Conquering concerns around salary transparency - Glassdoor for Employers

Conquering concerns around salary transparency

Workers want salary transparency, but some employers are afraid of what might happen if they offer it.

We asked around 30 leaders from companies on Glassdoor's Best Places to Work 2023 list about their fears, and the majority (63%) agreed or strongly agreed that greater salary transparency would be a burden. It seems, despite the importance of transparency to workers, some leaders need more reasons to make the switch.

The salary transparency landscape

Attracting top talent, employee retention, and improving pay equity are just the start of the benefits of salary transparency. But now, being honest about pay may also be legally required. Salary transparency laws already exist in several states, and more states are likely to follow, though some industries still resist transparency

Employers who want the best candidates understand they need to respond to job seekers' overwhelming demand for a posted salary range before applying for a job. Many are taking action by showing pay ranges for open positions. Some, including Glassdoor and Whole Foods, are going further by revealing salaries at every level of the company.  

This top-to-bottom approach helps candidates envision their career path at your organization.

Fact-checking fears

Let's dismantle some misconceptions about salary transparency.  We've tapped Glassdoor's Lead Economist Daniel Zhao to help counter some of the arguments we've heard from employers.

The argument: There's no data to support that salary transparency attracts a higher-quality applicant pool; it will only attract candidates who are "in it for the money."

Daniel says: Let's be honest - we all work for money. But that isn't the whole picture. Our data shows that employees value transparency. That largely impacts your employee experience, which is crucial to your employer brand. Respondents who share salary information or pay bands with their internal teams (internal pay transparency) generally ranked higher on Glassdoor's Best Places to Work list than those who only share this data for open roles (external pay transparency).

The argument: Greater pay transparency will require us to more closely monitor the labor market and continuously reevaluate compensation benchmarks, causing a burden.

Daniel says:  People leaders from the Best Places to Work surveyed by Glassdoor generally agree that greater pay transparency will lead them to reevaluate pay benchmarks more frequently. An employee could discover (as in this example) that they are being underpaid at their current job based on a job posting for a similar position. Companies tend to offer bigger salaries to new hires to attract top candidates, but fail to give existing employees raises to match that compensation. If an employee leaves for higher comp and you have to hire a new person - at higher comp - what are you accomplishing? It might be better to retain valuable employees and their institutional knowledge.

The argument: Compensation is only one part of work. Culture and other rewards are also important.

Daniel says: No argument here - but if you're competing against other companies who are equal or better than yours in terms of benefits, compensation is a major deciding factor for candidates. To pique their interest, you need to show them everything they'd be getting if they worked for you, including compensation. The most valuable - if often unspoken - workplace perk is a healthy, constructive workplace culture.

The argument: Some candidates might see the range as too low, and we will miss out on great talent.

Daniel says: If you're deliberately posting a range that's lower than what you could pay the best candidate, you're doing yourself and potential candidates a disservice. Remove gamification from the salary and negotiations process. Post the authentic, actual pay range - which is exactly what the overwhelming majority of employers seem to be doing. If you're not getting great candidates, you may need to offer more - this is still a job seekers' market.

The argument: We will get underqualified applicants who think they deserve the top of the pay range.

Daniel says: There's always the potential for applicants who aren't a perfect fit. Don't you want access to talented people at all levels of experience so that you have a greater pool to draw from for positions at all levels? You don't have to offer an interview to everyone who applies, but networking with job seekers at all levels is good business in the long view. Setting realistic expectations with candidates from the start of the process ultimately leads to more satisfied teams.

Taking the next steps

If you're ready to get started, know that salary transparency isn't a one-size-fits-all solution. We've got resources to help you get started and better understand which approach is best for your company.

  • Share (realistic and fair) pay ranges for all new job postings. 
  • Get buy-in from leadership by explaining the benefits of salary transparency for both current and future employees. 
  • Create a plan for internally publishing pay ranges for existing positions so people can assess where they are and set goals for the future. 

If you're still not convinced, check out this guide, which outlines the impact of salary transparency

Even small changes in transparency can help you quickly gain ground with employees and candidates.