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Pay Transparency in Recruiting: A Paper Tiger?

By Peter Weddle, CEO TAtech

Pay transparency can help an employer’s brand and its job postings roar like a tiger. Okay, I admit the analogy is a bit overdone, but in truth, the practice of being open and honest about compensation can give an employer a huge competitive advantage in today’s talent jungle. But, here’s the rub: this tiger looks as if it’s got laryngitis.

Let’s begin with what makes pay transparency such a beast. According to a survey by ResumeBuilder in September of this year, 85 percent of American workers say they’re more likely to apply for a job that lists a salary range, and a whopping 92 percent support the laws that States are enacting to require pay transparency. A survey by Monster went even further. It found that 98 percent of workers are of the view that employers should disclose salary ranges in job postings. So, the data are unequivocal. Pay transparency is something candidates want and increasingly expect.

Now, some will say that’s all pay transparency is – a boon for job seekers. In truth, however, it’s actually much, much more. Bringing salary out of the closet – including it in every job posting – will ultimately be what eliminates the noxious wage gap that has existed for far too long in far too many companies. According to Pew Research, for example, women earn 82 cents for every one dollar earned by a man doing the exact same work. For Black women, the situation is even worse. The U.S. Census Bureau reports that they earn just 64 percent of what non-Hispanic white men earn. Pay transparency will expose these unfair – and I would also call them biased – differences, and make pay equity a conversation that hiring managers, HR leaders and even CEOs have to deal with.

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But, here’s the rub: Despite State laws and regulations and what employers are saying in surveys, pay transparency ain’t happenin’. Given all of the commentary on the benefits of the practice, you would expect employers in the thousands to be rushing to get on board. Indeed, the one benefit most often cited as the rationale for pay transparency is its impact on candidate application rates, and no surprise, employers apparently agree. A WorldofWork survey found that 67 percent of organizations say that pay transparency is important. When it comes to walking the talk, however, these organizations are standing stock still. The survey found that only 14 percent of them are doing anything at all about making pay transparency a reality.

The data from today’s recruitment advertising bears that out. Indeed reports that fewer than half of all of the job postings on its site – just 43.7 percent – now include salary data. We can pat ourselves on the back and say that this figure has doubled since 2020, but the fact remains, that over half of all employers are implementing salary transparency with a lot of verbal capital or what most of us call “hot air.” In fact, according to Aspen Tech Labs’ latest Job Market Pulse report, even in trend-setting California where it’s now the law, just 58 percent of the jobs posted include pay information. That level of compliance reveals just what those edicts actually are: a paper tiger.

So, what’s behind this widespread lack of action? Well, some will opine that it’s just inertia. Companies will get on board eventually. Maybe that’s true, but for recruiters trying to fill openings right now, that’s not fast enough. While non-compliant companies dither, top talent is heading for the sunshine, for employers that are open and honest about the pay they’re offering.

But, there’s another problem. The HR Department. It’s caught between a rock and a hard place. Sure, HR leaders are likely to be strong advocates for pay transparency’s potential to erase the wage gap, but they’re also responsible for overseeing the compensation budget for the c-suite. And pay transparency can unleash a barrage of demands from current employees that their pay be brought into alignment with what’s being offered to get new employees in the door. The net result of that conflict of interests is likely to be paralysis.

All of which is to say that pay transparency isn’t a nice-to-have or increasingly, even an option. Rather it is an essential element of recruiting success in today’s (and tomorrow’s) talent market. And, the only people who have the data and the incentive to implement it are recruiters. It will be up to them to make the business case, to make sure pay transparency gets implemented effectively, and to make certain that implementation happens sooner rather than later. Or to put it another way, only recruiters can make the tiger roar.

Food for Thought,

Peter Weddle has authored or edited over two dozen books and been a columnist for The Wall Street Journal. He is the founder and CEO of TAtech: The Association for Talent Acquisition Solutions.