Revelio Labs x World at Work: Demand for Compensation Professionals Soars
To tackle pay transparency laws, companies need compensation professionals
Demand for compensation professionals has surged in recent years.
This increase in demand is driven by companies that are exposed to pay transparency laws mandating pay ranges in job postings.
The proliferation of publicly available pay data following these pay transparency laws has resulted in companies increasingly demanding compensation professionals skilled in data analytics tools.
The compensation profession experienced a striking inflection point in 2019 when Colorado passed legislation that required companies to list salary ranges in job postings. Since then, nine other states - California, Connecticut, Illinois, Hawaii, Maryland, New York, Nevada, Rhode Island, and Washington - have passed similar pay transparency laws. We have previously investigated the effect of pay transparency laws on pay equity, compliance, and retention. This week, in collaboration with World at Work, we examine the impact of these laws on the compensation professionals who will implement them.
We find that there has been a surge in demand for compensation professionals since Colorado first passed the Equal Pay for Equal Work Act in 2019, which mandated pay ranges on job postings. The number of job listings for the occupation has more than doubled since the law took effect in January 2021.
The increased demand for compensation professionals is driven by companies that are more affected by the new state laws. Companies that are highly exposed to pay transparency laws, which we define as having at least 50% of their workforce in the affected states, have experienced an increase in both counts and listed salaries of compensation professional job postings. This gives us confidence that the subsequent demand increase is truly the result of the new state laws.
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With new regulations come changes and transformation. Now that more pay is disclosed publicly, we’ve seen dramatic increases in the amount of public compensation data in the market. With this rich new source of information, the emphasis on data collection using surveys has decreased. Instead, we’ve seen more demand for skills related to the analysis of existing data: The share of compensation-related job postings mentioning skills related to data analysis and data analytics tools has increased since 2018.
As large amounts of data become available, the ability to analyze it becomes even more important. Because the data come from many idiosyncratic sources, we also expect that statistical modeling skills will become increasingly important for compensation professionals, to adjust for various biases, disparities, and data collection processes.
We are still in the early days of pay transparency and have already seen a meaningful transformation of the compensation profession. As more laws are passed, we will continue to track how occupations change and adapt to the times ahead.