No pay transparency, no candidate.
That’s the attitude of 44% of job applicants who, over the past 12 months, did not apply to positions because they lacked a salary range, according to a recent Gartner survey of nearly 3,500 job candidates.
That figure may seem surprisingly high given lingering talk of a recession and the fact that a wide swath of companies have instituted layoffs affecting thousands of employees. But given the nation’s low unemployment rate and high demand for certain positions, like AI data engineers, job candidates are opting to remain selective.
HR leaders can look to their pay transparency practices as a recruiting tool in such an environment, says Jamie Kohn, a senior director in Gartner’s HR practice.
“We’ve seen a lot of candidates look at these pay ranges and job descriptions as an initial filter on whether to apply,” Kohn tells HRE. “They feel that companies that share pay ranges are more fair and honest than those who don’t. And, understand, you’ll be competing against organizations that do offer pay ranges if you don’t.”
In addition to states enacting pay transparency requirements, some companies that post employers’ job listings, like Indeed, also calculate salary ranges as part of that posting.
As a result of these moves, pay transparency in job listings is likely to become the norm in another two to three years and also further accelerate the expectation of it by job candidates, Kohn adds.
How to set a pay range for pay transparency
For companies looking to stay competitive in this new reality, one of the most important first steps in setting a pay range is to review all of your current salaries, says Kohn.
“We’ve seen a lot of organizations do salary corrections, especially with all the inflation that we’ve seen,” she says. “People have been raising the salaries for their existing employees to make that pay range that they’re posting.”
When it comes to job postings, employers are using a range of approaches to be transparent with pay, Kohn says.
Some employers include a salary range in all of their job posts, regardless of whether the states they’re hiring in require it, she notes. In other cases, large employers with jobs in multiple states may post a very broad range but then also note major markets like San Francisco or New York City fall into a different category and list the range for that specific geographic region. For remote positions, Kohn will often observe the pay range based on the company’s headquarters location.
In determining the salary range, employers will often use the minimum to the mid-point of what they are willing to pay, or rely on using the 25th percentile to 75th percentile, she notes.
When Gartner has done surveys of job candidates and employees, they say they are more likely to apply to a job with a narrower range, says Kohn, adding that would be about $10,000 on each side of the mid-point.
Most importantly, HR leaders need to ensure that the current workforce and job candidates understand what factors influence where they fall in the salary range.
“People need to have a way of gauging what a reasonable salary expectation would be within that range,” Kohn says. “So, sharing some context around what determines it is really important.”
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