The power of pay transparency

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Why would you apply for a job without knowing what the salary is? You wouldn’t, would you? So stop expecting candidates to.

There is a growing conversation around pay transparency, particularly within the recruitment sector. There are, of course, pros and cons to disclosing a salary from the outset, but with the power currently firmly in the hands of the candidate, expectations are shifting. You rarely go on LinkedIn these days without seeing a post to the tune of, “If your pay is so competitive, why not tell us what it is?” or words to that effect. And, well, we agree.

So do the UK government, it would seem. On International Women’s Day a pilot scheme was announced among participating employers that would enforce them to display salaries on job adverts. A different approach, signed into German law in 2017, entitles employees of businesses with more than 200 staff to know what their peers are earning.

But, as it stands, many businesses are still listing salaries as competitive. We don’t know exactly why they’re doing this, but we know why they shouldn’t.

Closing the gender pay gap

We’ve seen pay transparency have a hugely positive impact on gender pay gaps. Italy introduced The Code of Equal Opportunities Between Men and Women in 2006, which required businesses of more than 100 staff to report on their gender pay gap every two years. The country now boasts one of the smallest pay gaps in Europe at just four per cent.

The UK’s recent pilot scheme is also aimed at levelling the playing field for women. This is because “evidence shows listing a salary range on a job advert and not asking applicants to disclose salary history provides a firm footing for women to negotiate pay on a fairer basis,” according to the government press release.

Curb appeal

Money talks, and while remuneration has reportedly taken a back seat to things like company purpose, mental health policies and progression opportunities, candidates are undoubtedly still attracted by a juicy pay packet. It’ll especially stand out to those candidates who are window shopping for new opportunities – the ones who aren’t particularly set on finding something new, but if the right opportunity crops up, they’ll go for it. Clearly displaying the salary, if it is as competitive as you claim, will help draw them in.

The list goes on...

There are so many more reasons we could add. Evidence supports the claims that employer trust increases, team morale improves, and workplace engagement also ramps up when businesses are transparent with their salaries and pay bands. It also increases motivation among employees when you outline what the next stage of their career progression holds in store, and how they get there.

Managing expectations

It’s a double-edged sword, we know that. There are downsides to be dealt with, both internally and externally. Firstly, you must make sure your current salary structure is ready to be made public, and that your employees are already within the correct bands. The last thing you want is Joe Bloggs finding out he’s in a different salary band to John Smith, despite thinking he fulfils the same role. Outline job roles, responsibilities, and targets for each position in the business and make sure that current employees fall within the remit.

There’s also an argument made against pay transparency concerning your competitors. If you advertise the salaries you have on offer, what’s to stop your direct rival from adding a few extra thousand pounds on top of that and poaching all the top talent? It’s possible, sure, but that’s when the rest of your offering comes into play. Salary alone isn’t going to attract the talent you need, but it can open the door. With a worthwhile employee value proposition, there’s no need to get drawn into a race to the top with your competitors.

Weighing it up

In our eyes, the benefits of pay transparency far outweigh the potential pitfalls. In an increasingly candidate-driven market, employers must do everything they can to attract potential employees – from all backgrounds, it’s worth adding – and get the conversation started. Candidates need to know that applying for a job is worth their while, and so only then can you guarantee that you’ve got the best talent available knocking on your door.
We understand hiring – it’s our bread and butter. For more information, or help with smoothing out your recruitment processes, get in touch.
 

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