Originally written as a LinkedIn article.
The complaints from job seekers are endless. Why aren’t companies posting salary ranges on job postings?
Well, there are several reasons why an organization would choose not to be transparent about their wages. The generalized answer is because it’s just easier to keep it a secret. But, both in business and in life, the easy way is very rarely the better way.
Turns out, there are many compelling benefits to being transparent about pay in job postings as well as within the organization. If (and that’s a big if) employers prepare well and put in the work to be ready for pay transparency in their organization, it’s all very worth it in the end.
So what are the benefits, and what stands in the way of employers receiving them? Let’s start with the advantages of pay transparency.
The biggest is probably the pay equality that employers end up being forced to maintain. When pay is kept a secret, employers can easily let pay disparities exist, but this is borderline unethical. When wages are out in the open, employees will complain or quit when they see they’re getting paid unfairly compared to what their coworkers are making, thus employers will resolve wage gaps and make sure everyone is earning what they deserve. It’s a bit more work, but pay equity will result in happier employers and thus better retention rates. Transparency and trust will add to the company culture, where workers feel safe and fairly treated by their employer.
In addition, when employees are aware of each other’s salaries, they can be more motivated to develop new skills and capabilities to grow through the organization. With established salary bands and anchors available for everyone to see, employees will learn what exactly is necessary to get promotions or pay bumps and will be more likely to put in the work to get there.
Job applications with posted salaries also get a lot more attention, and therefore a higher number of applications. Appcast’s research shows that postings with salaries get more clicks from applicants compared to postings without salaries. Postings that don’t include salaries are often ignored since many candidates don’t want to waste their time interviewing only to discover the offered pay is far below what they are hoping for. A bonus is that not only will postings that include salaries get more applications, but the applications will be from candidates more qualified for the job since they all already agree with the posted pay range. Less time will be wasted interviewing and vetting candidates that will turn down the opportunity as soon as the pay is revealed.
Furthermore, when pay is included in job postings the application experience from the candidate’s point of view becomes more positive, and their overall impression of the company improves. Studies by LinkedIn show that the salary range is the most cared-about part of a job posting and where candidates look first. Postings without pay are much less appealing to applicants because people don’t want to waste time applying to jobs that might be outside of their preferred pay range. When employers make the application process easier and more transparent, job seekers appreciate the organization more. The employer brand becomes stronger and more appealing.
Many peer-reviewed articles also prove that providing compensation details improves the applicant experience and employer brand (see references section). When specific details are included in job descriptions (especially numerical salary information¹), the company image is enhanced, applicants’ intentions of pursuing employment are strengthened, applicants are more attracted to the employer, and people feel like they’re better matched and qualified for the job.³ Being vague about pay by saying phrases like “an attractive package” or “competitive compensation” has actually hurt how job candidates view the organization.²
So with all these benefits, why do the majority of employers still withhold pay in their job descriptions? There are legitimate reasons that exist. Each major argument against pay transparency is listed below. Though the rationales used against pay transparency are very real, there are solutions for each that when heeded correctly, will strip the argument of its weight. Each solution is explained following each argument down below.
The common belief is that there are pros and cons to pay transparency. But I believe that when you follow these rules, the cons are eliminated and only the above-mentioned pros will exist. Let’s get into it.
Argument #1: If I’m Transparent About Pay, I No Longer Have the Competitive Advantage
Perhaps the most common reason employers choose to keep pay ranges a secret is so they have the advantage in pay negotiations. They have more power with the knowledge they have, and they can capitalize on their applicants’ lack of knowledge and negotiating experience to skimp and save on money. In pay negotiations, employers can act like what they’re offering is at the top of their budgeted range, and that they can’t go any higher when in reality they’re bluffing to get more bang for their buck. Employers want to get as much talent as they can for as little money as possible. This is the common mindset to have with business decisions, but in today’s world, it may hurt business more than it helps in the long run.
Solution: Invest in Your Talent; Pay Employees What They Deserve
Many job seekers would call the above-mentioned kind of behavior unethical. Some states even have laws in place that require employers to post salary ranges so they don’t have an unfair advantage. Many states prohibit employers from asking job applicants about their salary history for this same reason.
If you’re looking to save money for your business, it’s not a very good idea to skimp on the talent you pay for. How long are employees going to keep working for you if they discover they’re being underpaid? It’s time companies recognize that their people are one of their most important assets, and it pays off in the long-term to compensate them with what they deserve. Pay is becoming more transparent in businesses everywhere as time goes on, so keeping your employees in the dark about what they could be getting paid at the start won’t hold up for long. They’ll find out pretty quickly how much they could be paid at other companies and leave.
Argument #2: If I’m Transparent About Pay, I Could Upset My Current Workforce
You cannot be transparent with pay in job postings without being transparent about pay internally. Posting salary ranges online means that the whole world can see them—including your current workforce. This means if you’re offering to pay or promote newer employees more than current employees, people are going to find out and likely get upset. Being transparent with pay in job descriptions without being ready for pay transparency with your current employees will cause a multitude of problems.
Solution: Be Ready for Transparency
There are several benefits to pay transparency, but these benefits won’t be available to you if you don’t prepare for transparency first. One way to know that you’re ready for transparency is if you’re confident in the justifications for every salary in your workforce. You can’t be paying anyone unfairly (including gender or race wage gaps) if you’re going to be transparent with your pay. As soon as you reveal to your employees how much their coworkers (or soon-to-be coworkers, for the pay ranges written in job postings) are making, your HR department is going to get a huge inflow of questions from employees about their pay. If you have an air-tight compensation strategy, objectivity in each salary decision, justification for each salary offer and raise, and assuredness that you can respond to each compensation inquiry by the books, then the sweet benefits of pay transparency will come flowing in.
Argument #3: If I’m Transparent About Pay, Other Advantages to Working at my Company Will be Less-Emphasized
Oftentimes, employers who offer salaries lower than the local market average try to make up for it in other workplace benefits. They may not offer above-average salaries, but they can provide better health insurance, retirement benefits, perks, frequent growth opportunities, or a positive culture.
When your pay is posted publicly, this means you also have to compete in “wage wars” with other companies that also have their job salaries posted. The war for talent is real, and it can be easy to lose job candidates to competitors who pay just a few more dollars per hour.
The problem is, pay is loud and conspicuous. Even for job seekers who value other benefits more than pay, posted pay ranges get a lot more thought and attention than any other benefit according to LinkedIn. Knowing this, companies hope to withhold compensation details until they’ve had the opportunity to sell the complete employee value proposition. This way, applicants won’t turn down the opportunity after hearing pay, but before learning about the other benefits of working there.
Solution: Have a Firm Rationale for Paying Below Market, and Communicate It
First off, if you’re offering salaries below the market average, you ought to have a good reason for doing so. If you’re trying to save money by compensating employees with less than what they’re worth, you’re going to lose the talent war.
However, the truth is that 50% of companies in the world pay below the market average. Paying above the market average is not a requirement to achieve business success. Thousands of businesses pull it off. So how do they do it?
There are many methods of compensating your employees besides with money. Businesses that keep talent with below market average salaries provide benefits that their employees value more than money. What are these benefits? They vary, depending on each business and industry and what their employees value. Some workforces prefer flexible working arrangements, others prefer great managers, and others prefer tuition reimbursement programs. Each workforce is different, and it’s important to take the time to research what it is that your employees value, as well as what they don’t value. This can be done with surveys, stay interviews, exit interviews, and people analytics.
Once you’ve identified a unique employee value proposition, you need to communicate it. Yes, pay is loud and distracting on a job posting, but there is still room to include additional reasons why working for your company is great. Share these benefits alongside employee testimonials in job postings, job interviews, and maybe even company tours, and you’ll be sure to attract enough talent to keep your business running in top shape.
Argument #4: If I’m Transparent About Pay, It’s Harder to Find Culture Fit
Employers want to hire people who are excited about working for them for reasons beyond pay. They want to see applicants who want to work for them because of a culture fit. Employers know that individuals who are motivated by reasons bigger than pay perform better as employees and team members. But if the pay is posted, how can we know if an employee is genuinely more excited about the company culture and mission than they are about the pay? How can we know if they’re bluffing?
Solution: Weed Out Fakers in the Interview Process
There may be little you can do to vet the individuals who apply to your posting, but there is a lot you can do to vet them in the interview process. If it’s important to you to qualify applicants by their genuine excitement to join the organization, acknowledge that some applicants are going to put on a show to seem that way. Be strategic with the questions you ask to gauge what applicants know about the company or why they’re excited to join. These kinds of tactics can help you learn who is a fit, and who isn’t.
Argument #5: If I’m Transparent About Pay, I Get a Less-Diversified Applicant Pool
When employers post a certain salary or salary range on their job postings, they’re only going to get applicants that are okay with being placed in that range. Most of the time this is a good thing if salary ranges are well-thought-out and there are justifications for the minimum and maximum amounts the employer is willing to pay. However, there are instances where employers don’t want these restrictions.
Sometimes employers don’t have a specific idea of whom they’re looking for. Sometimes they want to put feelers out to meet individuals of varying experience and skill sets as a learning opportunity to figure out along the way what they need. After holding some interviews the employer may become convinced that all they need is an entry-level role. The same thing can happen if applicants with higher salary expectations convince the employer they’re worth hiring. By keeping compensation out of the job description, they’re casting a wider net to get a better idea of what’s out there as well as what they really need.
Solution: Communicate Your Intentions
It’s true, even if you do have a firm idea of what you believe your company needs, sometimes you interview candidates that offer completely new value propositions to the business. You don’t want to close your doors to these kinds of applicants, but you don’t want to miss out on the applicants that actually have the specific skills and experiences you’re looking for.
The solution is in communicating your intentions. If you’re okay with receiving a higher number of applicants, consider this. When you post your salary range, include a nearby note saying something like “We’re open to considering applicants with compensation needs outside of this posted range. Share with us how a different salary for your unique skills would be beneficial to us!” You can also widen salary ranges and broaden your required qualifications. These tactics will likely bring in more applicants, but that’s really what you’re asking for. Reap the benefits of both worlds—posting the salary range for more attraction, but still leaving doors open for more diversely-qualified job candidates.
Argument #6: If I’m Transparent About Pay, Applicants Get Tied to the High-End of the Range
Most applicants naturally find a way to qualify themself for the high-end of a salary range when they see one. They get attached to this number and thoroughly believe through the application process that they can get an offer at that amount. If employers offer them a salary that’s lower (which most often happens), the applicant can feel let down and disappointed. Their application experience doesn’t go as they had hoped and they get a negative impression on the company for not offering what they feel they’re worth.
Solution: Base Pay On Justifications and Negotiate
You want to make sure that you and the applicant are on the same page when it comes to the offered total compensation package. If there’s a miscommunication, applicants may not understand the additional value offered when they don’t agree with their starting salary and end up turning down the opportunity. So above all, do your best to communicate each aspect of their total compensation, as especially the additional non-salary benefits of working for the organization.
In these conversations, again it’s beneficial to prepare a solid rationale behind everything you offer the employee, especially starting pay. If there’s a disagreement, you need to help the candidate understand why you’re offering what you’re offering. Hopefully, you’ll have made the salary offer from previously-established objective salary bands and anchors, and you can share how the decisions were made based on their qualifications. Help them understand that you’re not trying to low-ball them to save money. Assure them of additional benefits and help them see the value of joining the organization.
Your transparency in these conversations can improve the applicant experience. Many employers even go out of their way and encourage applicants to negotiate. Miscommunication can come from both sides, and if there are additional qualifications or experiences that the applicant holds that haven’t been communicated, they should have every chance to share them. Sometimes applicants really do deserve a better offer, and if increasing their base pay means making the hire, it’s usually worth it.
In the broad scheme of things, companies with pay transparency get a competitive advantage. They get benefits that can’t be gained any other way. The more prevalent reason employers choose against pay transparency is because they’re not in a position to do so. They don’t have the justifications, they haven’t done the research, or they still have wage gaps they’d rather keep secret than put in the work to rectify. Large, complex businesses or businesses with newer, less concrete compensation strategies require more work (hence why large enterprises almost never post salaries online).
Organizations that are transparent about pay can win the talent war. They attract more qualified applicants, have greater pay equality, experience more internal mobility, and have a more attractive employer brand. Their not-so-secret weapon is quite simply giving their applicants and employees what they want.
So what work do you have to do to get there?
References (peer-reviewed)
- Rozsa, Z., & Machova, V. (2020). Factors Affecting Job Announcement Competitiveness on Job Listing Websites. Journal of Competitiveness, 4, 109–126. https://doi-org.dist.lib.usu.edu/10.7441/joc.2020.04.07
- Verwaeren, B., Van Hoye, G., & Baeten, X. (2017). Getting bang for your buck: The specificity of compensation and benefits information in job advertisements. The International Journal of Human Resource Management, 28(19), 2811–2830. https://doi-org.dist.lib.usu.edu/10.1080/09585192.2016.1138989
- Yüce, P., & Highhouse, S. (1998). Effects of attribute set size and pay ambiguity on reactions to “Help wanted” advertisements. Journal of Organizational Behavior, 19(4), 337–352. https://doi-org.dist.lib.usu.edu/10.1002/(SICI)1099-1379(199807)19:4<337::AID-JOB848>3.0.CO;2-V
