Company Cultures Adjust to Disclosing Pay Ranges in Job Ads

As New York City joins localities requiring employers to publish pay ranges in job ads, more employers across the U.S. are also adopting this practice, even in places that don't require them to.

Consultancy WTW's 2022 Pay Clarity Survey found that 17 percent of U.S. companies that are disclosing pay range information to job candidates in the U.S. are in locations without state or local statutes mandating that they do so.

In addition, 62 percent of these organizations are planning to disclose or considering disclosing pay rate information in the future, even where there are no local mandates requiring it. This will include information such as the position's hiring range (the choice of 58 percent of respondents that plan to disclose pay information) and full salary range (chosen by 48 percent).

Significantly, nearly 1 in 6 companies (16 percent) that currently disclose pay rates are seeing an increased number of candidate applications, the survey found.

The survey also found that over half of organizations (57 percent) are applying a geographic pay policy to determine the pay rates or ranges.

Changing Corporate Cultures

"As organizations consider disclosing pay information to job candidates, they need to step back and think about better informing their current employees," before workers get wind of what their employers are offering to prospective hires, said Marianne Madden, North American Fair Pay co-lead at WTW.

Still, some companies are holding back on communicating pay information. About 3 in 10 (31 percent) say their pay programs are not ready for this kind of transparency. Almost 30 percent cite administrative complexity, and 25 percent cite lack of clear job architecture as reasons to hold back.

Changing organizational cultures to be less secretive requires getting company leaders on board, Madden said. Next, educate people managers to help share pay structure information with employees, so they can explain the components that go into setting pay ranges and help employees understand how their job fits into the overall structure as well as how individual performance comes into play in determining where employees fall within their ranges.

"Education is not a one-time thing," Madden said, but should be ongoing.

How Much to Disclose?

Employers must decide whether job posts should include the position's complete pay range or just the starting pay range offered to a new employee. "If the range is too wide, candidates might think it's not realistic or fear getting stuck on the low end," Madden said. 

Indeed, some employers in New York City that have begun complying with new pay transparency rules are posting jobs with pay ranges whose lows and highs span $100,000 or more, CBS News reported.

However, if only the hiring range is given, candidates might fear that the position lacks room for growth.

"If you're using a starting range, note that you're doing so in the ad," Madden advised.

Pay Disclosure Mandates Spread

Madden expects that the recent wave of pay transparency legislation will continue and pick up speed. However, "regulatory requirements are only one factor in the expected increase in disclosures and communication about pay. Job seekers and current employees want to know and understand that they are treated fairly and are provided with equal opportunities to thrive and grow within the organization."

Wasted Hours

In another survey, most U.S. job seekers gave salary information in job posts more importance than the job role itself, the location, the company culture, its diversity and inclusion policy, or any work benefits or perks. The finding is from a September survey with responses from 2,000 adults in the U.S. who have looked for employment at least once over the last five years.

"Our research has confirmed what we have thought for a long time—job seekers are fed up with the job application process, and the lack of salary transparency on job ads is one of the main issues," said Doug Monro, co-founder and CEO at Indianapolis-based job search engine firm Adzuna, which sponsored the survey.

Lack of salary information is leading to hours wasted by those applying for jobs with an inappropriate salary, the Adzuna survey showed, as well as disinterest in continuing the hiring process. Among the findings:

• 54 percent of respondents said they had declined a job after they learned the intended salary, despite having completed a lengthy interview process. On average, those job seekers wasted seven hours applying for the position.
  

• 33 percent of respondents said they won't attend an interview if they are not told the salary that the employer is willing to offer.

"We want employees to know their worth and waste less time on applications, but we also want to bring value to employers who will be able to attract the right candidates for their open roles," Monro said.

Related SHRM Articles:

Companies Embracing Pay Transparency Gain a Market Advantage, SHRM Online, October 2022

Trend Toward Pay Transparency Continues, SHRM Online, September 2022

NYC Pay Transparency Law May Result in Pay Compression, SHRM Online, August 2022