Pay transparency has become a strategic priority for European organizations, no longer being just a good practice. In Portugal, the discussion around the European Pay Transparency Directive is already underway, and the biggest challenge identified is transforming the culture of organizations to deal with previously uncomfortable topics to address.
The candidate experience is highlighted as the first moment of a relationship that is intended to be lasting. Transparency from the outset enables more informed decisions about roles and compensation, avoiding investments of time in recruitment processes that may not meet expectations or be competitive in the market, resulting in reputational costs for the hiring party.
The directive comes to formalize practices that could already have been common, representing an opportunity to rethink compensation criteria, salary structures, and how decisions are explained. In the technology sector, particularly competitive in talent attraction, transparency can level the playing field, forcing companies to also compete on culture, purpose, flexibility, and growth opportunities.
One of the main issues associated with transparency is the pressure on leadership, who will need to be prepared for more direct conversations about compensation and career progression. The directive does not aim to increase salaries in a generalized way, but rather to ensure fairer and more consistent criteria, so preparing managers for these conversations should be a priority. Companies that know how to take advantage of this opportunity will be better positioned to strengthen equity, trust, and their employer brand.
