CEO of global recruitment firm Duffy Group Inc. and author: Revolutionizing Recruitment: How Recruitment Research is Reshaping the Industry.
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There’s been a lot of talk among recruiters—even at my company—about the pros and cons of sharing candidate salary ranges.
Polls show that workers don’t want employers to keep compensation a secret. A study from last year by people analytics specialists at Viser found 41% of respondents reported a negative experience when discussing pay with an employer. A majority of respondents—68%—said they would leave their current role for one at a company where pay transparency was greater.
How times have changed. One of our Duffy Group practice leaders can remember when candidates (herself included) were required to show paystubs as proof of their compensation.
But while openly sharing job salary ranges is a welcome change for candidates, is it good practice for employers and their recruiting partners?
The truth is that pay transparency is hardly new. It was a topic of discussion long before legislation mandating that employers share their salary or hourly wage in job postings took effect in California, New York and a host of other states.
Whether mandated or not, pay transparency is gaining momentum among some companies across North America, according to a pulse survey. Yet nearly a third of these employers are not ready to reveal compensation levels.
Consider the pros and cons.
Pay Transparency: The Advantages
More talent. We are hearing this more and more: Job-seekers want to know that their work will be appropriately rewarded, and they are more likely to apply for a position that lists a salary range.
Trust and a better candidate experience. Being transparent about compensation helps instill a sense of trust between employers and potential new hires and creates a better overall recruiting experience.
Reduced costs. Sharing salary information upfront can save employers money. The Society for Human Resource Management cited research conducted by Appcast, a job and advertising platform, that showed job postings with salary ranges in the title received more clicks than positions without that information. The difference in clicks was especially evident in postings for education and healthcare positions.
Efficiency. Posting salary ranges can serve as an effective screening tool, too, so that recruiters are not courting candidates whose salary requirements are not in line with the offer. (Research shows that compensation is the top reason candidates turn down job offers.)
Pay Transparency: The Disadvantages
A limited talent pool. Conversely, sharing salary information may hinder candidates drawn to the employer’s mission from applying for the job. Our team frequently talks to candidates willing to make a lateral move to do something they love and where they can make a meaningful difference.
A negotiation challenge. The current labor shortage is evidence that job candidates remain firmly in the driver’s seat. Experience tells me that candidates will undoubtedly shoot for the top of the posted salary range, making negotiation difficult for recruiters and hiring leaders.
Employee resentment. Salaries convey a lot about an employee’s worth to a company. Putting this sensitive information out in the open can create resentment among current staff members who may not believe the company is paying them enough. In fact, one in 20 workers report they would quit if transparency laws reveal they are paid less than co-workers.
Given the benefits and drawbacks of pay transparency, what is the best way for employers and their recruiting partners to move forward?
After some debate, one of our practice leaders made a compelling and consensus-building point: “For employers and candidates, it is simply the right thing to do.”
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