Pay Transparency in Job Postings: Are You as Up-Front as Your Competitors?

The conversation around pay transparency in job postings is heating up. Some states have made salary range disclosure a law, while others are considering it. HR is on the front lines of navigating this evolving landscape.

If your organization isn’t subject to a pay transparency mandate, there are valid arguments for and against including salary ranges in your job postings.

Arguments for Pay Transparency

Did you know that 39% of companies share pay ranges in job postings, regardless of whether they have to disclose them? That’s according to the latest Compensation Best Practices Report from Payscale. It’s quite an increase from the 27% of companies last year that said they put salaries in their job ads.

Here are some of the possible reasons:

• Educated applicants. Knowing the salary range for a job up-front allows candidates to make an informed decision based on their needs whether or not they should apply. Screening out applicants at this stage reduces wasted time and effort for both the applicants and swamped HR teams sifting through resumes.
• Improved recruitment efficiency. Because competitive compensation is attractive to top talent, including a salary range can position your company as a best-in-class employer. This increases the odds of drawing more high-quality applicants.
• Equity and fairness. By disclosing the salary range, you demonstrate a commitment to fair compensation practices. Salary transparency can help combat pay discrimination by making workers from underrepresented populations more aware of the market value of their skills.

Arguments Against Pay Transparency

The Payscale report also revealed that:

• 21% of companies only list pay in job postings because they’re bound by state law

• 11% don’t disclose what jobs pay until the first conversation with a candidate
• 8% don’t mention it until the first interview, and
• 5% wait until the initial verbal offer.

Possible reason No. 1: Laying your cards on the table about what you’re going to pay could make recruiting conversations mostly about compensation, instead of qualifications, skills and experience. A set salary range could make candidates less likely to accept an offer that they know is on the lower end.

Possible reason No. 2: Disclosing pay ranges could weaken an employer’s salary negotiation position and possibly result in paying someone more than the company wanted to pay.

Possible reason No. 3: If enough current employees start examining pay ranges for advertised positions, they could start raising pay equity questions about other existing salaries within the company — potentially hurting morale.

Finding the Balance

The way it’s trending, pay transparency in job postings is something that HR and the C-suite must at least discuss.

If it’s going to be implemented, here’s how HR pros can prepare:

• Develop clear communication strategies. Be prepared to answer questions about salary ranges during the interview process. Use the range as a starting point for negotiation, highlighting the total compensation package (benefits, bonuses, etc.).
• Standardize salary ranges. Ensure salary ranges are consistent internally and reflect the market value for specific positions, and
• Focus on value beyond salary. Don’t let salary overshadow company culture, growth opportunities and other benefits you offer. Craft compelling job descriptions that showcase your employer value proposition beyond just compensation.

Pay Transparency in Job Postings by Industry

Although pay transparency can present both challenges and opportunities for HR, it can be leveraged to attract top talent. In fact, your competitors could be doing it right now! When asked “When do you first share your organization’s pay range for a job?” here’s which industries said that they do so in their job postings, according to the Payscale study:

• Government – 70%
• Nonprofits – 59%
• Education – 49%
• Agents and consulting firms – 45%
• Transportation and warehousing – 42%
• Finance and insurance – 41%
• Manufacturing – 36%
• Food, beverage and hospitality – 36%
• Technology – 36%
• Energy and utilities – 36%
• Arts, entertainment and recreation – 36%
• Health care and social assistance – 35%
• Construction – 32%
• Retail and customer service – 31%
• Engineering and science – 30%, and
• Real estate – 29%.