Compliance is a quickly changing challenge for today’s HR leaders, with patchworks of local, state and federal laws testing HR’s ability to keep up. The challenge becomes even greater for the increasing number of organizations deploying talent across the globe. While the increasing pace of change is universal, pay transparency is one of the areas in which compliance regulations are evolving most quickly.
According to new research from Mercer, by 2025, more than two-thirds of organizations around the world had implemented or were in the process of implementing a pay transparency strategy. That figure stands at 81% for U.S.-based organizations, where 48% share pay information both internally and externally.
However, only 16.5% of U.S. employers have fully implemented a pay transparency strategy enterprise-wide, the report found.
The rapid expansion of pay transparency legislation is pushing organizations to keep pace. According to law firm Jackson Lewis, 16 states and Washington, D.C., have pay transparency laws on the books, with more jurisdictions expected to codify such laws in the coming year. Globally, the European Union is setting the standard. The EU Pay Transparency Directive goes into effect in June, requiring organizations operating in EU countries that have at least 100 employees to report gender pay gaps—and then take action to close them.
In fact, legal compliance was cited by 95% of respondents across the globe as a key driver of why they pursued a pay transparency strategy.
Beyond compliance, employee engagement and market competitiveness prompted most companies to look at pay transparency last year, a shift from factors like company values and employee satisfaction in 2024.
“While many organizations are focusing on meeting legal requirements, an increasing number of forward-thinking organizations are viewing pay transparency as a way to drive credible employee engagement and retention as well as elevate their employer brand,” said Tauseef Rahman, Mercer’s Global Pay Transparency Solutions leader, in a statement. “Being clearer on the rationale and reality of pay can go a long way in building trust with employees and candidates.”
Planning for a changing future
Business leaders also reported their organizations have grown increasingly comfortable navigating pay transparency requirements: Preparedness levels globally jumped from 32% in 2024 to almost 50% last year.
Significant global disparities still persist in preparedness, however, with North American countries reporting the greatest levels of readiness, which Mercer researchers say gives them a better opportunity “to leverage pay transparency as a strategic advantage, realizing cost savings and productivity gains.”
Those that are capturing those aims and reducing compliance risks are prioritizing leadership alignment, job architecture, and clear communication and data, Mercer says, and are committed to a “collaborative and iterative focus.”
“Readiness is not ‘one and done,’ ” they write.
Mercer offers a five-point playbook to help HR leaders guide their organizations toward preparedness for changing pay transparency regulations:
- Assess readiness, including reviewing compensation philosophy and policies.
- Set your destination by considering key questions around where the organization is headed and how pay transparency fits in.
- Plan for the journey by looking at current risks and gaps.
- Share the company’s story by engaging employees on a global scale, but with a local focus.
- Measure success by leveraging data and insights.
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