HR Magazine - August 2000: Adding Salary Ranges To Internal Job Posting

Vol. 45, No. 8

This simple change helps HR weed out inappropriate candidates -- and demonstrates your competitive salaries to employees.

Should you include salary ranges on in-house job postings?

Yes, according to compensation specialists and HR professionals. Otherwise, you risk raising employee suspicion and looking like you’re out of touch with the pay of your competitors. Inclusion of the salary range in the position description serves several useful purposes, experts say. It can:

• Indicate the position’s level of responsibility.
• Reduce the number of unqualified applicants.
• Contribute to an atmosphere of openness and trust.
• Demonstrate that wages are competitive.

Conversely, a reluctance to post salary ranges may indicate an inferior compensation system or a lack of trust between employees and management. And given that employees now have access to plenty of information about the pay of competitors, lack of openness about pay ranges may dishearten internal candidates.

“In the current business climate, not posting salary ranges is the equivalent of corporate suicide,” says Karen Larson, HR director for the Richmond, Va., Times-Dispatch and former manager of strategic program development for CSX Corp., a Fortune 500 transportation company. “It conveys so many negative messages to both employees and outside job applicants.

“If a company has a sound compensation system, if they communicate well with their employees and they are in synch with the market data for their region, they will truly be competitive and have every reason to post salary ranges internally,” says Larson.

Weed Out Inappropriate Candidates

The first benefit of posting salary ranges is that it can help employees determine whether they are qualified to pursue the job. Ranges that are higher or lower than their current salaries can give employees an indication of whether the job responsibilities fall inside their career path.

“In large companies, people may not have an accurate idea of salary ranges for positions, particularly if they are considering a job in another department. By giving them a salary range, you give them some idea of where the position fits in,” says Gary B. Omura, managing principal of Omura Consulting, a Los Gatos, Calif., firm that specializes in compensation issues.

By reducing the number of unqualified internal candidates, HR and hiring managers don’t waste time fielding calls from or interviewing poor candidates, says Larson.

“You want to give people enough information so that they can self-select themselves into a position, and a salary is certainly part of that process,” says Joseph F. Kager, CCP, managing consultant of POE Group Inc., in Plant City, Fla. “A job title and a basic description doesn’t necessarily tell you where a position stands in the company’s hierarchy.”

There is no set management level at which you should stop posting salary ranges on internal job openings. But when managers’ stock options, profit sharing and other compensation add-ons become significant, including salary ranges loses its point because the salary range is an inaccurate measure of the job’s actual compensation.

“It is always appropriate to give a salary range for positions up to lower to middle management if the organization truly believes in providing internal career opportunities for its employees,” Omura says.

Drop the Mystery

Posting salary ranges goes beyond including a few numbers with a job description, Larson says. Posting ranges is “a public show of trust” in employees and demonstrates that the employer values them and will help them advance. That show of trust builds morale, and companies with good morale attract and retain good people, she adds.

“Not posting salary ranges creates an air of mystery that is not beneficial. It generates confusion and distrust, wastes time and ultimately costs the company a lot of money,” says Larson. It also, “raises the question, ‘Why won’t the company tell me?’ in the minds of employees,” she adds. “That kind of suspicion and distrust leads to high attrition rates,” which hurt an employer’s bottom line.

“Salary is about the job, not the person,” says Kager. Employees understand that fact in “companies that communicate well. A company’s openness about compensation is a direct reflection of its relationship with its employees,” he says. “It doesn’t matter whether a company employs 35 people or 10,000 people. These kinds of communications aren’t size-dependent, they are trust-dependent.”

Don’t Underestimate Employees

Eliminating mystery about salary ranges also is smart because employees probably already have a good idea of what competitors pay and what their co-workers make.

“Anyone with a computer can go to the Internet and get a very accurate idea of what a position is worth in today’s highly competitive job market,” says Susan K. Schalbe, HR director for Sonoma Systems, a technology firm in Marina del Rey, Calif.

“Employees assume that you are trying to hide something or that your salary scales are not competitive,” says Schalbe. She has worked in a variety of industries such as entertainment, publishing, aerospace, banking and technology and says people generally know what is fair compensation within an organization. She adds, “In companies that don’t supply salary ranges, that decision is often made by senior executives whose thinking is a product of an earlier time,” when executives regarded any employee salary information as personal.

“The HR professional needs to try as hard as he or she can to change that kind of thinking,” says Schalbe.

Armed with his personal research, an employee who applies for a job within his company and discovers that the salary is not competitive with external positions is probably going to leave at the first opportunity, Schalbe says. “In this highly competitive market it is just silly to try to hide salary information,” she says.

Larson adds, “If I were looking for a job and found out that a company I was applying to was not up front about their pay practices, it would raise a real red flag for me. A company that doesn’t understand that employees have tremendous access to data about the job market nationally or regionally is not in touch with today’s world.”

Two decades ago, people placed great emotional stock in their salary and closely guarded their salary information. “The world is different now,” says Larson. “We are awash in information, and in a market where there are more skilled jobs than there are people to fill them, salary is not personal.”

Is Your Pay Out of Whack?

A refusal to consider posting salary ranges for internal openings may be a symptom that the entire compensation system needs revisiting.

“Sometimes, when a company has grown quickly, no one has really ever looked at the company’s compensation structure; they’ve been too busy hiring people to fill specific needs,” Kager says. “They need to take a close look at how jobs are classified within their company and then survey what is going on in the world outside.”

“Once HR has devised a sound compensation structure, they have completed half their work,” Kager says. “The other half is making sure that every hiring manager understands how their open position fits into the compensation system and that they can explain it to job applicants, both internal and external.”

Where the compensation system is in flux, posting salary ranges probably is not a good idea. For example, companies undergoing acquisitions or mergers should hold off on posting salary ranges internally, Kager says.

One of his clients, a manufacturing firm, recently acquired several businesses. Employees in the acquired businesses are used to varied compensation systems that the manufacturer has not yet integrated into a single system. To post ranges now would confuse employees, says Kager, who is advising the company not to post salary ranges before the compensation systems are evaluated and reconciled.

HR bears the responsibility for educating managers and employees about compensation, Kager adds. And Schalbe notes that HR has another responsibility—knowing whether the employer is subject to any laws requiring posting of salary information.

Schalbe says her company had to comply with a California law requiring employers to post internally the precise salaries—not just the salary ranges—of immigrant employees seeking green cards. “There were no repercussions” among employees, she recalls. “Some employees asked why we posted a salary, not a range, but no one was embarrassed or questioned it, including the employees whose actual salary was posted.”

Anticipate Questions, Competition

A company that has not included salary ranges in its internal job postings should not simply begin posting them without making sure employees and management are ready. Posting ranges without preparing the workforce for the change risks creating confusion and possibly resentment among employees.

HR professionals working for companies that have not traditionally posted salary ranges can expect questions from employees when those figures begin showing up in job descriptions. Be ready for questions such as, “You posted a job that looks a lot like mine but has a higher salary range.” To answer that, Kager notes, the HR professional must be able to explain the compensation system, including the regional and local salary data used to create pay ranges and the impact of experience and performance on salary.

Employees also may ask HR how to prepare themselves to move into the jobs they see posted. “Those are the employees who are committed to staying and are looking for opportunities to improve their job skills and their chances for advancement within the company,” Kager says. HR should be ready with career development help. á

Omura adds that HR should be ready for another possible result of posting salary ranges: competition—not just among employees competing for a job but also among managers vying to attract candidates. Knowledge of the pay in other departments may prompt some managers to inflate the pay level of their open positions to attract the best internal applicants.

This kind of competition is something that good compensation management can fix, Omura says. “If a sound salary structure exists, management can assure that each position is assigned its proper level and compensation package.”

More than Numbers

Salary is not the single determining factor for employees considering a job change inside or outside the company, say these HR professionals. Applicants look at an entire compensation package, including flexible hours, day care, vacation time, even programs allowing them to bring their pets to work, Omura says.

“No company should want employees who are only in it for the money,” says Omura. “Those types of people are always for sale to the highest bidder. So, when you post a job with a salary range or grade, remember that it is an important benchmark—but not the only important benchmark.”

Patricia A. Rouzer is a freelance business writer based in Westminster, Md.