By revealing company salary ranges and fostering a salary transparent society, companies immediately begin accruing both short-term and long-term benefits. Integral to the process is an introspective analysis that creates a greater understanding of what the company values and what they don’t. Companies with clearly defined parameters receive more targeted interest from candidates who have identified the company as being able to fulfill their needs. Interviewing and on-boarding processes are elevated by data-driven discussions. On the job, fewer doubts about compensation frees up employees’ mental energies to focus on the tasks at hand. Employees are also better able to visualize the long-term benefits of remaining with the company. A company opening its books and revealing specific salaries and salary ranges in terms of location and experience level may seem as if it is shooting itself in the foot in the short run, but, given the long view, salary transparency enhances productivity, retention, and quality.
While nobody expects companies to universally release every one of their employees’ compensation-related data for the general public to scrutinize, several companies are already doing so. Buffer, creator of a social media management tool, releases up to date salaries for each employee. Companies and individuals wary of an invasion of privacy will appreciate the middle ground Buffer took a stand on with a salary calculator it developed that incorporates factors such as a candidate’s role, experience level, desired location, and preference for higher or lower risk compensation package (equity vs. salary). There are a number of available options when it comes to salary transparency methodology.
Making Progress Toward Transparency
Regardless of the path a company chooses, the track leading toward long-term success involves several stops along the way that facilitate salary transparency and better-informed candidates. In any company, there will always be individuals determined to fight sharing salary-related data. Pushback from guarded employees and well-meaning human resources personnel may result in a temporary thinning of the ranks. The potentially painful transition to providing salary transparency is streamlined with thorough preparation involving organizational introspection and deep market research. First, companies must delve deep into their own needs to understand what skills, traits, and experiences are important to the company. Dissect these components to ascertain why they hold value. It should be apparent what each skill, trait, or experience adds to the company, leading to its continued success.
Before leveraging the benefits of salary transparency, companies must clearly define their compensation processes. Companies must determine the average salary for each position and clarify how those are established. Companies should be able to explain why an employee’s compensation falls at a certain spot within a range. What an employee needs to accomplish in order to move up within a pay range must be clear and transparent. Candidates approaching a company with well-defined values and needs should carefully assemble a portfolio that highlights their skillsets, character traits, and experiences as related to the value they will contribute to the company.
Salary transparency should inform the interview process as well. Those company needs should be juxtaposed against the backdrop of the broader market’s needs. Market research and analysis should lead to establishing updated benchmarks pertaining to skills and experience. Because market values change rapidly, especially in the tech industry, relying on dated benchmarking techniques with a narrow perspective cripples the hiring process and sets companies up for failure from the outset.
Salary Transparency Enhances Long-Term Productivity
The effort required, the difficulties to overcome, and pushback from both outside and within shouldn’t deter a company from achieving salary transparency. In addition to ameliorating conditions for employees, companies benefit in numerous ways from both individually and collectively enacting initiatives that promote salary transparency. Beyond simply staying relevant to the needs of the next generation of job seekers, companies that promote salary transparency have a better understanding of their own values in terms of desired skills, which makes hiring easier. Once an employee is on-boarded, conversations about their value to the company, as well as how to enhance it, are much more data-driven. Providing access to data on salaries, not only within the company, but across a market segment, also dispels any doubts regarding compensation. Rather than focusing on whether or not they are getting paid adequately, employees focus on doing their job and growing their career. This improves both productivity, as employees know what the company values and how they can impact that, as well as retention rates, as employees are more productive and rewarded, while less likely to leave looking for a better deal.
While salary transparency may result in companies losing control over salary negotiations and other minor aspects of candidate interviews, it generates real benefits that extend to employees, the company, and beyond. Salary transparency not only contributes to rectifying societal wrongs, such as gender and ethnic wage gaps, but also helps individuals both understand their present salary and see more clearly the track toward greater pay. For companies, salary transparency is an invaluable tool that enhances hiring, as well as long-term employee satisfaction, retention, and productivity.