Business Tips··7 min read

The Pros And Cons of Salary Transparency

salary transparency

Since the inception of the “typical” workforce environment, employers have had the luxury of correctly assuming that the interview process was entirely one-sided and had no true need for salary transparency. If a candidate was taking the time to participate in the interview process, the historic assumption was that they were at the liberty of the hiring manager and that hiring manager’s employer. The employer was seen as the side wielding all of the power - no matter what, if a person was interviewing, it was expected that they would accept whatever offer came their way because no expectation needed to be set.

In the last few years, there has been a monumental shift in that mentality. In the midst of what has been deemed “The Great Resignation,” employers are experiencing a two-sided hiring process for the first time and finding themselves in need of a new workforce process.

The Employee Lifecycle Journey starts way before “Day 1.”

In the HR space, we talk a great deal about the employee lifecycle journey. Historically, this journey has been associated with “Day 1.” As a workforce, we have failed to recognize that the journey actually starts way before that. From the moment a potential applicant logs onto the job site of their choosing, their journey has begun. Whether they are involved in a passive or an extremely active search, they have already started to venture down the path of finding new employment. The employers who have started meeting these applicants at the beginning of their journey are inevitably faring much better than those who don’t in their search for top talent.

There are innumerable job sites out there right now - a true product of technological evolution. In the past, if someone was seeking employment, they would pull out a newspaper, circle what they liked, and make a phone call. Or, perhaps, they knew someone at a desirable organization and reached out to them directly. Regardless, the options were far less broad and far less accessible than they are now. Like all things with such acute accessibility, the choices are limitless and the information is abundant.

According to CareerBuilder, 60% of job candidates will stop an application midway because they’ve found it either too tedious or not informative enough. The number one piece of information missing? Salary. In the same vein, according to Pew Research Center, 63% of employees quit their jobs because of perceived low salaries.

How early is too early to ask about salary in the workplace?

There is a mentality of the past that asking for salary information “too early” is rude and should be seen as a reg flag by the employer. It has also been seen as callous to ask for a raise. Employees rehearse their speeches for weeks to ultimately ask for something they may very well deserve and be entitled to. Cut to today, we know that salary transparency in the workplace opens the door to equitable employment, societal praise, and employees who genuinely feel like they’re working for a company that sees them as human beings vs. just another number. It’s been an uphill battle for some to come to understand that we work to live, not the other way around. Because of that, understanding the financial implications of a position from the beginning has become a non-negotiable in the hiring process.

That understanding has also started to become a major topic of conversation for existing workforces and, in many ways, is becoming just as unchangeable as it is in the hiring process. That being said, there are still debatable points here. Pros and cons of salary transparency, if you will.

Salary transparency pros and cons are vast. Here are some pros:

It does appear that the overall opinion surrounding salary transparency in the workplace is a favorable one. For starters, salary transparency can attract highly-qualified workers. An immediate rebuttal to that could be that people will think the salary isn’t appropriate for the ask and will not apply. Ultimately though, that leads us to another pro - by having the insight that, perhaps, the ask does match the responsibility, it offers the employer an opportunity to evaluate and align with current best practices in their comparable workforce.

Another pro to consider is that fewer salary negotiations will occur. With salary transparency equity at the forefront of an employer’s conversations, they are generally right on the money to begin with. With that, you’ve already onboarded a satisfied employee. This is not to say that growth should be stunted, but you do reduce the risk of going out of the hiring budget range sooner than expected.

While there are many obvious pros, a major one to be mindful of is centered more around culture. Culture within the workplace has become a top priority. Companies are paying hundreds of thousands of dollars a year to ensure that their employees are satisfied and that their mission statement actually matches their actions. By employing salary transparency, an employer is establishing early trust in their employees. This can and should be seen as invaluable.

Lastly, and perhaps most importantly, salary transparency encourages employees to focus on their work. This level of transparency doesn’t just benefit the employee. This level of transparency has a direct impact on how an employee engages with the organization. By establishing an “on the same page” environment early, expectations are set and can actually be met. Employees aren’t spending their time wondering how much more their peers make than them, they already know. More so than that, they understand why.

Salary transparency companies generally support the idea of “same wage for same work.” By minimizing the time perseverating on others’ monetary success and ensuring equity in the workplace, employees can bring their skills to the table and use them at the level at which they are hired. Additionally, this then allows for the easy establishment of a clear path for growth. Because workers have visibility into others’ salaries and the skill levels that match those salaries, they can focus on their jobs and plan their trajectory forward.

Let’s take a look at the other side; the cons.

Like everything else, there are inevitably some pitfalls in salary transparency in the workplace. First and foremost, let’s take a look at salary transparency laws. At the very lowest level of this, certain positions require government regulations. Because of this, salary transparency may not be A. Possible and B. Favorable. It could be downright illegal to list some salaries depending on the hiring body. Obviously, these employers will not list salaries, but are they put at a disadvantage because they can’t? Is it fair that some industries cannot meet this ongoing need in the same way as others? Is that playing field too uneven?

Second to that, there are also privacy concerns. An individual may not want their salary to be public knowledge. Now, this could be because they feel salary transparency will cause an uproar due to their over-equitization in an organization versus that of their peers at the presumed same level. Regardless, there is a risk in opening up that level of transparency.

Another con to consider is the idea that the overall work climate may suffer. In a similar vein to before, this is an obvious opportunity for an employer to grow and evolve. Until that evolution is complete though, the upheaval has the potential to destroy versus build. Progress is a marathon, not a sprint. We just don’t want to lose too many runners in the long haul.

The controversial topic of sales transparency is one that is not soon going away. As The Great Resignation rages on, employers will continue to be expected to bring their “A Game” to every potential hiring opportunity. Long gone are the days when an applicant will simply accept a position just because it’s there. With 11.26 million jobs open in the US as of February 2022, the need to jump on the first offer just isn’t a reality right now.

Similar to the real estate market, which exists in two states: A Buyer’s Market and a Seller’s Market with buyers agent services linking the two, we are currently in an Applicant’s Market. Employers are no longer in a position to half-heartedly hire. Culture, transparency, salary, equity - all of these things have to be apparent from the moment the journey begins. As with most things, there is probably a happy medium here. Many companies are choosing to offer this information aT hire and then keeping it private past that point. While this may be a short-term solution to a long evolution, it is certainly one to consider and certainly one that can help employees jump on board to the next chapter of work.

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