Employers may not know how to explain their pay decisions, Aon says

A recent Aon pulse study of more than 1,000 companies reveals that a striking 87 percent of employers claim they can substantiate their compensation decisions, yet only one‑fifth have ever responded to a mock or actual pay‑transparency request. The same survey shows that merely a third of respondents have undertaken a pay‑remediation analysis, and just 5 percent consider such remediation largely finished, indicating that most organizations are ill‑prepared to justify pay structures when challenged. The report highlights managers as the chief obstacle, with 43 percent of firms citing a lack of managerial readiness to explain compensation as the biggest barrier—more than twice the proportion pointing to job architecture or role‑clarity issues.

These findings arrive as pay‑transparency legislation proliferates across the United States, threatening to expose the gaps identified by Aon. State‑level mandates, such as Virginia’s upcoming pay‑history law effective July 1, 2026, will require employers to disclose compensation information that many cannot yet defend. The timing is critical, given broader trends that exacerbate the problem: Payscale data show the gender pay gap widening into 2026, while Salary.com reports that only 44 percent of workers believe they are paid fairly, fueling growing employee dissatisfaction with compensation practices.

The implications extend beyond compliance risk. Employers that fail to equip managers with the tools to articulate pay decisions may face legal challenges, as illustrated by a recent plaintiff’s claim against Amazon for an unresolved pay‑error despite repeated HR contacts. As more jurisdictions adopt transparency requirements, companies will need to accelerate remediation efforts and enhance managerial training to avoid costly disputes and to address mounting worker frustration over perceived pay inequities.

⚡ Effects Interpreter