In January, the state of California joined the growing list of states requiring employers to disclose pay scales in job openings. Yet, despite the mounting pressure—new laws, candidate preferences and increasing availability of information—for organizations to disclose this information, many HR leaders are still reluctant.
Gartner research shows only 51% of HR leaders plan to share salary ranges in job postings in 2023, with just 26% of those saying they plan to share salary ranges in all job postings.
If executed correctly, pay transparency can improve an organization’s employment brand and diversity recruiting efforts, and save recruiters’ time.
To successfully navigate new pay transparency laws and create effective job postings, HR leaders should consider the following:
How to establish a pay range
Determining what pay range to share is challenging: Too low and you will turn away candidates, too high sets unattainable expectations, and too wide or narrow may not comply with new laws.
The following considerations can help HR leaders determine a final pay range to share with candidates:
- Legal requirements: Pay transparency laws vary in how they set range requirements. Some organizations opt to share the minimum to maximum to cover the entire pay range. Others share narrower ranges that align more with likely starting salaries. HR leaders should consult their legal partners to determine specific requirements.
- Current employees: Pay ranges shared in job postings should be comparable to existing internal compensation rates. However, for roles with a broad range of tenure and experience levels, the pay range may be too broad. Organizations should also consider whether some employees fall below the proposed range and why. They can either adjust the range or adjust employee salaries, unless there is good reason for the employee to be below the range.
- Competitors: Many employers benchmark their pay bands against similar positions in the market, though this can sometimes be an inaccurate representation due to the specifics” geography, organization size and/or revenue. Further, with organizations using different criteria to set ranges, it is difficult to know whether a posted range includes the maximum or whether candidates receive offers above the posted range.
- Budget: All organizations are ultimately constrained by available budget. Employers must ensure the posted range fits within the current budget for the role to avoid setting unattainable expectations.
Share how pay decisions are made
Pay transparency goes beyond just sharing a pay range. Providing insights into the processes and inputs that influence pay decisions can help candidates to view these decisions as more equitable. Gartner research shows when employees understand how pay is determined, employee trust in the organization increases by 10% and pay equity perceptions increase by 11%.
Related: Merit increases spike, but is HR really ready to talk about pay?
Therefore, HR leaders should work to build trust from the earliest opportunity: the job posting. Sharing the factors that determine pay, particularly for wide salary ranges, provides candidates with much-needed context to understand where they might fall in that range. This can include factors such as education, experience and advanced certifications.
Organizations may also consider sharing where in the pay band starting salaries typically fall. For example, a job post may state that candidates typically start on the lower end of a pay range and move closer to the higher end if they meet certain requirements or remain in the position for a certain period of time.
For remote roles, or those open in different locations, cost of living may cause pay ranges to vary considerably. Instead of listing a wide pay band, organizations should figure out how to be more specific. This could mean posting the job in multiple locations with a narrower range for each location or sharing multiple pay ranges within a single job posting.
Connect compensation to the employee value proposition
While compensation is a key factor in employment decisions, it’s not the only thing that matters to candidates.
Gartner research shows 65% of employees say the pandemic has made them rethink the place that work should have in their life, with many prioritizing wellbeing and growth opportunities. As a result, job postings should share compensation in the context of the broader employee value proposition.
According to a Gartner survey of 3,621 employees, more than half of candidates say they would choose work/life balance, an interesting career path or flexibility over a job with 10% higher pay. Emphasizing these attributes can help companies that pay less than their competitors attract candidates.
See also: Is pay compression costing you good people?
HR leaders should give specifics to show candidates what EVP attributes look like in action. For instance, job postings should communicate how the organization will help candidates grow. Organizations can outline in their job posting how candidates will contribute to certain initiatives and how successful candidates have been promoted to certain positions. Unique skills development opportunities can also be included to showcase how an employee can grow within an organization.
Pay transparency in job postings may create a broader movement toward internal pay transparency as well. To help with this transition, recruiting leaders should work with their HR leadership team on the following areas:
- Share the organization’s broader pay transparency and equity strategy. Achieving pay transparency does not happen overnight. Organizations can boost employee trust just by sharing pay equity goals and the steps they are taking to accomplish those goals.
- Determine the right level of pay transparency for the organization. Organizations are not required to divulge all aspects of their pay decisions to satisfy employees. However, to help employees, leaders should consider sharing salary bands and job levels with employees for their current role to give employees more visibility into where they fall in a salary range and why.
- Train managers to address employees’ pay concerns. Most organizations’ biggest fear for sharing salary in job postings is that some employees may be unhappy with their current pay. To build confidence in compensation decisions, HR leaders should provide managers with guidance on contextualizing individuals’ pay. This means empowering managers to share the pay decision-making process and to tie individual performance to pay narratives.