How much money do you make? For many UK workers, this question is as uncomfortable to answer as it is to ask.
But the EU’s incoming pay transparency directive, alongside a nationwide campaign promoting salary transparency in the UK, have helped fuel the debate around pay transparency policies in the private sector.
Although numerous surveys have indicated widespread support for salary transparency policies among the workforce, the trend has yet to gain widespread acceptance from UK employers. Inertia and a culture of pay secrecy that has developed as a result of long-standing norms is one sticking point, the lack of legislative momentum is another. But employers are also concerned that pay transparency might restrict their ability to set the right price for the right candidate.
So what’s the best way forward? Legislation or no, should firms take proactive measures to promote pay transparency? Here, Claire Morley-Jones, global group HR director at Wonder, and Amy Foster, director of talent, Rockborne, present both sides of the debate.
Posting salaries builds trust and leads to more efficient recruitment
There are several reasons why businesses post salary bands when recruiting. First, including the salary information on a job posting says a lot about the honesty, transparency, engagement and culture of a company. Remuneration levels are a sensitive topic, but by being transparent and promoting the salary bands for job roles, it shows you have nothing to hide when it comes to pay for all colleagues. This means you’re confident of not offending existing colleagues and that you want your workforce to know they are not under-valued.
These policies demonstrate a company’s commitment to fairness and respect for potential employees. It’s a clear sign of trustworthiness and can lead to better employer branding and potential appeal to consumers and customers.
It can also encourage employers to be more proactive around addressing discrepancies which could be discriminatory – the most obvious example of this is gender pay gaps.
This can also act as an indirect way for employers to conduct regular pay reviews, which has significant potential to reduce the risk of potential legal challenges around Equal Pay claims.
A recent example where not being proactive in this area presented serious financial troubles for an employer was at Birmingham City Council. They face paying out millions of pounds in penalty payments after years of unequal benefits for male and female employees doing equivalent work.
Salary transparency can also provide your company with a competitive edge. Showing where you sit in the market attracts higher-calibre candidates and positions the company as an employer of choice. Conversely, it might lead potential candidates to consider their motivations for applying beyond salary. These could be things like joining a small-feel team or the fulfilment of contributing to society. Either way, posting salaries can help attract those with similar values and ambitions to your own.
Finally, posting salary bands leads to more efficient recruitment. It saves time for both recruiters and candidates by ensuring that expectations are aligned early on. Candidates can self-select – only those who are genuinely interested will apply, which means we don’t waste time on those who aren’t.
Salaries should match skills and abilities, not arbitrary industry rates
Businesses often keep this policy at arm’s length because they don’t want competitors to use the information to their advantage. When I worked for an investment bank we advertised our graduate salaries, prompting another well-known bank to increase theirs by a few thousand which then forced us to do the same. The bidding cycle just rolled on and on.
And quite honestly, many companies don’t want to over-offer and pay over the odds. Rather, they’d like to hire candidates for the best possible price.
However, there are other reasons for a business to choose not to post a salary range on a job ad. Sometimes, a company is eager to stay open on salary because they simply want to secure the right person and want to avoid being too prescriptive – instead, they’d like to see who applies and go from there.
It might be that the right person for the role is less experienced than first appeared necessary, which dictates a different salary. Or employers may meet someone who is extremely qualified and can take on far more than the initial job specification entailed. Employers may want the flexibility to offer more or to make changes to the role rather than have it set in stone from the get-go.
Advertising a specific salary could also have the adverse and unintended effect of putting certain candidates off. Employers and hiring managers need to put themselves in the shoes of someone who might be coming from a place where they are already feeling like a bit of an imposter. If the salary is deemed beyond their reach in their eyes, these candidates might naturally deselect themselves rather than thinking ‘this is something I can do’. Employers may then risk missing out on talented individuals from a varied mix of backgrounds who are able to offer a diverse range of thought.
Instead, employers should focus on paying candidates what they are worth, rather than assuming that the industry rate is suitable. Benchmarks or salary ranges of course have their place – giving employers a good idea of what competitors are offering and providing candidates with a helpful starting point for negotiations, but they shouldn’t be treated as gospel. By making job adverts more focused on the skills and experience required, candidates may be more likely to match their abilities to the list, rather than deeming themselves ‘underqualified’ for a certain salary offering.