Recruiters and HR teams must understand each candidate’s reasons for looking for a new opportunity, and compensation is a key element. People don’t change jobs solely for money, though it is among the top three motivators, along with professional development and a comfortable cultural fit. No wonder there is so much discussion these days about pay transparency.
Clarity, right from the start
Most hiring conversations cannot move forward until salary is discussed since it will be a deal-killer if you and the candidate are not on the same page. The old adage, “He who speaks first, loses,” is no longer the best advice. Instead, directly and honestly addressing the subject up front gets things moving faster and in the right direction. There is no ambiguity, doubt, or need for conversational sparring around the topic.
Ultimately, the market sets pay rates. It is vital for recruiters, candidates, and employers to set expectations so that when an offer is presented, it will be taken seriously. Here at Power-4, we work with both employers and candidates to help them understand what is realistic. We always ask what candidates are looking for. Companies should make clear what they can or will offer.
That doesn’t mean there can’t be room at the end to negotiate to some degree, but clear communication up to that point sets the stage for success. Otherwise, if it appears that either side is changing the rules after the fact, no one benefits and the result is a negative closing experience for the candidate and the company representative.
Greater efficiency
Posting and discussing salary up front, at least in general terms, reduces the number of variables, making the process easier and more comfortable for everyone. It immediately weeds out candidates who expect to earn more than you can afford. On the other hand, you don’t want to be outside the competitive range if you expect to attract top talent. If possible, can you adjust the job title to one that carries a higher salary range?
Sharing salary information also replaces outdated (and increasingly illegal) questions about current or past earnings or years of experience with a focus on skills and ability.
Attract even better candidates
Candidates want to know how much they can earn in a new position, but all employees want to feel they their pay is equitable. SHRM says pay equity pays off in multiple ways. It can help companies attract the most desirable applicants, and it helps candidates determine which prospective employers offer the most desirable workplace.
In some companies, there may be an unspoken concern that the applicant is “too young” to be earning that amount of money. Aside from overtones of reverse age discrimination, employers need to remember that the goal is to bring on valuable knowledge and skills. Hiring a well-qualified candidate who is eager to move up in role and responsibilities speaks well of your company and bodes well for your future relationship with this candidate.
A better experience for everyone
Waiting till the end of the interview phase to discuss salary can turn the entire process into a waste of time if the proposed salary is not acceptable. That’s frustrating, and it can damage your company’s reputation as a desirable place to work. In addition, candidate perception of fairness is 30% higher when they’re told the salary range without having to ask. Taking a straightforward approach builds trust.
Transparency is the future
In 2017, California started requiring all employers to provide pay scale information if requested by an applicant. Just this year, the state has expanded its pay transparency requirements. In 2019, Colorado was the first state to require salary ranges to be included in job postings. As of now, eight states (as well as a smattering of municipalities) have similar laws on the books, and 15 more states are considering pay transparency legislation.
According to the Harvard Business Review, while 94% of HR professionals say it’s important for employees to know how pay decisions are made, only 47% of their companies actually do that. They fear:
Fewer candidates may apply if the pay range is below expectations
Friction could develop among current employees
Pay transparency will lead to narrower salary ranges and hinder their ability to increase pay based on performance, which could, in turn, reduce productivity or lead to increased turnover.
Employee dissatisfaction could increase vulnerability to poaching
Companies cite these and administrative hassles as reasons for keeping mum on salary ranges, but employers committed to attracting and hiring outstanding candidates understand that one of the greatest benefits of pay transparency is that it makes their company more competitive.