Should a tech business fail to enact salary transparency then it may not realize how much harm that is doing.
From failing to entice the best prospective new hires to how they could end up breaking the law.
Disclosing salary transparency could even help a tech business decide how to organize its pay structure and go some way to achieving pay equity across society.
In this article, we will look at the appeal of salary transparency in tech hiring.
A lot of tech businesses may not even realize how just one phrase in a job advertisement has already limited their pool of applicants.
According to the latest Compensation and Culture Report from bequm, 79% of job seekers listed the salary as a key factor to see included in a job description. Should a job description list the pay as ‘competitive’ then many job applicants will be put off.
That the lack of salary transparency was seen as a red flag perhaps should not be a huge surprise yet the extent to which the vast majority of those surveyed singled it out should be a real concern.
Such immediate skepticism may lead the best candidates for the job to look elsewhere, even if the salary is actually higher than that of a rival company.
If only describing a salary as ‘competitive’ is seen as such a warning sign then a job description that details the salary range could be seen as an indication of a tech business worth applying to.
Paying a new hire what they are worth is one thing yet giving them a reason to apply to a rival company due to the failure to disclose a prospective salary is quite another. The law may even be ruling the practice out altogether.
Change is coming to how businesses are able to treat salary transparency and if it can happen in New York then, chances are, it can happen anywhere.
The law has been changed in New York City so that businesses are required to list their salary ranges in job opening advertisements.
Due to the New York City Human Rights Law, it will be unlawful for businesses with four or more employees to advertise for a ‘job, promotion, or transfer opportunity’, unless they list the minimum and maximum for that role’s salary.
There is also the Equal Pay for Equal Work Act which has been passed in Colorado and requires employers to list compensation in job postings.
As salary transparency is now law in New York City and Colorado, many businesses across the US have taken it upon themselves to get ahead and publish their pay structures.
There are even signs that other states, such as California, will make it mandatory for large companies to publish their pay scales.
A business that is wholly transparent about its salary transparency may even find it easier to organize its pay structure. In 2013, the social media company, Buffer, decided to publish every single one of their employee salaries online.
This was not a leak but a pre-meditated act and since then, the company has used a formula approach to calculate salaries. Instead of approaching salaries at the negotiating table, their pay structure has been so transparent that it has become effectively simplified.
If both the business and its employees are on the same page with what they should be earning then it becomes relatively easy to calculate that salary, even when you throw in the location.
Like many businesses, Buffer pays more depending on an employee’s location. Such locations like San Francisco garner a higher wage due to the higher cost of living.
With that in mind, you can simply input the location and the job title to find out how much you would be set to earn.
For some businesses, the thought of publishing their employee salaries and making their pay structure public may seem daunting.
If a tech business is willing to pay a fair wage to attract the best talent then making those individuals aware of the pay structure is one way to go about it.
Salary transparency may not simply make sense for potential employees and the tech businesses themselves but provide a greater good to society.
Data pulled from the United States Census Bureau continues to show that there remains a pay gap between genders and races.
For example, pay discrimination remains illegal yet the Pew Research Center has shown that white women still earn only 84% of the salaries of their male counterparts.
The Gender Wage Gap still persists and there is some evidence that the gap is larger for women of color. Pay Equity would help close the gap between women and races.
Also, with more salary transparency, you can expect a more robust pool of applicants who can see that the salary is worth applying for.
When it comes to salary transparency in tech hiring, it really does make sense. If a business is going to recruit a new hire then disclosing what they are set to earn marks the tone for how they are viewed by prospective employees.
If the job advertisement mentions the phrase ‘competitive pay’ then not only does it make the tech business seem like they have something to hide but is seen as a red flag by most job seekers.
Salary transparency should be achievable across certain industries, soon enough it may even be law.
When you consider pay fairness, you are really looking at pay equity. That notion that employees of a business should be paid exactly the same if they are deemed to be doing work that is of an equal value.
That should be seen in a business’s pay structure in that different roles are paid equally if they are deemed to perform roles of equal skill and effort.
Salary transparency can help a business ensure pay equity by preventing disparities with new hires.
It also helps if employee compensation is reviewed regularly and that compensation reviews are kept separate from performance reviews.