Pay Transparency and ‘The Dreaded Salary Question’
by Pauline Fournier
In each edition of our Insights newsletter, Senior Career Consultant, Pauline Fournier responds to career questions that have recently come her way from people with whom she is working. In our Winter 2023 edition, Pauline shared some insights for both job candidates and employers on tackling ‘the dreaded salary question.’
QUESTION: Over the years, I’ve been asked about what some refer to as the ‘dreaded salary question’. When does a candidate ask? When does the company reveal the salary?
ANSWER: One thought has been that whoever mentions salary first is at a disadvantage. I’ve never bought into that way of thinking. I’ve always believed that it is better to know up front than to go through the interview process only to find the salary is way out of line with the candidate’s expectations.
With more states and municipalities passing pay transparency laws, the ‘dreaded salary question’ can be answered before the interview begins. There are many versions of the law, with some states requiring a salary range to be included in the job posting. In contrast, others require the employer to disclose the range upon request, during the application process or following the first interview. In most cases, the law requires transparency when an employee is promoted or changes jobs within the company and for new hires.
What does this mean for the candidate?
The advantage for the job candidate is that they know up front if the salary is within their range and can decide whether or not to apply. Many candidates have much angst when filling out the required salary section of the application. They don’t want to be eliminated from consideration based on the number they put on the application. They can respond with a salary in that range if they know it. Yes, there will still be room for negotiation – within the range.
These laws can also help with pay equity. If the range is published or made available upon request, the employee will know where they stand compared to others. If pay is equitable, employees are likely to be more productive and happier. Happy employees can lead to longer retention and greater productivity. Employees have reported feeling that pay transparency leads to greater trust and a culture of openness.
What does this mean for the employer?
An advantage some employers have reported is that the quality of the candidates applying for roles has improved. Candidates with a salary requirement much higher than the range don’t apply. They already know it won’t meet their expectations. Most candidates have expectations within the posted range.
When employees understand how compensation is calculated and believe they are fairly compensated, employee engagement, productivity, and retention increase. Communicating with candidates and employees is critical to the pay transparency process. According to PayScale, most employers have one conversation with non-managers per year. Pay transparency could lead to more conversations and a better understanding of expectations.
Many employers have used market data to set salaries and other compensation. With some of the pay transparency laws, they can now see how competitors are paying. This also helps when it comes to negotiating with candidates who have competing offers.
According to Forbes Magazine, Talent.com found that 78% of job seekers in England believed that salary transparency is a good thing, with 74% arguing that it creates a fairer environment for workers and their colleagues.
Indeed, pay transparency is not simply a matter of putting salary ranges on a job posting. There is a lot to think about, and companies must develop strategies, but the move toward greater pay transparency in workplaces will ultimately be beneficial to both candidates/employees and employers. Perhaps, the question won’t be so dreaded in the near future.
