Salary transparency is on the rise... in job postings?

Salary transparency continues to be one of the hottest HR trends, and it’s here to stay. But it seems there has been a disconnect between companies and candidates. Here’s what to do about it.

Undoubtedly, we all want to work in rewarding and personally fulfilling careers. However, most people must consider salary requirements when applying for and ultimately accepting jobs. Salary is such a significant criteria that it doesn’t always make sense to delve so far into the interview process before discussing compensation, only to discover an impractical salary gap between offer and requirement. In turn, this can lead to frustration as both candidate and recruiter don’t want to waste each other’s time if the salary offered doesn’t match up with requirements. With salary transparency available on job postings, candidates can make more informed decisions at the onset of an apply process, delivering more qualified and appropriate candidates to a hiring manager and potentially higher retention rates in the long run. In fact, according to a 2015 Glassdoor study, providing pay information at the beginning of the interview process helps candidates self-select out, reducing the number of resumes needed to make a hire by half.

Employers are recognizing this. According to PayScale’s 2017 compensation best practices report, 49% of organizations are aiming for salary transparency in 2017, up from 31% in 2016. However, even employers who favor transparency may argue that transparency at the job posting stage of the recruitment process is premature. In fact, many organizations are pushing back, citing that the negative risks outweigh the intended benefits of such preliminary transparency. 65% of employers never post salary in the job descriptions, according to a recent CareerBuilder Empower study.

The top three reasons employers may push back include:

DIFFICULTY SHOWCASING TOTAL COMPENSATION

Since there are so many different drops in a total compensation bucket (e.g. base pay, bonus, incentive, health benefits, PTO, company culture, etc.), many employers are finding it challenging to properly portray all the company has to offer when only an initial salary range is listed. While some job sites are looking into ways to allow an employer to prominently display total compensation (rather than just a salary range), this feature is not yet available, and employers still have to combat this pain point for now.

POTENTIAL COMPETITION AMONG CURRENT WORKFORCE

Some employers may find competition and jealousy created between its current workforce and new candidates when current employees search salary listings in the open postings. In a perfect world, all employees doing the same job would make the same amount of money. The reality, however, is that each employee brings individual skills and experiences to the table that make them more or less valuable in regards to salary. A current candidate may not take that into account and only focus on the salary they see listed in the posting.

UNREALISTIC CANDIDATE EXPECTATIONS

Naturally, many candidates expect they will receive (and assume they are worth) the higher end of a pay range listed in a posting. This can leave both hiring manager and candidate frustrated if that isn’t the case due to the variables of individual skill, experience or location of the candidate. On the flip side, while providing more salary info can produce more quality applicants, it can also lead to potential candidates self-selecting out, even if hiring managers may be willing to go above a listed range for a “perfect fit.” When potential candidates self-select out, hiring managers lose the opportunity to connect.

All in all, we have a good sense of why salary transparency in job postings can be problematic for entire companies, from current employees to potential candidates in the process. Nonetheless, salary transparency is where the industry is headed with players such as Glassdoor, Indeed and LinkedIn at the forefront, providing job seekers insider salary and review information.  Even if an employer does not choose to list their salary on the posting, these sites are including estimates based on employee reviews and third-party data. Naturally, some employers are concerned that the salary estimates displayed are not correct. A representative from Glassdoor assured me that they “want to actively work with employers to ensure pay ranges are reliable to help them recruit more informed candidates.” They have set up a method to contact their salary team to correct any discrepancies. (If you’re seeing a discrepancy in your Glassdoor listings, you can contact the salary team here). When it comes to salary estimates, employers need to ensure accuracy and take active steps to correct when necessary.

(Examples of job postings with salary/hourly wage on Indeed)

(Examples of job postings with estimated salaries on Glassdoor)

(Examples of estimated salaries on LinkedIn)

While these sites have continued to give candidates insider information on the companies they are most interested in, the newest player, Google for Jobs, will soon allow candidates to actually filter listings by salary. Our research has shown that listing an exact physical address and salary information will be key to a higher page ranking (and therefore potentially being outranked by a competitor if you do not list it). Glassdoor has seen naturally similar results since introducing salary estimates, with more job seekers clicking on and applying to jobs with salary estimates and showing more interest in an employer’s job listings. Thus, it is even more critical that employers ensure their company listings are correct (Glassdoor Internal Data, August 2017).

UPDATE as of November 16, 2017: All jobs appearing on Google for Jobs will now include salaries. If salary information is not included in original job postings, Google will show an estimated salary based on similar jobs. Job seekers will now have the ability to filter their job search by salary. Learn more.

While discussing pay still remains a professional taboo for many, and potentially problematic from the employer’s side, this is where the market is going and it’s important for companies to figure out how to take this on and represent the full picture of compensation and all other benefits when posting. Communication is key. According to a recent PayScale survey, 82% of people were okay with lower than average pay, as long as the rationale was explained to them. While we aren’t suggesting that candidates settle for less than appropriate pay wages, it’s important to realize that candidates want to make informed choices and are demanding this information upfront. Love it or leave it, salary transparency is part of the future of recruiting, and it’s best that employers keep up with candidate and technology demands rather than to lose them to competitors.