As the new year kicks off, companies must still navigate through a competitive labor market. Yet, retaining and attracting top talent is more challenging than ever. One powerful strategy that addresses these challenges is pay transparency, the practice of openly sharing compensation data, pay ranges, and the logic behind salary decisions.
According to a 2024 Mercer study, pay and benefits remain the top reasons why an employee chooses and stays with an organization. Financial stress continues to weigh on these workers, with many struggling to cover monthly expenses, increased debt, and rising healthcare costs. Transparent compensation practices not only address these concerns but also enhance employee satisfaction, and reduce turnover.
The Growing Demand for Pay Transparency
Employees increasingly expect compensation transparency as part of their relationship with employers. Companies that openly communicate pay structures build trust and loyalty, creating a more engaged workforce.
Mercer’s study found that employees who are provided with pay data from their employers are twice as likely to believe that they are paid fairly. These employees were also 85% more engaged and 62% more committed to their organization, underscoring the direct link between pay transparency and employee engagement.
Providing clarity around compensation helps employees understand the value of their role and fosters trust, which is essential for attracting and retaining talent in today’s competitive job market.
Pay Transparency as a Retention Strategy in 2024
While 68% of employees now plan to stay with their employer, this figure remains below 2021’s retention level of 72%, according to Mercer’s study. This highlights the need for employers to take proactive steps to retain talent. Pay transparency has emerged as one of the most effective tools for meeting this challenge. Employees who understand their compensation and see fairness in pay structures are less likely to leave. Transparent pay structures foster trust and a sense of belonging, motivating employees to stay longer. Transparency helps employees see potential for career progression within the organization, reinforcing their commitment.
Addressing Financial Stress with Compensation Transparency
In 2025, financial stress remains a significant concern for employees. Mercer’s study found that covering monthly expenses tops the list of employee concerns, followed by the ability to retire. Transparent pay practices can alleviate some of these concerns by helping employees plan their finances with greater confidence.
Additionally, pay increases in 2023—the largest since the 2008 financial crisis—have improved employee satisfaction, particularly when combined with clear communication around total rewards. Employers that actively communicate how pay decisions are made and the value of benefits and rewards can further reduce financial stress and strengthen employee engagement.
Operational and Cultural Benefits of Pay Transparency
In addition to improving retention, pay transparency offers businesses several key advantages. Open pay practices signal fairness, making your company more attractive to candidates. Transparency helps organizations identify and address potential pay gaps, promoting a more inclusive workplace. Mercer’s study found that employees working from the office four days a week are the most engaged. Transparent pay practices ensure all employees, whether remote or in-person, understand and trust their compensation.
Pay Transparency as a Strategic Imperative
In 2024, pay transparency is essential for retaining and attracting talent. Employees are increasingly focused on fair compensation and benefits, and companies that communicate openly about pay will stand out in the competitive job market. As Mercer’s study shows, employees who feel they are paid fairly are more engaged and committed.
With financial stress remaining a top concern, transparent pay practices not only build trust but also improve employee well-being and engagement.
Streamline your pay transparency efforts with TRS Express. Book a demo to learn how our platform can help you create professional, branded Total Rewards Statements that foster trust and strengthen employee retention.