to reform. <\/p>\n

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Fair pay through transparency \u2013 building a stronger employer brand<\/span><\/span> <\/span><\/h1>\n

These developments laid the foundation for the European Parliament\u2019s 2023 vote to adopt the EU Pay Transparency Directive. What we\u2019re seeing is a broader shift: pay is no longer viewed as an internal HR issue, but as a reflection of larger societal structures. <\/p>\n

The directive is not just about mandatory reporting \u2014 it serves as a mechanism to ensure we are on the right track. It\u2019s also a reminder that fairness doesn\u2019t happen by default; it must be actively built. <\/p>\n

However, there seems to be a gap between how prepared employers and employees are. According to our latest survey 50%<\/a> of global organizations, including those in the EU, are not prepared for the pay transparency regulations set to be implemented by 2026. <\/p>\n

At the same time, more and more young professionals are ready for transparency. Across social platforms, from LinkedIn to TikTok, they are sharing salary information to highlight inequalities and offer tips on how to negotiate pay. A large part of the workforce is already aligned with the level of transparency the directive will require \u2014 and employers will need to find intuitive, clear ways to present pay data to attract and retain young talent. <\/p>\n

One of the lead negotiators behind the directive, EU Parliamentarian Kira Marie Peter-Hansen, visited us at Benifex Sweden during our Future of HR event this spring to share insights into how and why the directive came into being. According to Kira, if used correctly, the directive can act as a catalyst for real change. <\/p>\n

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Why is the pay transparency directive necessary? <\/h2>\n

\u201cHow many of you in this room can justify every salary in your organization today?\u201d That was the question Kira first asked during the opening of her talk at The Future of HR. Only a few hands were raised \u2014 and we suspect most organizations wouldn\u2019t respond any differently. <\/p>\n

Kira went on to explain that unequal pay today isn\u2019t typically the result of bad decisions, but rather of bad habits. Pay gaps often don\u2019t arise because someone intended them \u2014 but because no one noticed they were happening. <\/p>\n

The Pay Transparency Directive forces us to document our data and actually look at it. And as Kira puts it: “If we\u2019re against this, what exactly are we protecting? Probably our pay gaps.\u201d <\/p>\n

Job architecture in focus <\/h2>\n

At the heart of the directive lies Article 4, which requires companies to start working actively with their job architecture. This means categorizing roles and pay levels to create a structure for equity. <\/p>\n

When roles and levels aren\u2019t clearly defined, it leaves room for arbitrary judgments. And that\u2019s often where pay gaps begin to take root. A clear job architecture not only creates transparency \u2014 it also protects the organization from subjectivity, bias, and unconscious patterns. <\/p>\n

It will be costly, and it will be difficult \u2014 but that\u2019s no reason not to be transparent about what needs to change. <\/p>\n

As Kira says: \u201cComfort doesn\u2019t drive change, innovation, or competitiveness.\u201d And we wholeheartedly agree. For organizations to shift structures \u2014 and potentially generations of ingrained processes \u2014 things sometimes need to be turned upside down. That is rarely comfortable. And this isn\u2019t about blaming anyone for former decisions \u2014 it\u2019s about ensuring equal pay for equal work. <\/p>\n

When asked about the right moment to disclose salary or salary ranges, Kira\u2019s response was clear: she believes transparency should begin in the job posting. Early transparency, she argues, helps create trust that one is being valued fairly \u2014 and also provides context for why a specific salary is offered. <\/p>\n

Pay transparency at IKEA <\/h2>\n

One of the early adopters of equal pay between genders was the INGKA Group, the holding company that includes IKEA. As early as 2013, IKEA conducted its own Gender Equal Pay (GEP) analysis, with the goal of closing the gender pay gap. <\/p>\n

Over the years, they\u2019ve learned that even when gaps are closed continuously, they tend to reappear. That\u2019s because pay-related decisions are made by managers and HR teams throughout the entire employee lifecycle. At IKEA, there are more than 20,000 managers, meaning there are countless decisions around compensation and benefits where things can go wrong \u2014 or right <\/p>\n

Konstantinos Karavidas, Total Rewards Manager at INGKA, spoke at HR Connect in Copenhagen in June and described it like this: <\/p>\n

\u201cWith 20,000 managers, there are 20,000 opportunities to close the pay gap.\u201d <\/p>\n

Raising awareness of pay disparities and engaging in ongoing dialogue about them allows us to gradually shift leadership habits and how salaries are set. <\/p>\n

However, believing that transparency alone will solve everything is naive. Data can reveal disparities and patterns \u2014 but it\u2019s people and culture that determine what we do with that data. <\/p>\n

Konstantinos highlighted that culture varies from country to country, and new generations have different expectations than those before them. Assuming a one-size-fits-all solution risks including some while excluding others. <\/p>\n

Still, when it comes to implementing pay transparency, his stance is clear: \u201cWhy wouldn\u2019t you? Pay transparency and equal pay are not about compliance \u2014 it\u2019s about doing the right thing.\u201d <\/p>\n

Konstantinos closed his talk at HR Connect with three key takeaways: <\/p>\n

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  1. Get the basics in place. Clean up your data structures and remove exceptions. \n<\/li>\n
  2. Define your company\u2019s position. Clarify your pay philosophy and your approach to pay equity analysis. \n<\/li>\n
  3. Train your leaders. They are your most valuable resource for driving this work forward. <\/li>\n<\/ol>\n

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    Pay transparency as an employer branding strategy <\/h2>\n

    We believe that pay transparency is not just about compliance \u2014 it\u2019s about doing what is right. And doing what\u2019s right builds stronger company cultures and stronger employer brands. <\/p>\n

    In fact, companies with clear communication around compensation find it easier to attract and retain top talent. The Global Pay Transparency Report<\/a> shows that employees are 85% more engaged and 60% more loyal when they feel they are being paid fairly. Another study, conducted by Visier<\/a>, found that 68% of employees would switch jobs to gain access to pay transparency \u2014 even if the salary remained the same. <\/p>\n

    Being transparent sends a strong signal that fairness matters, and that your organization is actively working toward it. It builds trust \u2014 and simply makes your workplace more attractive. <\/p>\n

    Pay transparency in our platform <\/h2>\n

    To help you, as an employer, make the most of our platform, you will soon be able to visualize your pay data directly within it. 
    We work closely with Sysarb, a leading pay equity analysis service, to help you structure and analyze your compensation data. That data is then integrated into our platform and intuitively visualized for each employee. <\/p>\n

    Since we use open APIs, we can also retrieve your compensation data in other ways if needed. <\/p>\n

    Here\u2019s what you\u2019ll be able to present in our platform: <\/p>\n