How Pay Transparency Impacts Small Businesses

Part of a series  |  Pay Transparency Series

A cafe worker leans on a counter holding a cup and saucer while talking to another person.

Small-business owners may be concerned about pay transparency if they feel they can't compete with the salary and benefits of larger employers. However, small businesses can leverage the power of personalization and culture to attract, hire and retain talented employees.

Talent attraction is the biggest hiring challenge facing small-business owners right now, and some fear the push for pay transparency will make it even more difficult to find quality candidates. Small businesses often lack the budget to compete with larger organizations when it comes to salary and benefits, so understanding how pay transparency impacts small businesses is key to navigating the changes ahead.

Fortunately, there are many things small-business owners can do to attract and retain talented employees. Some of these strategies even improve work culture and the employee experience simultaneously.

Kristen Appleman, Senior Vice President and General Manager of ADP TotalSource, closely watches the trends of what works — and what doesn't — for small-business owners. She explains how a small business can use creativity and personalization to meet hiring goals and preserve a strong team.

Personalization sets small businesses apart

One of the foundations of talent attraction for small businesses is showing candidates what's special about your business and the team that runs it. This can be as simple as having strong communication and follow-through with job seekers during the hiring process.

"If you're a small business owner, you should follow up with candidates when you said you would," Appleman says. "This is true especially when you think about the generation that you are hiring. Many people are now very comfortable with text messages. So maybe you're not able to have a 30-minute conversation that moment, but you can send a text message to say, 'Hey, Alex, wanted to see what time you're available this afternoon. Our slower time is around 3-4 p.m. Does that work? If not, text me a few options. Looking forward to talking to you. Hope you're having a great day!' That is perfectly fine."

Reaching out to applicants using methods they're comfortable with rather than relying on stringent traditions may help you interact with more candidates and keep them engaged throughout the hiring process.

It can also be valuable to consider personalization when it comes to setting work schedules if it would entice employees to stay. Appleman advises offering flexibility in scheduling to the extent possible — including earlier or later shifts, split shifts or four-hour shifts rather than the standard eight. These options can make it easier for employees to balance the other responsibilities in their lives, whether that's picking up a child from school, working another job to make ends meet or needing to check on an aging parent in the middle of the day.

Shine a spotlight on your culture

Work culture is often one of the key reasons people choose to work for a small business over a larger organization. Highlighting your culture throughout your recruiting efforts can help to bring in the right candidates.

Appleman advocates for small-business owners to "manage the message when it comes to what you want prospective employees to think, feel and do." When writing job postings, tell a compelling story about what it's like to work in the organization, what the culture is like and what makes the team unique. Highlighting the human side of your business can charm job seekers who value community and cooperation in the workplace.

It's also helpful to give job seekers a clear picture of what the opportunity offers. While positions at larger organizations may have a narrow focus, small businesses allow employees to wear many hats, gaining knowledge and experience in various functions. Appleman says many job seekers appreciate the chance to "really view a more holistic part of the business, to play a greater role and have the opportunity to broaden their skill set."

How and where you look for employees matters, too. Don't overlook local community members and customers as potential talent sources. Consider advertising job openings on your premises with signs and flyers, or you might offer referral perks to customers who help you find a new employee, such as a gift certificate or free product from your business. You can't predict who will know someone who is looking for work; spreading your message among your client base can help broaden your reach.

Deploy the same tools as larger employers

Using talent management tools that give your organization the same look and feel as larger employers can limit how pay transparency impacts small businesses by showing job seekers and employees that you value and prioritize their experience. These kinds of tools, especially when paired with a savvy social media strategy, can make a polished first impression and grab candidates' attention.

"You're bringing forth that small business uniqueness, with each person being their own and being valued," Appleman says. "So you'd be wise to think about how you show up to those prospective employees."

These small-business tools aren't just for show. They can help you streamline or even outsource parts of the HR function to save time, control costs and take better care of your employees. "ADP's talent management module allows you to collect resumes and applications, [which helps] expedite the hiring process [and] to get that person paid effectively," Appleman notes. "An HR outsourcing provider [can also provide] a hub for your organization to show who you are, manage that message as a potential employer and show that you are an employer of choice."

Working with an HR outsourcing provider can also give you access to expert advice on cultivating culture, managing compliance and navigating challenges like pay transparency and pay equity.

Small business, big impact

As pay transparency gains traction and eventually becomes standard practice, small-business owners may worry about their ability to find, hire and keep quality employees. According to a 2022 FlexJobs survey, more than half (63%) of workers value flexibility and a better work-life balance over better pay, while less than one-third (31%) prioritize better pay.

Given those figures, you can ease challenges by getting realistic — and creative — about how work can happen while trying to understand and meet your employees' needs. Ultimately, the impact your small business feels from pay transparency may come down to how flexible and responsive your business can be.

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