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As an employee, are you frustrated by going through several interviews only to find out during the job offer phase that the salary range is inadequate? Does it remind you of going to a car dealership and being shocked by the final price when buying a vehicle? It’s the nondisclosure that makes both situations feel sleazy as it fosters a win-lose scenario.
If you're an employer looking to hire new talent, you may have wondered whether you should include the salary range for the position in your job advertisement. This is a common dilemma that many employers face, as there are pros and cons to both disclosing and withholding pay information.
In this post, we’ll explore reasons why employers don't post salaries, and some of the benefits of doing so. We'll share how job seekers can combat this situation. Also, we'll look at some of the legal implications of salary transparency, and how it can affect pay equity and diversity in the workplace.
Why Do Employers Hide Salaries?
According to a 2021 report from Payscale, a compensation data company, only about 12.6% of global companies published the pay range for a role within their job ads last year. This percentage is slightly higher for US online job sites, where about 12% of postings include salary ranges, according to Julia Pollak, chief economist at ZipRecruiter. This is an increase from 8% in 2019.
Some of the reasons why companies do not post salaries in job adverts are:
They want to have more flexibility and room for negotiation with candidates. By keeping the salary range hidden, they can adjust it based on the candidate’s qualifications, experience, and expectations. They can also avoid overpaying or underpaying candidates who may have different market values.
They are concerned about internal equity and employee morale. By disclosing the salary range, they may create dissatisfaction or resentment among existing employees who may feel underpaid or overpaid compared to their peers. They may also face pressure to adjust the salaries of current employees to match the market rate or the advertised range.
They do not have a clear pay structure or market data. By hiding the salary range, they can avoid revealing their lack of a consistent or competitive compensation strategy. They can also avoid being questioned or challenged by candidates or employees who may have access to more accurate or updated salary information from other sources.
They fear losing competitive advantage or attracting unwanted attention from competitors or regulators. By disclosing the salary range, they may expose their financial situation or their business strategy to their rivals or potential acquirers. They may also attract scrutiny or litigation from government agencies or advocacy groups who may monitor or enforce pay equity laws or regulations.
Tips for Job Seekers in a Non-Transparent Market
It may take some time for companies to be transparent with salaries. Therefore, knowing your worth and a company’s job salary range is paramount. Equally important is having the skill to ask questions and advocate for your salary, bonus and benefits during the interview process. At www.Empowered.Community, we cover these topics extensively via our free Interview Skills program as well as expert mentoring from Fortune 500 hiring managers. Our purpose is to help individuals achieve their full potential and improve communities. Contact us to participate in our next class. Meanwhile, useful resources include: salary.com, glassdoor.com, payscale.com.
Should Employers Reveal Salaries?
However, some experts and advocates argue that disclosing salary ranges can have many benefits, such as:
Supporting pay equity and transparency, especially for women and minorities who may face discrimination or bias in pay decisions . By revealing the salary range, they can demonstrate their commitment to fair and consistent compensation practices. They can also reduce the pay gap or the pay secrecy that may prevent women and minorities from negotiating or asking for higher salaries.
Attracting more qualified and diverse candidates who are interested in the role and the compensation . By revealing the salary range, they can increase the number of applicants who are willing and able to accept the offered pay. They can also increase the diversity of applicants who may come from different backgrounds, experiences, or expectations. They can also reduce the number of candidates who drop out of the hiring process due to mismatched salary expectations.
Reducing turnover and increasing retention by setting clear expectations and reducing dissatisfaction . By revealing the salary range, they can improve the alignment and fit between the employer and the employee. They can also increase the satisfaction and loyalty of employees who feel valued and respected for their work. They can also reduce the likelihood of employees leaving for better-paying opportunities elsewhere.
Saving time and resources by screening out candidates who are not willing to accept the offered pay range . By revealing the salary range, they can avoid wasting time and money on interviewing, negotiating, or hiring candidates who are not satisfied with the pay. They can also avoid losing candidates who may accept other offers that disclose the salary upfront.
Legal and Ethical Implications of Salary Transparency
As of early 2023, some states and cities in the US have enacted or proposed laws that require employers to disclose salary ranges in job postings or upon request by applicants or employees. These include California, Colorado, Connecticut, Maryland, Nevada, New York City, Ohio, Rhode Island, Toledo, and Washington. Other countries and regions, such as the European Union, are also considering similar legislation.
These laws are intended to promote pay equity and transparency, and to prevent employers from basing pay decisions on the previous or current salary of the candidate or employee. They also aim to empower candidates and employees to negotiate or ask for fair and competitive salaries.
Employers may need to adapt by:
reviewing and updating their pay structures and policies to ensure they are consistent and compliant with the law.
providing training and guidance to their hiring managers and recruiters on how to handle salary discussions and requests.
monitoring and documenting their pay decisions and practices to avoid potential lawsuits or audits.
balancing the benefits and drawbacks of disclosing salary ranges, and to consider the impact on their employer brand, reputation, and competitiveness.
What Does It Cost Employers That Don’t Adapt?
In today's competitive job market, companies that fail to keep their salaries competitive risk losing their best employees, who often garner substantial salary increases by changing jobs. The cost of replacing an experienced employee is at least 9-months of salary, highlighting the importance of salary transparency. By proactively offering competitive compensation and fostering a culture of fairness, companies can retain their top talent, boost productivity, and ultimately enhance their long-term success.
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