Ask a Hiring Expert: Why Pay Transparency is a Good Thing

Pay transparency refers to the way employers communicate with job seekers and candidates about compensation for a role. 

Being up front about how much a role pays as early as the initial job posting is a trend that’s gaining steam. In fact, in some states, like Colorado, it’s now required by law to include compensation in job descriptions

And yet, some employers are still reluctant to include salary in the job postings, and would rather discuss compensation later on in the hiring process

Though there may be mixed feelings about pay transparency, at CareerPlug, we think it’s a very good thing! As our Senior Director of Human Resources, I’d like to share why pay transparency matters and how it can positively impact your hiring process. 

Let’s talk about compensation

When it comes to recruiting, the old advice was don’t lead with compensation. Instead, the idea was to first get candidates engaged in your process so you can later sell them on the total package — benefits, culture, job responsibilities, and then, compensation. 

But that’s the old way of doing things. The reality? You should lead with the total package on your job descriptions, including compensation.  

The data backs this up! In our survey of job seekers in our annual Candidate Experience Report, 39% of job seekers told us they expected to be informed about compensation in the initial job post. When Indeed asked in their own survey of job seekers if salaries were helpful when shown along with job descriptions, over 80% job seekers responded favorably.

job seekers want compensation in the initial job post

There are so many good reasons to be transparent about pay. Let’s dive deeper into those reasons and discuss how pay transparency has shaped hiring at CareerPlug. 

Why pay transparency matters

Pay transparency can actually save you time and effort during the hiring process. It can impact recruiting efforts from the initial job posting all the way to the offer stage. 

Let’s start by talking about applicant flow. Putting compensation information in your job postings will actually help your visibility on Indeed and other major job boards and ensure your jobs are showing up in searches to relevant candidates. 

Indeed found that “salary information” is one of the most important factors for job seekers when they search for and view jobs. Because of this, when you don’t provide a salary in your job posting, Indeed will add a salary estimate to the job. If this estimate isn’t in line with what you’re willing to pay, it can lead to frustrated applicants and wasted time for your hiring process. 

Instead, include the accurate compensation in your job posting. This will allow job seekers to  self-select in or out early in the process. This may mean that you get less applicants, but it also means that you can be sure that someone who takes the time to fill out an application is aware of what you have to offer and is ok with it. 

Pro Tip: On major job boards like Indeed, make sure you’re listing the compensation in the appropriate section of your job posting. Don’t include the compensation in the job title. Major job boards remove jobs with title modifications.

Another thing to consider is that not including pay in your job descriptions might actually keep high quality candidates from applying. Candidates have a lot of options these days, and they don’t want to spend all day filling out applications. Candidates will concentrate on opportunities that are upfront about the pay instead of playing the guessing game. 

Pay transparency and the candidate experience 

Pay transparency may have an impact on how many late stage candidates say yes to your job offers as well. We found that “compensation and benefits not meeting expectations” was one of the top contributing factors of a poor candidate experience. That’s important because 58% of job seekers have turned down a job due to poor candidate experience

It’s also important to note that when we asked job seekers what employers should focus on during the hiring process, they said they want more communication sooner, including more transparency in the hiring process about compensation and benefits

Pay transparency can improve your candidate experience, and therefore improve your chances of getting candidates to accept your offers. 

The job seeker’s perspective 

It’s important to think about pay transparency from the job seeker’s perspective. Here are some of the stories candidates make up about your business when you withhold compensation early in the hiring process: 

  • When I do learn about compensation, it will be below market. 
  • They want to see the lowest amount they can pay for someone to do the job. 
  • They don’t understand the value of my work. 
  • They don’t value open communication and transparency as a company. 

On the flip side, when you do share compensation, here are the kinds of stories job seekers tell themselves: 

  • They understand the value of this position at this company. 
  • They will value my work. 
  • They value open communication and transparency with their employees.  
  • They care about inclusive hiring practices and pay equity. 

Why I switched to leading with salary on job descriptions

We practice pay transparency at CareerPlug and it’s made a positive impact on our hiring process

I hate negotiating and most candidates do too! Why was I putting people through this awkward, painful process that implied we didn’t lead with our best offer and therefore value their candidacy and only rewarded people who asked for more – which, by the way, has a disparate impact on historically marginalized groups like women and people of color

Now, instead of feeling like an intense game of poker, the screening conversation is a breath of fresh air. I can confidently say, “We put compensation in the job description because we like to be transparent with candidates. The role pays X. Is this in line with what you’re looking to make?”. 

I can almost feel the candidate’s relief on the other end of the phone that I didn’t ask them the impossible question: “What are your compensation requirements?” which forces someone to evaluate their own worth (a dangerously subjective task) while trying not to shoot themselves in the foot. 

Our advice 

Respect job seekers enough to be transparent from the start. Job seekers will truly appreciate the clarity you provide, increasing your likelihood of making the right hires and positively impacting your employer brand

If you’re not sure where to start with competitive compensation, research what it looks like in your market by searching for similar job titles online. You can also check out free compensation resources on sites like Indeed or Glassdoor; keep in mind this is also where job seekers are often looking to evaluate their market worth. 

Have internal discussions and make sure your job posts are aligned with your internal team. Compensation should ideally meet both internal and external benchmarks – i.e., what you’re paying the position compared to other companies in your industry and what you’re paying the position compared to other employees within your company. 

Once you know your best offer, include it in your job description and the right candidates will find you. For more tips on creating your job posting, check out this video with some of my best advice: 

What if my pay is not competitive? 

First, the hard question to ask yourself: Why? 

Really think about what it would mean for your business if you were able to hire and retain the best people. Would it grow? Would it save you time and money? Think about hiring as an investment and consider what you might get in return. 

And of course, compensation isn’t everything. Benefits, perks, culture, growth opportunities, working for a great boss or for a company whose mission they believe in — all of that can be vitally important to candidates. Make sure your job description speaks to all of those things! Compensation is just one piece of the puzzle and you can contextualize it alongside the other reasons why you’re a great place to work. 

Final thoughts 

The labor market has gone through some major shifts in the last couple of years. If you have been struggling to find high quality employees, it might be time to change the way you hire. 

When you consider pay transparency from the job seeker’s perspective, it becomes much easier to see why it’s so important. Ultimately, pay transparency can help you attract the right candidates and improve your chances of getting them to accept your offers. 

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