Article: More businesses are ready to adopt pay transparency – are you?

Compensation & Benefits

More businesses are ready to adopt pay transparency – are you?

As Asia grapples with the concept of pay transparency, will businesses step into the light or linger in the shadows of outdated practices?
More businesses are ready to adopt pay transparency – are you?

Despite the lack of pay transparency regulations in most Asian countries, nearly 4 in 5 organisations in the region, surveyed by Aon, view pay transparency as important to their business.

This has sparked a movement among companies to provide greater clarity in how they reward and remunerate talent, findings of Aon’s 2023-24 Asia Pay Equity Survey revealed.

Aon’s study is the largest of its kind, collating over 350 responses from 13 Asian markets – including India, Japan, Singapore, Malaysia, and the Philippines – and uncovering factors at play behind compensation strategies.

Greater pay transparency, better outcomes for employers

While most regulatory requirements are still under way, calls for stricter pay equity and disclosure laws are “gaining momentum worldwide,” the report suggests.

This wave of change compels organisations to enhance their total rewards and talent strategies to adhere to new regulations; promote their employer brand; and improve how they attract and retain talent.

With or without regulatory requirements in place, employers tend to agree that being open about remuneration enhances their employer brand, as well as their talent attraction, retention, engagement and motivation outcomes, Aon found.

“Although it is still nascent, trends in pay transparency show that regulations will catch up in the region and most organisations may have to disclose some information about pay transparency,” said Peter Zhang, partner and head of Talent Solutions for Aon in Asia Pacific.

More eyes are on this trend now, especially amid the wider challenge of closing the pay gap between certain classes of workers. Not the least of which are gender pay disparities.

“[With] regulators showing keen interest in pay equity and introducing legislative requirements, it has got the attention of boards, business leaders and HR alike,” the analysts wrote.

“Pay transparency practices in Asia are mostly driven by regulation and compliance (72%), followed by DEI policy (58%) and peer practices (38%).”

Growing emphasis on pay transparency

Overall, 79% of businesses in Asia believe pay transparency has a very high importance, if not an increasing level of importance, to their organisation.

Of the key markets surveyed in the region, for example, India had the highest percentage of employers (86%) placing importance on pay transparency.

But to what extent are businesses really transparent about their pay practices – and with whom do they share the data?

For most other Asian countries, pay transparency is yet to be enacted into law. As a result, employers in these markets decide on the scope of their pay transparency practices based on their DEI commitments, peer practices, local market requirements and global headquarters’ mandate.

Aon also found most employers (84%) keep the information within their community of internal stakeholders, such as their senior leadership, board members and employees. For companies that add external stakeholders to their circulation, they typically provide context around their pay decisions, such as their compensation philosophy.

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Topics: Compensation & Benefits, Strategic HR

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