The decision to pursue a job or not is largely contingent on pay. Although candidates now view job offers more holistically, salary remains the top influencer. However, historically salary information is not usually available while applying for a job.
Employers withhold salary information for various reasons. From losing leverage to discouraging unqualified applicants, employers have their own reasons for keeping employee pay confidential. Nevertheless, times are now changing. Pay transparency is emerging as a competitive differentiator (and in some cases a requirement) for employers and the market is responding.
This article discusses some of the most common advantages and disadvantages of including salary in the job ad.
Why Organizations Avoid Posting a Salary in the Job Ad
Despite the importance of salary in influencing employment decisions, the information is often not easily available today. Organizations may decide to withhold salary-related information for various reasons. Some of the most common disadvantages of mentioning salary within the job ad are:
Losing the Leverage in Negotiations
One of the most cited reasons for not mentioning salary in the job ad is that the organizations lose leverage during negotiations with candidates. When you post the salary in a job ad, the information becomes available to all candidates. Now that candidates know how much a firm is willing to pay for the role, they will use the information to negotiate a better deal for themselves.
In addition, this publicly available salary information might be used by rivals to inform their employment decisions. They can also try to poach your candidates by offering higher salaries than you do.
Setting Unrealistic Expectations for Candidates
Organizations also fear that if a salary range is mentioned, all candidates will expect the figure at the higher end regardless of their expertise and qualifications. In a salary range, compensation is ultimately dependent on skills, qualifications, experience, expertise, and other factors. The higher end of the pay band is usually reserved for only the most valuable candidates.
However, when salary information becomes public, candidates may feel undercut when offered less than the highest possible range. Disappointed by a low offer, a candidate might pass over the opportunity. On the other hand, even if they accept the offer, they might feel that they “settled” for less. This has a domino effect on productivity, engagement, and mental wellbeing.
Existing Employees may feel Slighted
Another common reason for not disclosing salary beforehand is that it can promote jealousy and discontentment amongst existing employees. If current employees find out that new hires are making more than what they started with, they might feel slighted.
Companies consider various factors while determining the salary for each employee. Private salary information allows organizations to manage this information sensitively. However, if employees know others are making more, it will affect teamwork and cohesion.
The Advantages of Mentioning Salary in a Job Ad
Salary is one of the most important influencers of a candidate’s employment decision. If offered a lower salary, candidates do not hesitate in overlooking that opportunity. Especially now, when the candidates control the market and are more mindful of their employment choices.
Hiding salary information from a job ad is extremely unfair to the candidates. Without salary information, candidates are often forced to go through countless interview rounds only to decline the opportunity when an offer is made. It is particularly disappointing for candidates that have cleared all interview rounds and are faced with an offer way below their expectations and qualifications. This is a waste of time for both the candidates and the organizations.
However, we are now entering the era of pay transparency. In states like Colorado, Nevada, Connecticut, and Washington pay transparency laws have been in place since 2021. These laws require employers to disclose salary information in one way or another. A similar law is set to go into effect in May 2022 in the state of New York.
Here are the top advantages of including salary range in the job advertisement:
Although we are gradually moving towards pay transparency, companies still do not mention salaries in their job ads. According to a PayScale survey, while 54.5% of companies expressed a desire to be more transparent about pay, only 12.6% of global companies mention pay range. Including the salary range can give you an advantage over other potential employers.
With salary information easily available, the number of applicants will be higher. Moreover, if the salary and benefits are attractive enough, a higher caliber of candidates will complete your application. It will save you time, and provide a pool of the top candidates.
Promotes Diversity, Equity, and Inclusion
Marginalized and historically under-represent communities are frequently at the receiving end of low pay. Although this might not be the intention, unconscious bias often permeates the hiring and remuneration decisions of any company. Thus, mentioning salary range in the job ad shows your organization’s commitment to promoting diversity, equity, and inclusion initiatives. The salary range in the job ad also enables the candidates and employees to hold the organization accountable. This gradually builds trust amongst the organization’s employees and promotes team building and commitment.
Being transparent about pay allows organizations to attract candidates belonging to marginalized communities. It also allows the organization to identify its biases and take corrective actions. For instance, WeMaintain employed an updated salary and equity policy with transparent information about pay bands. They updated their pay bands to base their salaries on achievements and contributions rather than on experience. They also publicly mentioned their pay bands on all job ads encouraging an increased number of applications from women in the historically male-dominated field of mechanical engineering.
Apart from this, salary transparency facilitates growth amongst all employees equally and improves retention in the long run.
Attract only Interested Candidates
Mentioning salary ranges within the job can streamline the candidate pool. Since salary is an important determinant of employment, candidates who are expecting more will not apply. Thus, candidates who apply will be the ones who have considered all aspects of the role and not just money.
This will narrow down the candidate pool to only those who are a match for the organization and the role. Organizations can then spend time evaluating these candidates to select their best fit. Since the salary is already taken care of, it leaves room for other discussions. Candidates are also aware of what to expect and can focus on understanding the team, work culture, roles, responsibilities, and company values.
To include the salary or not to include the salary?
Although mentioning the salary in the job ad has certain disadvantages, the benefits outweigh them. Including salary information may affect your negotiating leverage, tip off your rivals, and increase feelings of jealousy amongst your current employees. However, the labor market is moving towards pay transparency. It not only profits the company, but it is also fair for the candidates. It saves time, and money and promotes diversity and inclusion. Thus, pay transparency is the way to move forward.