SHRM Research: Pay Transparency Improves Business Outcomes, Could Close Wage Gap

​Many organizations that provide salary ranges in job postings are reaping rewards.

About 70 percent of organizations that list pay ranges in job advertisements said it has led to more people applying for their jobs, and 66 percent discovered that it has increased their quality of applicants, according to new data by SHRM Research released on Equal Pay Day 2023.

"These results highlight that many organizations who provide salary ranges in job postings find doing so helpful to applicant quality and quantity—two major questions at organizations where pay transparency may be on the horizon," said Derrick Scheetz, a senior researcher with SHRM.

The report comes as more states and localities—from California to New York City—are passing laws that require employers to list salary ranges in job listings. About 1 in 4 employees now live in an area where employers are required to share pay ranges, according to calculations by research firm PayScale.

The National Women's Law Center noted that mandating employers to share salary ranges can serve as a mechanism to close the gender pay gap. Pay transparency can also promote employee trust, loyalty and productivity, which can improve a company's bottom line.

Workers Want Pay Transparency

Some organizations have raised concerns that posting pay ranges may lead to negative outcomes, such as fewer people being interested in applying, and the additional administrative burden of disclosing salaries.

However, the SHRM report found that among U.S. workers:

• 82 percent are more likely to consider applying to a job if the pay range is listed in the job listings.
• 74 percent say they are less interested in applying to job advertisements that do not list a pay range.
• 73 percent are more likely to trust organizations that provide pay ranges in job postings than ones that do not.

The findings align with a 2022 LinkedIn report revealing that 91 percent of workers said that including salary ranges in a job post would affect their decision to apply, and 82 percent of respondents said seeing a salary range would give them a more positive impression of a company.

Some workers even say failing to include a salary range in job advertisements should be illegal.

But more employers are showing a willingness to be more transparent: Among organizations participating in the SHRM survey that were not required by law to list salary ranges, 67 percent voluntarily list pay information in their job postings sometimes, often or always, the data revealed.

Other reports show the number of job listings that include salary ranges has been steadily climbing since 2019.

Determining Salary Ranges

Kristen Howe, chief product officer for Linkage, a women's leadership development firm acquired by SHRM in 2022, said that women can use salary information as a starting point to ask the right questions during salary negotiations.

"Women can leverage this pay transparency to negotiate better salaries and start to level the playing field toward pay parity," Howe said. "Organizations should view this positively as companies with better gender parity have better financial outcomes."

Ciara Harrington, chief people officer for software company Skillsoft in Nashua, N.H., said that there are benefits to including salary ranges in job ads, but, presently, too many companies include wide pay ranges—which can be counterproductive for women in salary negotiations.

"This can still lead to a pay-gap situation where a female may accept something on the lower end [while] a male will typically negotiate for the higher end," she said. "The challenge this presents for companies is that many are simply not ready for this level of transparency."

Harrington said that transparency in job postings requires a "very solid foundational dataset" where employees are accurately mapped to the correct job for the role they perform, with each job having an associated pay range. It also requires both managers and employees to be educated and trained in the organization's compensation philosophy.

She implored organizations to remember that pay transparency is not just about base pay. Annual bonuses, spot bonuses and any other offerings should be considered when determining salary ranges.

"All companies should be preparing to move in the direction of full pay transparency by taking the necessary steps to build or update a solid foundation in their job architecture and in educating their workforce," Harrington said. "Pay transparency is not going away, and all companies need to be preparing to be more open and transparent with their data in the future."