Niki is Insperity's director, service operations. She specializes in employee onboarding, human capital management and HR infrastructure.
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Though only a few states and municipalities have enacted pay transparency laws so far, they are becoming increasingly popular. These laws require businesses operating or hiring in certain states to list the salary range for every position they post online. Businesses nationwide need to keep tabs on these laws and find out how they might apply to their hiring practices.
In preparation for these laws, organizations may wish to audit their pay levels to ensure they engage in fair practices. This can make sure that publicly shared salaries align with compensation for existing employees, ensuring fair pay across the business.
Businesses can also benefit from understanding the benefits of pay transparency for recruitment. While not all businesses choose to disclose salary ranges in job postings in the absence of a state mandate, pay transparency can offer competitive advantages, improve the hiring experience on both sides and build trust in the organization.
1. Gain a competitive advantage.
By providing a salary range for an open position, businesses gain an advantage over their competitors. This can be especially impactful in a tight labor market where employers want to stand out to top candidates. Among employers who want to hire remote employees, not every business will be required to post this information, depending on where they are headquartered. Those that do stand out immediately to employees who want to know the salary bands before they apply for a role.
Even if you are not required by your state to share salary ranges, you may wish to consider being proactive about pay transparency, which can help you stay competitive while streamlining the recruitment process. When candidates have accurate salary expectations going in, recruitment teams can save time on salary negotiations and avoid candidates who want more compensation than the business can offer. That gives teams more time to focus on finding the right candidates who align with the business’s mission and values.
2. Improve the employee experience.
The employee experience begins during the recruitment process. One of the most challenging parts of the process for many candidates is salary negotiations. Often, candidates want to know how much a position might pay before they even apply. Tension or discomfort can result when businesses do not disclose pay, or if candidates obtain inaccurate information from online salary-sharing sites.
Pay transparency can make the recruitment process more positive and reduce the risk of attracting a candidate who may walk away over salary differences. Candidates may spend months or over a year hunting for the right position, and along the way, feel frustrated when the compensation offered by a business does not meet expectations. By sharing salary ranges upfront, businesses ensure they will attract candidates who understand the compensation for the role and who feel immediately valued and respected by their future employer.
3. Increase trust.
Providing salary ranges in advance can create feelings of trust in the organization from the first step of recruitment. When organizations choose to be transparent about salary in online job postings, candidates take that as a sign of transparency within the organization. This is a value many organizations want to highlight as it is attractive to highly skilled candidates.
This trust can strengthen organizational culture and increase retention. In January 2022, a McKinsey survey found that 46% of workers who resigned during the Great Resignation referenced their desire to work with people who trust and care for one another. Businesses can build this trust proactively, before employees even onboard, by implementing pay transparency in recruitment.
Final Thoughts
Though it is impossible to predict how and where salary transparency laws may be enacted next, businesses should keep pay transparency in mind even before such laws arrive in their state. There are several surprising benefits pay transparency can offer in terms of a business's relationships with its prospective and current employees.
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