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The salary conundrum

Salary transparency is touted as a means to fight unfair pay disparities. Others argue it isn’t in the best interests of a company or its employees.

The pros and cons of salary secrecy, criticized for disadvantaging workers in wage negotiations while facilitating pay disparities based on gender or race, is much debated among human resource experts. LinkedIn reports that talent professionals are undecided about whether or not salary ranges should be shared. A survey showed that 27 percent of companies shared salary ranges while 22 percent said they would start in five years.

However, more than half said they don’t share ranges and aren’t likely to start.

“The challenge is there are so many nuances within compensation,” says Richard Beed, senior vice-president of human resources at Central 1 Credit Union. The many elements of compensation include benefits and insurance, employee perks, bonuses and lifestyle arrangements, in addition to the base salary. “Explaining all those pieces and how it comes together can be hard in a couple of paragraphs, along with the actual job description,” says Beed. There is also the issue of whether sharing salary ranges will advantage competitors if they aren’t already sharing their ranges, he adds.

The issue of equal opportunity isn’t one that Central 1 takes lightly. “The data will tell you that men are going to be hired for a higher wage than women are and clearly that’s not right,” Beed says. “So being transparent about the range is being transparent about the salary.” According to Beed, Central 1 is currently in discussion about becoming more transparent with its job postings. To date, the organization only publishes pay grades in its job postings, although its salary ranges are publicized internally.

The Canadian Credit Union Association (CCUA) also assessed whether to include salary ranges and grades on their postings, eventually deciding to do so. Now, the CCUA lists a grade for internal postings and a range for external postings.

Valerie Lewis, a director of human resources at the CCUA, agrees the issue of salary transparency is complex in part due to differences in “fiscal realities,” salary ranges and labour supply and demand across the country. “I found that some people that came on board from a particular province were, in my mind, highly overpaid compared to Toronto salaries but had a perception that they were underpaid,” Lewis says.

Lewis hasn’t always felt comfortable publishing salary ranges. Not publicizing the salary of a job posting can give recruiters more flexibility to hire a candidate who may not fit the exact job requirements. “Let’s say some candidate comes in fresh out of school, with little experience, but you think they have great potential.” Lewis prefers to focus on an applicant’s qualifications ahead of compensation. “I always recruit based on values, attitudes and competencies. Money comes later. I like that flexibility and I don’t like talking myself into a range.”

The democratization of data generally, the increasing availability of salaries information on sites like Glassdoor and Salary.com, and the existence of a record number of job openings make it clear the transparency movement is not going away. And while having the will to change is an important first step, companies have considerable groundwork to do before becoming more transparent, says Annika Reinhardt, a compensation and negotiation professional with Talent Collective. Unless you have “a clear compensation philosophy on how you want to value and reward employees, there is no point in posting anything,” Reinhardt says. Employers also need to be able to figure out what baseline data they are using, where it comes from and how to have conversations with employees and prospective candidates about what it means for them, she adds.

Ultimately, despite the work involved, becoming more transparent about compensation can benefit not only employees but companies as well. A study by Smart Recruit Online found companies that included wage information in their job ads saw a 30 percent increase in candidates.

Beed agrees that employers stand to benefit and strengthen their brand by being more transparent. “We want that open and trusting relationship with our employees.” ◊