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HR must prepare for these salary discussions and help educate job candidates
Salary transparency is everywhere these days. Web sites abound that share pay data for practically every type of job and experience level. The result is that HR practitioners, recruiters and hiring managers often are contending with questions from current employees and job candidates about how their compensation packages stack up against those at other organizations.
The catch is that candidates who use these websites to estimate how much their skills are worth in a particular region or industry sometimes draw the correct conclusions. But many times they don’t.
“Wise candidates look at numbers and try to put them into context,” said Jennifer Loftus, SHRM-SCP, national director of Astron Solutions, an HR and compensation consulting firm in New York City.
In other words, while searching for information that matches their current job or the new role they’re considering, candidates may end up with salary data for a position that requires more experience or credentials than the job they’re comparing. Or they may look at national figures that don’t align with pay rates in your company’s location. And they often don’t consider the value of vacation days, leave policies and other benefits that will make up a large share of their total compensation.
“It behooves companies to get in front of this rather than try and stop it,” said Chris Bolte, CEO of Palo Alto, Calif.-based Paysa.com, which provides salary and other intelligence to technology professionals. “A lot of people want this information and it’s out there.”
While being challenged on your salary offer can get a negotiation off to an uncomfortable start, Tim Low, Seattle-based PayScale’s senior vice president of marketing, contends that “better conversations” result when both sides come to the table with information.
“We think that transparent and fact-based conversations about pay drive the best outcomes,” he said. “Years ago, you could say employers held all the cards, but now we let candidates have the information they need to” launch discussions about the value of their skills.
Compensation Is Not Just Salary
Some HR professionals would undoubtedly prefer to dismiss the data compiled by brand-name sites as unreliable. And while some compensation consultants may frown on some of the sites’ methodologies, no one makes a serious argument that the numbers are entirely without value.
Simply saying “Here’s the offer and that’s it,” can hurt your employment brand, Loftus said. A better approach is to talk through the offer and the candidate’s information in detail. For example, is the candidate’s information derived from organizations that line up with yours in terms of size, industry and location? A candidate may have some credentials you don’t really need, and that can become a negotiation point.
It’s important to point out that your offer includes more than salary.
Besides that, with sites like Salary.com and PayScale, “you’re only looking at a small piece of equitable compensation,” says Judi Mickey, senior data analyst and consultant at HR Consultants Inc., in Johnstown, Pa. “A lot more goes into developing a pay structure than a look at the external market.” For example, organizations regularly research not only salary ranges but the types of perks and benefits offered by others in their industry.
Educating candidates about compensation structures and how they’re put together is becoming a part of the negotiation process. And HR advisors, compensation consultants and executives from the salary sites themselves agree that making these conversations successful requires an approach that is transparent, honest, well-reasoned and well-informed.
Don’t participate in these discussions until you have adequately prepared.
Besides doing your homework about each role during the requisition and budgeting processes, you need to have command of the details of your organization’s compensation plan. Take the candidate through your benefits package in detail and be ready to put a dollar value to it. Some companies may offer lower pay but be generous with benefits and liberal with paid time off.
“Every organization needs to have a solid compensation program and communicate it to employees and candidates,” said Chris Ratajczyk, managing director in the Human Resources & Compensation Consulting Practice of Arthur J. Gallagher & Co., headquartered in Itasca, Ill. “You need to be clear on how the organization values the role, explain ‘Here’s how we gathered and considered data.’ You have to be ready with a lot of backup information. It may not make the candidate happy, but at least you’re able to communicate” the thought process behind the plan.
“As a candidate, that would make me feel pretty good,” Ratajczyk added. “It says the organization has its act together.”
HR should also be sure to give the organization’s compensation plan regular attention. “Jobs don’t change price once a year,” PayScale’s Low said. “Smart HR people are always monitoring the market.” Ratajczyk said that a solid compensation program should be reviewed and refined every year or two.
Still, Loftus acknowledged that if a candidate is really hung up on salary, “you may have to part ways. Because if you make an exception, you have to ask yourself: What are the consequences? Will it undermine the organization?”
Keep an Open Mind
It’s also important not to automatically assume that the pay information a candidate cites is wrong. As Ratajczyk said, “You may be missing something in the market.”
“It’s very possible a candidate will bring in eye-opening information,” added Loftus. “It might explain why you’re having trouble filling a role. Again, do your homework.”
In the end, you’ll either discover a disconnect between your salary structure and the market, or you’ll confirm that your pay scales are where they should be.
If you haven’t yet faced a data-armed candidate, rest assured that you will. “These sites are already becoming more influential,” said Ratajczyk. “That’s not a bad thing, but HR needs to be ready to respond with knowledge and facts. It’s hard to say, ‘That's just what we pay.’ ”
Mark Feffer writes about recruiting, workforce issues and technology from his base near Philadelphia.
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