Three Actions for CHROs to Increase Pay Transparency

Increased pay transparency enhances talent outcomes, builds employee trust and improves retention. Moreover, global legislation increasingly mandates transparency on specific compensation topics.

For example, the EU pay transparency directive will be effective in 2026, and a growing number of U.S. states and other countries are implementing pay transparency laws. Advancing pay transparency is critical to help organizations boost key talent outcomes.

We spoke with Augustus Vickery, Director, Advisory in the Gartner HR practice, to discuss what HR leaders should do to prepare for increased pay transparency, including changes in process, policy, employee communications and reporting.

Journalists who would like to speak with Augustus regarding this topic can contact Mary.Baker@gartner.com or Gerri.Weinberger@gartner.com. Members of the media can reference this material in articles with proper attribution to Gartner.

A: In addition to abiding by all legal equity analysis reporting requirements, CHROs should prepare for upcoming pay transparency legislation with the following three actions: 

1. Revalidate compensation philosophy and principles with the HR leadership team – The first priority is to review current rewards principles and philosophies and assess whether they are fit-for-purpose for the future. Ideally, the CHRO will convene a cross-functional HR team to align on principles and execution.
2. Engage business and executive leadership teams on pay principles and philosophy – Often, executive leadership teams do not have visibility into how their organization is complying with current and future regulations or the implications. The CHRO must provide clear and concise information on the current legal and regulatory landscape to their peers, as well as the implications for how rewards policies and processes need to be applied. The CHRO should also communicate the revalidated compensation philosophy and principles to the executive team.
3. Revise salary ranges, job structure and compensation policies according to refreshed pay philosophy – Once the CHRO secures agreement from executive teams on the updated principles and philosophy, they must address three things: Employees’ positions in salary ranges; Job structure and levels; Compensation policies and processes. 

A: Despite efforts by HR and managers, a May 2025 Gartner survey of nearly 3,400 employees found only 40% agree their organization is transparent about the total value of their pay and only 36% agree their organization is transparent about how pay decisions are made.

This lack of transparency and perceived fairness can be detrimental to organizations, resulting in lower employee engagement, effort, retention and a distrust amongst employees towards their employer.

In today’s tumultuous volatility, uncertainty, complexity, and ambiguity (VUCA) business environment, disengaged employees who don’t trust their employer and want to quit are troublesome. Advancing pay transparency will help build trust, boost talent outcomes, and improve retention.

• Building Trust: When employees are given visibility into how their pay is determined, they feel a stronger sense of security and trust in their organization.
• Boosting Talent Outcomes: Organizations with higher levels of transparency experience measurable benefits including significantly higher employee engagement.
• Improving Retention: As employees gain clarity on how their roles align with organizational goals, they become more inclined to explore internal roles, pursue development opportunities and envision a long-term future with the organization. 

A: Organizations often face challenges in addressing pay equity, particularly when it comes to unexplained pay gaps resulting from past pay practices. These pay gaps often arise from legacy systems or subjective pay decisions, and they can persist unless organizations adopt a rigorous approach to identifying and resolving them.

To overcome this, organizations must conduct regular pay equity analyses to assess whether pay practices are fair across all demographic groups, ensuring that employees in similar roles receive fair compensation regardless of gender, race or other characteristics.

Organizations often have difficulty making the required culture shift to more transparency around pay. Employees and leaders may resist due to discomfort with such openness about pay, and managers may not feel equipped to handle transparent conversations about pay.

Organizations must equip managers with the necessary skills and knowledge to confidently discuss compensation. It is crucial that managers can clearly communicate how pay is determined, how decisions are made, and what growth opportunities exist.

Gartner clients can learn more about pay transparency in the report "Prepare for Emerging Pay Transparency Directives With 3 Actions" and the on-demand webinar "Driving Performance Through Pay Equity in 2025."

About Gartner HR Symposium/Xpo

Gartner HR Symposium/Xpo is where CHROs and their leadership teams gather each year to reimagine their strategies through the lens of Gartner’s research-driven insights and expert advice on leadership and learning, employee experience, culture and change, talent acquisition and workforce planning, and HR technology. Gartner HR Symposium/Xpo will be held October 7-9 in London, October 27-29 in Florida, and November 17-18 in Sydney. Follow news and updates from these events on LinkedIn using #GartnerHR.