Why Pay Transparency Benefits the Recruiting Process

Up to 17 states and municipalities have enacted pay transparency laws to date (GovDocs).  

Legislation ranges from disclosing pay information upon candidate request to requiring employers with more than 15 employees to post a pay range in a job description. Many candidates view increasing pay transparency as a positive. According to a recent poll Another Source published on LinkedIn, respondents said the main benefits of having pay transparency were: 

Let’s examine each area in greater detail. 

1. Pay transparency encourages pay equity.

   ADP defines pay equity as providing similar compensation for employees with like job functions, no matter their race, gender, etc. How might pay transparency in the workplace impact pay equity? Sharing data-based salary ranges ensures visibility into what compensation a role offers. It also identifies any pay gaps that may exist and where there may be opportunities for improvement. 
    
   Employers must do their due diligence in researching relevant salary ranges for roles they are recruiting; tools such as LaborIQ provide strong recommendations based on current labor market reports and national data. By posting an appropriate pay range to the job description, employers are more likely to attract the right talent. Candidates are more inclined to apply for roles with compensation that aligns with their personal expectations (Resume Builder).

    

2. Pay transparency increases candidate trust.

   Including pay information on job postings can contribute to a positive candidate experience. Applicants are more likely to perceive that the salary range for the role is fair when it is disclosed in the job description or during the interview process. 
    
   Keep in mind that before candidates apply for roles or interview, they are most likely researching an employer on Glassdoor or other career sites. As the subject matter expert in their field, they will also probably have a target salary in mind that should be comparable to the range you researched.

    

3. Pay transparency avoids renegotiations.
   

   Because many candidates decline offers based on compensation, being upfront about pay can help recruiters better identify candidates whose expectations are a fit for the role. This in turn ensures more meaningful conversations with qualified prospects. 
    
   You don’t want to miss out on top talent because the salary expectations weren’t clear from the beginning! Furthermore, it will be an additional time and energy commitment to reopen a position and repeat the recruitment process.

    

4. Pay transparency promotes a culture of openness.

   Referring to the top motivators in the job search, candidates prioritize contributing to meaningful work above growth opportunities and areas of focus. Will they be valued and receive fair compensation for their efforts? Are they joining an employer that has a culture of openness and trust? Pay transparency is one essential element in all of the above. 
    
   When employers are open about compensation, candidates perceive that they are more likely to be transparent about other areas such as performance and communication with leadership.  

Employers, what has your experience been with enacting pay transparency? If you have recently begun to post salary ranges on job descriptions, how have candidates responded to this information? Join the conversation with us on your favorite social media – LinkedIn, Facebook, and Twitter. 

Written by Evelyn Kwong 2023