Salary Disclosures, Explained: Why Pay Transparency is Key to Your Hiring Process

Colorado’s Equal Pay for Equal Work Act took effect in the beginning of this year in an effort to take measures to prevent gender pay inequalities. The law required any company hiring people in Colorado to disclose salary and benefits information on all job postings.

This action gets Colorado employees one step closer to closing the wage gap. However, companies elsewhere are taking measures to avoid disclosing salaries. Many companies open to remote workers are excluding Colorado applicants to avoid having to disclose salary requirements for the position.

More companies would benefit by following Colorado’s direction and being more transparent with salary information. Disclosing a position’s salary is a smart move for both the company and the applicant. Here’s three reasons why:

  1. It’s important for diversity and inclusion efforts

Salary negotiations are far from equal, and women and people of color often face bias when trying to negotiate a higher salary

Women often face backlash when negotiating for a higher salary. Gender roles are deeply ingrained and expect women to act passive, helpful, and accommodating. When women push for a higher salary, they are often perceived to be acting against their normal gender roles and are seen as less hireable and less likeable, according to Harvard University. This leads women to being penalized financially or being less likely to be promoted.

In the same study by Harvard University, many employers and negotiators held racial biases against Black candidates when agreeing on salary, and believed that they should settle for less pay. Employers would often offer less salary concessions and usually give Black candidates $300 less in starting salary, on average.

Listing the pay for a job would limit the amount of negotiating that needs to happen, or would at least limit the range for negotiations. This would increase salary equality between employees, no matter their race or gender.

  1. It saves time for both the employer and the candidate

Yes, leaving the salary off of job postings will encourage more people to apply. But, most of these people will not be the right fit if they don’t know the starting salary.

A top candidate might apply and move forward through interviews, hoping that the job’s salary meets their expectations. Once they find out that the salary offer is too low, they’ll have to decline the offer. Your company will leave a bad taste in their mouth, and then your hiring team is at square one again.

It can also show candidates if they are over or under-qualified for a role. Actual job descriptions can vary between companies, even if they have the same title – so it’s hard to assume what a director, manager, or associate title can mean depending on the organization.

Listing the salary will encourage the right candidate to apply, and save time for both the candidate and your team.

  1. Starts relationship with new hires on the right foot

Being transparent about salary from the beginning shows the candidate that they can expect trust and respect during their time with your company. Do you really want to start your experience with a potential new employee by tip-toeing around their biggest interest for the role?

Listing salary also fosters transparency among current employees, as there is more likely to be salary parity across the organization.

Pro tip: Along with disclosing salary, you should also list the company’s benefits in the job posting! This better explains your full compensation package to candidates. Also, if you offer really great benefits, candidates might be willing to accept a slightly lower salary if you’re not in the position to offer more.

In conclusion

While states like Colorado are starting to require salary transparency, more companies should voluntarily follow suit instead of taking measures to avoid listing starting salaries. This benefits the employer and the candidate by promoting diversity and inclusion, saving time for the candidate and the hiring team, and starting the relationship off positively.

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