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Salary Transparency: The Key to Better Applicants?

Posted by Eric Putkonen on 11/05/2015 in Recruiting articles |

This is a long one…just a warning….

no salary infoFor many years, working as a recruiter, I have been told that we should never post the salary information in the job posts.  When you post on job boards, there is often a place to put this information and I am told to leave it blank.

Why?

Often I hear a pretty standard set of objections to posting salary ranges:

  1. Whomever reveals their salary range first loses (or at least is in a weaker position to negotiate).
  2. If we post a salary range, all the applicants will want the top end of the salary.
  3. If we post a salary range, it will cause conflicts or problems with what we pay internally to current employees.
  4. If we post a salary range, it is really difficult to hire anyone below that.
  5. We should be hiring people who are moving for the right job, not the money.
  6. We are trying to keep our salary range hidden from the competition.

But what are job seekers and hiring managers saying?

CareerBuilder’s Candidate Behavior 2015 study (in the Hiring Manager report) said that when hiring managers are asked which items in job postings positively impacts a candidate’s decision to apply, “Salary range is defined” was at 63%…second to only “Job duties/responsibilities clearly defined” at 84%.

When candidates were asked which items included in a job posting are most likely to positively impact their decision to apply, 77% said the salary range is defined…second only to the job duties/responsibilities being clearly defined at 85%.

When candidates were asked what are they key reasons that prompted them to look for a new job, the top reason at 62% was “Looking for a higher base salary.”  Looking for better advancement and better skills growth potential came in at 3rd and 4th.

Rarely seen salary info in job listing

Rarely seen salary info in job listing

There are potential benefits to posting the salary in the job posts…the largest is most potential applicants want to see it.  But let me see if I can overcome some of the objections (the number corresponds to the number of the objection listed above):

  1. We have been asking for salary info from candidates for years – often just to apply to the job.  It is not fair, especially for the people who under-price themselves and have no point of reference of what the company pays, because I have seen recruiters reject candidates under a certain salary (sometimes the entire salary band is only 10K)…and there are some really good candidates we are losing out on because they are underbidding themselves to attempt to tempt us to interview them (not knowing they may be rejected if they are too low in salary requirements).  Now with Glassdoor and similar sites, people can share their salaries; and more and more often savvy job seekers may already know what the companies pay.  Lastly, putting all the pressure on the candidate to divulge first is not the best way to start a relationship (see below).
  2. This is a matter setting and managing expectations; something we should already be doing as recruiters.  If you say that some Associate job pays 45K – 60K, depending on experience, market conditions seen through other applications, and compared to the experience and pay of current employees, I don’t think everyone will be expecting 60K.  You can make the argument that as his or her skills are comparable to others in this job and experience at 50K…that 50K is our best offer…I believe the candidate will understand.  Also, you can explain that 60K was for candidates who may meet all the preferences of the job…and so as they don’t have absolutely everything that he or she can not expect the top end.  Mention that most companies try to hire somewhere in the middle…not the top end.  It just takes communication and transparency…and showing you are trying to be fair.
  3. We should not be bringing in someone of equal skills into a company for more than current employees…it is not fair to our employees.  If this is an issue, then we are not paying current market rates internally…and we should be increasing our current employees salaries to prevent turnover (because it is likely that the top reason that prompted him or her to look for a new job is looking for higher pay…per surveys and studies).
  4. If you think you might pay under the range, have a lower bottom end to the range.  But I find (especially with large companies) that grade levels are codified and used, and below a certain point the job should be downgraded to a lower grade level.  There is a bottom end.  Likewise, if the top end given is not true; for example, sometimes when I tell hiring managers the internal salary range I see listed for the job – they laugh sand say due to internal equity and such, they could only go to midpoint.  Then make the publicized top end of the salary in the job posting the mid-point or just under the mid-point in the job posting.  That way you never get applicants beyond what the hiring manager can really afford.
  5. Per the above mentioned survey, people are moving because of salaries and it is naive and unrealistic to try to make it a non-issue.  Embrace reality…salaries do matter.  However, you gain some additional flexibility by making sure there is job growth potential and job stretch (getting to do new things) and perhaps making it a telecommute position…etc.  The job matters too…obviously.  Remember that clearly defined job duties/responsibilities was the number one impact in job postings.  But do not dismiss salary as a major factor of motivation.
  6. Every company I have worked for claims that they pay “Market” and are competitive in their salaries…so we should all roughly be the same…right?  Furthermore, salary ranges are becoming less hidden all the time.  Again, see Glassdoor.  We tell people to not discuss their salaries…but they do.  Also, do not fear you will start a bidding war with competitors, because like you…every company has limits on what they can pay.  It will just become apparent which companies do pay better and which do not (if everyone posted salaries).  In which case, you better have other things to sell in addition to salary to make up for it.  If you are a great company, you have nothing to worry about.

Thumbs upThere are many advantages to posting the salary range in job postings and here are only a few:

  • It doesn’t waste everyone’s time – thus a better candidate experience and less work for the recruiter.  If your current salary is above what the position pays, you would rather not apply than spend an hour applying for a job that you won’t be considered for anyway.  The top performers and A-players, in particular, are sensitive to this.  Some refuse to apply without knowing the salary range beforehand.
  • It will make paying market easier – you can see what the market pays…directly.  This will only worry you if your company does not really pay market.  Everyone posting salaries will give you a wealth of information to bring to hiring managers to educate them on what market-rate is currently.  The compensation department is always giving you what was market…not what is market…because they look at historical figures.  And where do these figures come from?  I would just like to see what everyone is paying currently (even if we are on the bottom end) because then we can create better strategies with hiring managers.
  • Most importantly, you start the relationship with the candidate from a position of trust and transparency…rather than secrecy and making candidates feel like the company is trying to screw them over.

In summary, let us put it this way, if you were shopping for a car or a house…but all the advertisements were without a listed price or price range, the dealers/realtors never disclosed the price, and when you asked about price you were asked “how much are you willing to pay?”…would this make you at all more hesitant to buy a car or house?

 

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