"Forward-thinking" employersprovide employees with total compensation statements or totalreward statements that outline all of the employee'srewards.

Highly skilled talent is scarce—and getting scarcer. The questfor talent is leading many employers to step up their "paybrand" by being more transparent around compensation and benefits,according to PayScale's 2020 Compensation Best Practices Report.

"Workers today expect transparency because we are living in adigital, interconnected world where information about workplacecultures and practices are easily accessible," PayScale writes. "Ina candidate's market, the best people are going to look forpositions with employers who are open and fair, reward performance,and offer opportunities for learning and developing and careergrowth."

Related: How top employers are upping their benefit packagesto attract talent

PayScale surveyed more than 4,900 employers and found thatcurrently, only 38 percent of the respondents share pay ranges withemployees on their job position, 2 percent higher than last year.Most, however, want to increase their transparency about their paypractices, with the majority targeting Level 3 or 4 on PayScale'sso-called "Pay Transparency Spectrum" which defines the degree towhich an organization shares its compensation strategy withemployees.

Level 3 is when an organization has a compensation plan andshares pay ranges with individual employees, and Level 4 is when anorganization's compensation plan reflects organization's culture,drives talent strategy and is open to employees (Level 5 is whenranges and employee pay information is available to allemployees).

"Increased pay transparency also increases employee engagementand retention when compensation strategy is tied to salary marketdata and decisions about pay are well communicated," PayScalewrites. "In addition, PayScale research has also shown that paytransparency closes the gender wage gap."

The road to greater transparency entails developing acompensation plan, and this year 70 percent of employers say thatthey either have a compensation philosophy/strategy or are workingon one. Thirty percent of organizations use pay ranges for each jobposition and 24 percent still use pay grades. Seventeen percent usea mix.

"Greater pay transparency requires a more mature compensationstrategy," PayScale writes. "It's difficult to communicatetransparently when you don't have clear methodologies to answerquestions about how you determine pay and it's dangerous to betransparent if you have internal pay equity problems."

In 2019, 16 percent of surveyed employers switched from usingpay grades to setting ranges for each position. Of those that madethe switch, 20 percent say the main reason was increased precisionor to gain a better understanding of the true market value of eachposition, 14 percent say it was for greater flexibility toaccommodate more rapid pay changes, 7 percent to improve cultureand ensure employees aren't so focused on pay grades, 9 percent toimprove pay transparency, and 49 percent for a mix of the abovereasons.

"Another best practice is to share pay ranges for individualpositions with employees as well as where the employee falls withintheir range and why," PayScale writes. "The reasons why includethings like years of experience, education, specific skills,location, past performance and other compensable factors. When youare forthcoming about pay, you communicate to employees that youcare about getting their pay right and are interested in theircareer growth and future within the organization."

"Forward-thinking" employers provide employees with totalcompensation statements or total reward statements that outline all of theemployee's rewards, according to the report. These include basepay, variable pay, and benefits, sometimes with a monetary valueassigned so that the employee can understand the total value oftheir position within the organization. In 2019, only 38 percent ofemployers provided a total compensation or total rewards statementto employees.

"Although giving employees so much information about theircompensation can feel scary, it's important to remember thatemployees are an investment," PayScale writes. "Very likely, theorganization has made very conscious decisions about what to offeremployees in terms of base pay, variable pay, and benefits. Notexplaining this information to employees only leaves the door openfor employees to misunderstand or undervalue their compensation andbenefits."

Other key survey findings include:

• In 2019, 66 percent of organizations agree or strongly agreethat retention is a top concern, which is similar to last year. In2019, 82 percent of organizations gave base pay increases, with 3percent being the most prominent increase given, which is alsosimilar to last year. Eighty-five percent of organizations plan togive base increases in 2020.
• Employers are continuing to employ a variety of tactics toattract and retain top talent. These include merit-based pay (60percent), learning and development (57 percent), discretionarybonuses (34 percent), and more perks (26 percent).
• The majority of employers (57 percent) have completed a salarymarket data study at least once in the last 12 months. The majority(52 percent) also reference market data for individual job titlesat least twice to year; 17 percent did so monthly, 14 percent didso weekly, and 6 percent do so daily. Eighty-four percent oforganizations use more than two data sources and 4 percent usedmore than five data sources.
• Employers are continuing to offer standard benefits in highpercentages, such as medical, dental and vision insurance (78percent), retirement contributions via a 401K or 403B (73 percent)and accrued or granted PTO (60 percent). However, more atypicalbenefits are also being offered and have grown in popularity. Forexample, remote work is now offered by 48 percent. Education ortuition reimbursement is offered by 45 percent of employers andflex-time is offered by 39 percent. Paid parental leave is alsogrowing in popularity at 38 percent. Unlimited PTO, which is stillunusual, has grown to 11 percent.
• Top-performing employers, defined as those who exceeded theirrevenue goals in 2019, offer higher base pay increases as well asmore varied incentive pay, such as company-wide bonuses, profitsharing, and employee referral bonuses in addition to individualincentive bonuses. Top performers are more likely to have adedicated compensation team, conduct a full market study oncompensation and use both third-party survey data as well as paidsubscription data.
• Top-performing employers are also better communicators aboutpay decisions and offer manager training on compensation basics inhigher percentages than non-top performing organizations.

"Top performers are also more likely to provide more benefits,especially tangible benefits, and agree that employees know how toget to the next level of their career within their organization,"PayScale writes. "Finally, top performers were more likely toensure they are part of their organization's strategicdecision-making processes."

Read more: 

• 5 factors to consider before plunging into a totalrewards program
• Adapting your compensation strategy to keep up withtoday's worker expectations
• What "total rewards" areas are employers focusingon to recruit top talent?