Big Debate : Should Companies Disclose Salaries in Job Advertisements
Some experts argue that including a salary range in the job description is good practice when writing job descriptions and should be taught as standard recruitment training. While many also believe that disclosing salaries can weaken negotiating tactics.
HIGHLIGHTS:
- The new wave coming up where organizations are trying to disclose salary.
- Disclosing salaries can weaken negotiating tactics real or not.
- Few companies in the US, but many in India, doing similar practices.
- Salary was the most important factor for 77 percent of job seekers.
- There is no such law in India to disclose salaries.
- Most companies won’t be open to adopting such a practices.
The Big Debate: Should companies disclose salaries in job posting or advertisements
With things surely changing, and companies taking efforts to hire the best of the talents, there is a new wave coming up where organizations are trying to disclose salaries for the open positions on their online portals instead of just mentioning-best in the industry.
Well, there is a lot of debate surrounding the question of whether or not salary ranges should be part of job postings. Some experts argue that including a salary range in the job description is good practice when writing job descriptions, and should be taught as standard recruitment training while many also believe that disclosing salaries can weaken negotiating tactics.
Though a report by LinkedIn revealed that 70 percent of people would want to hear about salary in the first message from a recruiter, not many companies are willing to oblige.
Many professionals also express that knowing the expected salary in advance lets a candidate primarily judge a job on the basis of salary, irrespective of the exposure it is providing, while some believe that this could further streamline the process of hiring for HRs and save a candidate’s time!
Is it practiced anywhere?
There are a few companies in the US, but many in India, that are practicing something similar. Furthermore, in December 2021, New York City lawmakers overwhelmingly voted to require many job ads in the nation’s most populous city to include altitude ranges, in the name of giving job applicants a better chance at fair pay, particularly women and people of color.
A survey by Talent.com suggested that salary was the most important factor for 77 percent of job seekers when they were looking for a new job.
In fact, around 98 percent of the survey respondents said it was essential for them to know job salary before considering applying, but surprisingly, only 12 percent of US jobs had online disclosure of salary information in June 2022. In comparison, this makes India a good place to disclose salary for open jobs.
Though there is no such law in India, companies are slowly coming forward to practice this. For instance, a company, named Even Healthcare, is doing so.
Mayank Banerjee, Co-Founder, Even Healthcare, said, “We list out salaries for all roles on our careers page to set a precedent for trust and transparency from the very beginning.” It helps us create an equitable workplace. “We pay the same for the same skills regardless of the university people went to or the companies they worked at.”
Equitas Small Finance Bank is another company following a similar practice.
Pallab Mukherji, Chief People Officer, Equitas Small Finance Bank, said the organization publishes a broad compensation range for certain positions that it announces on its chosen job boards, particularly for junior and mid-level roles.
“We believe that by publishing a range along with associated benefits, we set expectations for the target talent market and help them get some insights into the hiring philosophy of the bank.” “It helps the market create a sketch of the candidate that the bank is wanting to onboard,” Mukherji said.
Do companies plan to disclose salaries in online job postings? How can they implement it?
Most experts said that companies won’t be open to adopting such a practice, especially in the IT industry, where the job market is very competitive.
Rajiv Naithani, Chief People Officer at Infogain, said, “Coming from the Indian IT market, I don’t think it’s a good idea to put the salary along with the job postings.”
According to Naithani, in India, salaries vary a lot more than they do in many developed markets. If the salary is made public, it could get harder for the company to find talented people – who might lose interest in the job if the salary is lower than what they expect.
He believes that in India, some public and government industries can post salaries because they keep consistent and equal pay packages and salary slabs, based on the role, and give each job a specific pay grade. But the technology industry is always dealing with changes in skills and challenges with the supply of talent. Because of this, it will take time for them to get into similar practices.
According to Anjali Raghuvanshi, Chief People Officer at Randstad India, when pay scales are revealed in the job postings, the candidates might focus extensively on that and disregard the other benefits that a company provides like additional incentives, travel, career growth, and learning and development opportunities. Only focusing on salaries will also attract mercenaries who jump organizations with no real contribution, and they will leave at some point for better opportunities in terms of pay packages only.
“We, at Randstad, don’t disclose salaries, as we believe in the confidentiality of the client’s pay packages as well as the total reward earning scope for a candidate.” “Salary, alone, is not a representation of the total reward element for a candidate and is not solely reflective of incentive/bonus earning potential, career progression, or recognition within the organization,” Raghuvanshi said.
She further mentioned that salary disclosures might not offer an open platform for the candidate and recruiter to explore a vast variety of job opportunities and limit the scope of finding the right fit for both parties. Besides, hiring managers would want to recruit talent that is more focused on the job; while pay is an important parameter, the overall persona of a candidate can be judged without putting the pay scale on the table.
How far can this wave go?
Even Healthcare’s Banerjee stated that he can only hope that people will demand more from their employers and that employers will recognize the true value that open salaries bring to the table.
“We are aware that it is challenging to implement a transparent culture like open salaries.” “Open pay is a conscientious position to take; it leaves founders with very little flexibility and demands far more accountability,” he added.
Raghuvanshi of Randstad India gave a different point of view on this.
According to her, pay transparency is an evolving subject. Some companies offer partial pay transparency, where, at times, they reveal the salary range that they can offer for various job roles across levels of experience.
She believes that complete pay transparency might only work for freelance/gig hires where the candidates’ relationship with the organization is purely transactional. India is a competitive job market, which is another reason why companies refrain from revealing salaries to avoid resentment among team members.
Such scenarios might get tricky, as the additional costs of equalizing the pay scales, in case someone demands it, might be quite high. Companies in developing nations would want to consider these aspects due to higher volatility in the job market, as opposed to more talent stability in developed countries.
Mukherji of Equitas Small Finance Bank highlighted that the hiring manager, along with HR, may choose to disclose the salary range or at least confirm with the potential hires that compensation would not be a constraint. This would be particularly applicable for the candidates that one would want to take forward the discussion with.
At relatively junior levels and where there are volume hires to be completed, it is advisable to publish salaries to save time screening through numerous applications, which eventually may be over the budget for the advertised position.
At senior levels and for niche roles, candidates are typically very selective about the positioning/level of the role that they would want to apply for. Eventually, there should be discreet checks made before applying for a senior position to avoid confusion later.
“The current generation values transparency. I am sure more and more companies like us would want to bolster their brand by being open in their communication related to compensation, particularly at Junior and Middle levels. I also feel publishing or otherwise depends on the position and business stage the organisation is in. For example, if I am in need of talent in a particular area or setting up a new business line, chances are that I would be willing to make more exceptions to attract exceptional candidates in the bank,” Mukherji added.
Pros and Cons of Salary Disclosure Practice
Pros:
1. Upholds transparency and provides a holistic view to the “total rewards”
According to Mukherji of Equitas Small Finance Bank, this will uphold the transparency of the organisation, enabling the applicants to take a decision whether to apply ot not.
Moreover, information such as the salary range and mentioning other components like variable pay/reimbursements/benefits provide a holistic view of the “total rewards” to the candidate, instead of limiting the salary visibility to only the fixed remuneration. This may especially help in incentive-driven roles.
2. No worries about the expectations
Naithani of Infogain said that it will make it easier for companies to hire people because they won’t have to worry about expectations not being met at the offer stage given that the candidate will already know what to expect. Recruiters won’t care much about negotiating and will instead focus on the quality of the candidates.
3. Cuts down time in hiring
Banerjee of Even Healthcare feels that open salaries cut down time in hiring. The pesky negotiation phase is out of the window, and people can focus on the brass tacks.
This can also help the company to be fair to team members who may not be good negotiators and often lose to people who are able to get a higher package for themselves.
Cons:
1. Complex process
Mukherji of Equitas Small Finance Bank highlighted that providing a salary range alone at times is insufficient, especially if the compensation structure compensation structure comprises complex components, such as reimbursements, perquisites, options etc.
Additionally, some organisations tend to factor a portion of variable pay in the compensation published which may lead to unnecessary complications either during salary negotiation or after the candidate joins the organisation.
Also, tax implications of salaries are little known in some talent pockets. At relatively junior levels, candidates could be more interested in knowing about thir “take-home” pay rather than the overall CTC, therefore any significant difference between published salary and salary in-hand may result in employee dissatisfaction.
2. Initiates difficult conversations
Banerjee of Even Healthcare said that an open salary culture may initiate difficult conversations in case someone’s current salary falls just above a certain fixed bracket, and they are not perceived to be good or experienced enough to move up a level in the initial offer. However, options such as trading off some equity or other benefits for an increased salary, can still allow an organisation to offer competitive compensation overall.
3. Accessibility to talent could be restricted
As per Naithani of Infogain, accessibility to talent could be restricted due to expectations mismatch on the published compensation and even internal employees will know what is being offered for the role and may become a potential risk for the employer.
No wonder, most employers are not ready for this. Though when looking at a job posting, compensation and benefits are the primary things that most candidates are looking for, salary disclosures may overlap things like exposure, career growth opportunities etc. To tackle this, companies may start with posting salary ranges so that the decision making becomes easier on the part of both the parties.
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