74% of employees want pay transparency. Why are companies afraid of what employees expect?

THESIS: Companies are afraid of pay transparency not because it is bad for employees, but because it may expose inconsistencies in their own system. Transparency does not create the problem. It reveals it.

A gap that says a lot

The contrast is striking: most employees are ready for transparency, while most employers are not. This gap does not stem from differing views on values but from differing levels of readiness. Employees have little to fear. Employers, on the other hand, are often afraid of what transparency might reveal.

Importantly, employees are not asking for a revolution. They expect salary ranges, criteria, a clear process and explanations behind decisions. In other words, they expect what a well-managed organization should have anyway. In practice, the expectation of transparency is an expectation of order.

What are companies really afraid of?

Not only employees’ reactions but, above all, the exposure of their own pay inconsistencies. What does this mean in practice? Two people in the same role earning different salaries without a clear explanation. Bonuses awarded on a whim. Promotions without defined criteria.

The fear of transparency is therefore, in many cases, a fear of confronting a disorganized pay system. This is actually good news for employers, because the problem is not transparency itself. It is something the company can realistically fix before Directive 2023/970 comes into effect.

Market experience

Markets that introduced pay transparency earlier offer clear lessons. Companies that treated transparency as an opportunity to organize their pay policy gained higher employee trust, greater cost predictability and a stronger competitive position.

Companies that treated it as an unpleasant obligation and published data without a remediation plan faced media and reputational pressure. The difference was not made by the pay data itself, but by whether that data was supported by a consistent policy.

Tick off the EU Directive or use it strategically

EU Directive 2023/970 will make transparency an obligation, including salary ranges in job ads, pay gap reporting and the shifted burden of proof. Companies can simply tick this obligation off. But they can also act more wisely and use this moment to organize their pay policy earlier.

The difference between these two paths is fundamental. The first creates compliance costs and risk. The second turns the same effort into an advantage: a stronger employer brand, improved retention and lower legal risk. This is the moment when compliance can become strategy.

WHAT THIS MEANS FOR YOUR ROLE

HR: assess readiness: do we have salary ranges, criteria and a process that can withstand transparency?

Legal/Compliance: transparency is a requirement under Directive 2023/970. Without a system, the company risks disputes and sanctions.

Leadership team: this is a maturity test. Acting earlier means advantage, not cost.

Pay transparency does not create the problem. It shows whether the system is organized.