The Secret Power of Salary Transparency
Origanally posted on Substack - 6th June 2023
A discussion on LinkedIn amongst recruiters about when to talk about salary during the hiring process inspired me for this article. None of them argued it should just be open on the vacancy...
On 24 April 2023, the Council adopted new rules on salary transparency with the aim of combating pay discrimination and helping to close the gender salary gap in the EU. From now on companies in the EU must disclose wage information and take measures if the salary difference between men and women exceeds 5%.
BAM.
One should think much has been written and said about this, yet I looked for it in current vacancies and the result was disappointing. Now I am really starting to believe that in the competitive landscape of talent acquisition, salary transparency in job postings is a strategic element that is often overlooked.
Despite the differences between Belgium and the Netherlands, and the general reluctance to provide transparency with regard to remuneration, recruiters can increase conversion, significantly improve employer branding efforts, strengthen diversity, equality and inclusion (DEI), avoid false expectations or wasted time and ultimately strengthen the bond between candidate and employer. Do recruiters know this?
Difference Belgium-Netherlands
According to a study by Jobdigger which appeared in Jobat, in Belgium, 6.7% of the 250,000 screened vacancies in 2022 turned out to have a wage/salary indication. That was an increase of 3.2% compared to the previous year, almost doubling the numbers. However, that’s still not a marginal 1/10 vacancies and with that, fear beats potential for the time being.
This is certainly different in the Netherlands, where 42% of the screened vacancies contain a salary or wage indication in 2022, which also is a double-up compared to the previous year. The Dutch are doing it better, but still there is about 58% room for improvement.
Higher Conversion
Jobat already states that the vacancies that are posted on their job board with a wage/salary indication have a higher conversion. A vacancy with transparent wage/salary information is therefore more likely to appeal to a candidate.
That makes sense when another study shows that 40% of candidates find an attractive salary and important and alternate their top three decision factors with job content, location, working atmosphere or culture.
Amplifies Employer Brand
Employer branding has become an important aspect of talent acquisition as candidates actively seek companies that align with their values and offer “fair” compensation. By including wage/salary scales in job postings, recruiters demonstrate transparency and fairness and build trust with potential candidates.
This openness reinforces the employer's commitment to treating employees fairly and valuing their contributions. Candidates are more likely to perceive such organizations as attractive and trustworthy, which strengthens the employer brand.
In addition, a clear wage/salary range demonstrates the employer's investment in employee growth and development. It conveys the message that the organization recognizes the value of talent and is willing to reward it appropriately.
As a result, top quality candidates are more likely to be attracted to these positions, improving the overall talent pool.
Highlights DEI commitments
Diversity, equity and inclusion are, rightly so, at the heart of today's workplaces. Including pay scales in job postings aligns with these commitments by reducing the potential for wage/salary inequality and promoting fairness from the start.
Candidates from different backgrounds can assess whether the compensation offered matches their expectations and value, promoting transparency in the hiring process.
In addition, pay/salary scales help address systemic biases that may exist amongst compensation & benefits. By setting clear guidelines, recruiters can ensure that honest reward practices are tracked regardless of gender, race or other demographic factors.
Ultimately, this commitment to pay fairly reinforces the organization's reputation as an inclusive and fair employer, attracting diverse talent and fostering a positive work environment.
Avoids frustrations
Job seekers, active or latent, invest a lot of time and effort in the application process. However, without a pay range, candidates may invest time pursuing opportunities that ultimately fail to meet their remuneration expectations.
This can lead to frustration and wasted resources for both candidates and recruiters. An example was recently highlighted on social media by a recruiter who eventually understood the outraged candidate.
The candidate had taken leave at his current employer for the job interview only to find out during the interview that the salary expectations did not match and that did not go down well. Below is an excerpt from the public dialogue:
#Touché
By specifying clear salary scales in job postings, recruiters ensure that candidates have realistic expectations from the start. This transparency enables potential applicants to make informed decisions about whether or not to take advantage of the vacancy, reducing the risk of false hopes, disappointment or wasted time on unsuitable positions.
Improves Candidate-Employer Relationship
A strong connection between candidate and employer is essential for successful hiring and long-term employee satisfaction. Including wage or salary scales in job postings promotes open communication and trust between recruiters and candidates. Candidates are more likely to engage with recruiters if they feel they are being treated with fairness and respect.
When recruiters provide salary information in advance, candidates can assess whether the compensation matches their expectations and financial needs. This knowledge enables candidates to have more meaningful conversations during the application process, focusing on other aspects of the position such as career growth, company culture and work-life balance, etc.
What if the competition offers more salary?
This should not stop companies and is almost a non-excuse because that competition buys/uses the same salary benchmarks and has aligned the wage policy accordingly, including the pay scales…
As the competition pays new hires more, it's essential for recruiters to proactively address this challenge. While pay/salary transparency is crucial, it is equally important to highlight the overall value proposition the organization offers beyond compensation.
When faced with competition that pays higher wages or salaries, it is therefore best to focus on emphasizing non-monetary benefits, such as company culture, growth opportunities and extensive benefits packages.
Emphasize long-term career growth and the organization's values and mission. Be open to negotiation and be flexible in exploring alternative forms of compensation. Effectively communicate the total compensation package to convey the overall value proposition for the prospective employee.
5 Tips for Recruiters
Inform customers about the benefits of pay-transparency.
Provide market insights, salary data and compensation advisory services.
Encourage clients to include salary information in job descriptions.
Set a good example and encourage open communication with both client and candidate.
Provide realistic resources (budget) and tools to practice and promote transparency.
By taking these steps, recruiters can help clients attract qualified candidates, build a positive employer brand, and ensure a hiring process that is perceived as fair because of the salary-transparency.