The 'Yelping' of Pay: Managing Expectations in the Era of Online Salary Data

What to do when job candidates and employees have pay estimates from career websites

By Joanne Sammer May 1, 2017
LIKE SAVE PRINT
Reuse Permissions

Social media is changing the way employees and job applicants approach discussions with employers about pay. Employers need to keep up by being more transparent about how compensation decisions are made.

A growing number of websites like Glassdoor allow employees to anonymously post their annual compensation—and then provide an overview of salary ranges for various positions at a given organization. Other sites, such as PayScale and Salary.com, aggregate pay data from market surveys and make this information available through a user-friendly interface.

Job candidates use these sites to prepare for pay negotiations during a job search, just as employees use them to see if their pay is competitive to the market.

For employers, the upshot is a growing number of pointed questions about how and why the organization makes its pay decisions. If employers are not prepared, these conversations can quickly get uncomfortable.

"It would be foolish for employers not to acknowledge and deal with the fact that this information is out there," said Sayeed Islam, a principal consultant with consulting firm Talent Metrics in New York City. He likened the information on sites like Glassdoor—which also lets employees rate their employers on several metrics, including the competitiveness of pay and benefits—to the impact the review website Yelp has had on the hospitality and restaurant industries.

Social media-driven salary information is an example of how the balance of power in pay discussions has shifted. In the past, employers held all the cards, asking for the salary histories of applicants who had no access to reciprocal information about the employer's pay practices. Now, the Internet and a growing number of local laws prohibiting employers from asking about salary history have combined to help level the pay-data playing field.

Transparency and Credibility

Job candidates and current employees, armed with online salary information—which may or may not be accurate—feel empowered to engage with employers in discussions about fair pay.

Employers, in turn, must be prepared to discuss everything from the organization's pay strategy and philosophy to how the organization uses market data to set pay levels, and to correct misperceptions stemming from partial or inaccurate online information.

"People believe that the pay data on these sites represents the market, so that becomes their point of reference," said Mary Ann Sardone, workforce rewards practice leader with HR consultancy Mercer in Atlanta. "This requires employers to be credible about pay and to be prepared to constantly be pressed for information about it."

How open an employer is about pay will depend on the organization. Being transparent does not have to mean sharing what everyone is paid, although some startup companies have made headlines doing just that.

Instead, employers should be prepared to share, at a minimum, some basic information about how the organization sets pay levels tied to the market and, if relevant, how it adjusts pay based on internal valuation measures. For instance, some organizations may be willing to pay more for a given position—whether a media relations specialist or a chief HR strategist—than similar organizations in the same industry would, if the position plays a more important role in the organization's long-term plans than it does for its competitors. Likewise, some positions may be less valued by an organization than by the overall market.

"Some employers feel good about being more transparent while others think the topic is too complex to explain properly," said Sardone.

Line managers, who are frequent targets for employee-initiated conversations about pay, also need to be educated about how the organization sets compensation levels. Using that information along with some guidance from HR about how to manage these conversations, managers will be better positioned to ensure that conversations with their direct reports are productive and satisfy employees' questions and concerns.

[SHRM members-only how-to guide: How to Establish Salary Ranges]

Telling Your Pay Story

If an employer has been lax on keeping its pay levels current with market demand, now is the time to become more diligent.

Pay structures are not infallible and should not be static. If an organization left its pay levels unchanged during the recession, its pay practices may not be keeping up with a more competitive market.

When employees and job candidates press the organization for in-depth discussions of pay, it is important that HR and hiring managers feel confident in the story they are telling. That means making sure pay ranges are up to date and the overall pay structure is aligned with the market and internal valuation measures.

"To make sure pay is accurate and relevant, employers are introducing more rigor into the process," said Sardone. For instance, they are more apt to use multiple job-market surveys when pricing jobs—smaller employers might opt to augment a purchased survey by using online sources (carefully)—and to apply multiple data points within a job-market survey to more closely match pay with job responsibilities.

Employers should also carefully decide what story they want to tell when it comes to compensation. Should the organization simply focus on wages and salary (and, when relevant, annual bonuses and long-term incentive payouts), or add to its discussion total rewards information that includes the value of employee benefits?

"This is an opportunity to communicate to the employee everything they are getting from the employers," said Islam. "Depending on the employee, something like schedule flexibility or compressed workweeks might have tremendous value even if that value is not monetary."

"Employees and job candidates have become more accustomed to using social media and social information to make decisions," summed up Sardone. "The information is out there and you have to deal with it."

Joanne Sammer is a New Jersey-based business and financial writer.

Related SHRM Articles:

'My Pay Isn't Fair,' Nearly Half the Workforce Thinks, SHRM Online Compensation, November 2016

How to Counter Employee Perceptions of Income Inequality, HR Magazine, May 2016

 

Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. Join/Renew Nowand let SHRM help you work smarter.

 

LIKE SAVE PRINT
Reuse Permissions

SHRM CONNECT

Join SHRM's exclusive peer-to-peer social network

Join Today

Job Finder

Find an HR Job Near You
Post a Job

SPONSOR OFFERS

Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 3,200 companies

Search & Connect