The Case for Salary Transparency

This might be controversial advice, but employers should always include a salary range when posting a job.

The modern trend of advertising a job without a salary attached is hurting both job seekers and hiring organizations. A little history: It was common to include salaries when jobs were advertised mainly in newspapers. This was still generally true in the early days of internet postings. Some point to the Great Recession as the start of job ads being posted without salary information. “DOE” or “Competitive salary offered” became the norm. Companies were being flooded with overqualified applicants willing to settle in a tough economic environment, and realized they didn’t need to show salary ranges to get applicants.

But things have changed. So why don’t modern employers share what they plan to pay new hires? When you ask companies who currently don’t post salary ranges, you’ll hear a range of reasons:

• They don’t want to alert competitors to their super-secret pay practices.
• It’s organizational policy (closely related to: “We’ve always done things this way.”).
• They’re willing to pay more than the range would suggest for the right candidate.
• They think candidates only see the top end of the range.
• Other companies don’t post their salary ranges.
• Pay inequity would be broadcast internally (a.k.a.: “We don’t want our current employees to know we’re paying new hires more.”).
• They actually don’t pay that well and don’t want to scare candidates off before they apply.
• They want to attract candidates who care more about fit than money.

Let’s be honest about hiring: most every company would like to to reduce its overhead and hire as cheaply as possible. The cynical reality is that, if your company can pay someone $42,000 to do a job instead of $60,000, you will probably do that. But this is a short-sighted win.

In the long run, companies who fail to tie salary ranges to job titles and share them publicly are behind the curve, and they’re probably losing money as a result. There are a few key reasons why not posting salaries is generally bad practice.

Why Salary Secrecy Hurts the Bottom Line

Besides the upcoming implications with the Oregon Equal Pay Act, the disregard of a company’s human capital makes bad business sense. A recent Society for Human Resources Management (SHRM) survey found that two-thirds of employees rank compensation as very important to job satisfaction. How is a job seeker supposed to evaluate the role if a crucial piece of information is withheld from the posting?

There are plenty of reasons why you should include salary ranges in job listings:

• Get more applicants – Job postings that include salary ranges get 30% more applicants because job seekers don’t want to waste their time on applications that go nowhere.
• Avoid losing finalists due to salary surprises – Hiring managers don’t want to come down to the 11th hour only to lose a final candidate who won’t take a pay cut.
• No job salary is completely “DOE” – There’s usually some kind of budget, and paying new employees within a stated range retains new talent and maintains internal equity. If a company is willing to pay more for the right applicant, it can always include a “+” on the high end of their range.
• Pay transparency is trending – Having and honoring a salary range results in greater wage parity for women and people of color (POC). Minority professionals often don’t ask for more and are penalized when they do, either at the point of hire or throughout their tenure with the organization. If you’re looking to increase diversity at your company, pay transparency is a great place to start.
• Secrecy and low pay begets high turnover – If you don’t share salary ranges when hiring, your company might pay less in salaries in the short term, but you shouldn’t be surprised when you’re unable to retain employees over time. Think of all the time and energy  you spend recruiting and training! Estimates say the cost of employee turnover is 150% of a candidate’s annual salary, and more senior positions can take upwards of 6.2 months on average to become productive.

Why Employers Should Post Salary Ranges

We live in an era of increased salary transparency in the hiring marketplace. Job seekers use salary tools like PayScale and Glassdoor, which have become increasingly accurate and targeted. Professionals know what they’re worth, and they are increasingly empowered to avoid companies that aren’t transparent about pay.

Because pay is the most tangible way a company shows an employee how they are valued. An educated prospective employee is going to know what a competitive salary looks like. Hiding your range is a disservice to them, current employees, and the broader economy.

On the other side of the coin, there are arguments against pay transparency. For companies, keeping salaries (including new jobs postings) secret means their current workers are less likely to be angered over poor pay, demand a raise, or flee to a competitor. All of these actions would force companies to increase wages anyway.

However, that kind of secrecy also sounds like the breeding ground for an unengaged workforce.

The arguments against pay transparency ring increasingly hollow given research into the benefits of cultivating a happy, engaged workforce. Today’s job seekers are seeking authentic, mission-driven companies, and salary transparency is becoming a baseline expectation.

Ultimately, posting salary ranges when you hire is a huge step towards a healthier, more ethical work environment. When you’re open about what you pay, your current and future employees will be engaged in their work for your company. And that’s a great foundation for future success.