Nov 8, 20238 min read

Salary Transparency Practices

Salary transparency was long heralded as a key milestone in achieving pay parity for underrepresented groups. Is it working?

As multiple states and cities implement salary transparency laws, we are seeing more job descriptions listing salary ranges. This not only helps job seekers and recruiters start the conversation in a more fruitful place, it also sets expectations for roles that do not provide a range. Jacob Warwick, Negotiation Coach and Founder of ThinkWarwick, an Executive Negotiations Consulting firm, states: “applicants can generally understand how employers value certain functions and roles across the market—and determine whether it's worth their time to pursue.” Posting ranges may also better qualify candidate pools, as those uninterested in the range will move on to other roles.

Shelley Piedmont, SPHR, SHRM-SCP and Founder of My Career GPS explains, “In the U.S., many states are still without pay transparency laws on the books. Over half the states do not have any pay transparency laws. And for those that do, some states only require the employer to offer it upon request.” She continues, “As for ensuring compliance, there are civil fines for instances of not reporting pay rates. They can range from $100 to $10,000, but how often they are enforced is unclear.”

One common issue with ranges is that they are often quite large. Alex Immel, Lead Negotiator and Found of Next Level Negotiation shares, "I saw one company post a salary range of $70k-$300k for an entry level role. Frankly, that’s laughable and doesn’t help anyone. Ridiculous ranges like that damage the reputation of the employer while creating confusing expectations for job seekers.” While skirting salary transparency laws, expansive ranges are a disservice to candidates and hiring authorities, as they do not provide any true insight into level or value of the role.

In addition to exaggerated ranges, Shelley Piedmont points out that some employers who are unhappy with these laws have found workarounds such as “not publicly posting jobs” or “advertising roles as remote and out-of-state only.” She also notices some companies “flagrantly posting without ranges and taking their chances.”

Marti Konstant, a Workplace Futurist and Founder of Konstant Change advises employers, “If you have something to hide by not making pay visible, you appear untrustworthy.” Reasonable ranges boost candidate confidence in the brand and that their compensation will be fair and equitable.

Salary Transparency Impacting Satisfaction, Employer Branding, and Career Paths

Companies honoring the intention of salary transparency laws will enjoy stronger employee satisfaction and employer brand. Ashley Cash of ACash Consulting reveals, “I worked for a company where a core value was integrity. Imagine my surprise to learn that because I negotiated my salary, my more tenure peers earned significantly less than me. To say we were distrustful of the company would be an understatement. And where there is distrust, there is disengagement and dissatisfaction. Do disengaged and dissatisfied employees do their best work? Nope!” Gone are the days when companies could blithely assume salary would remain confidential.

Dorothy Dalton, Founder of 3Plus International, a firm guiding companies to advance gender balanced diverse and inclusive workplaces. She notes former practices to keep salaries hush-hush perpetuated pay disparity. “Confidentiality around pay, tends to reward those with a specific market value at a given time and those with strong negotiating skills, or in a dominant demographic (white men!)” Now even remote workers quickly uncover salaries through Reddit threads and Slack channels and when people find out they’re being underpaid, employee performance and retention rates tank.

Shelley Piedmont sees the upside of transparency even among those not subject to current laws, “A positive from these laws is that according to Willis Tower Watson’s 2022 Pay Clarity Survey, 17% of companies are already disclosing pay range information in U.S. locations where not required by state or local laws.”

Ashely Cash reinforces that employees are now aware of pay disparity. She shares, “If the concern is an uproar among underpaid current employees…trust me, they already know. Of all the things employees/job seekers have to worry about, earning the same salary for the same work shouldn’t be one of them. I believe doing the right thing for your people is good for business.”

Internal and external transparency around salaries builds confidence among employees and candidates. Dorothy Dalton states, “For salary transparency to be effective organisations also need to be open around how their pay scales are constructed, and the data used to calculate those published pay levels. This will include other factors typically used to determine salary which can also be contentious involving years of experience, skill levels, and performance.”

Clear understanding of the salaries viable for specific titles can also help professionals determine more lucrative, rewarding career paths. Jacob Warwick states, “Candidates will now have more (public) access to learn how the nuances in functional expertise, seniority, and company size influence pay ranges. This will help the savviest professionals position themselves for smarter or more lucrative career decisions. For example, product marketers can make as much as 40% more than content marketers. Increased transparency to those details will help aspirational professionals make more calculated career decisions.”

While this is by now means standard or invariable, generalized knowledge of fields in high and low demand can and will influence how professionals may wish to pursue or pivot their careers. Marti Konstant encourages employees, “Market wage (supply and demand) expectations are reasonable. Why shouldn’t employees receive what their talent and skills are worth?” With shorter average tenures and less stigma on job hopping, we are seeing more movement to gain and sustain competitive wages.

Do ranges truly reveal the upper limits?

Many experts point out that posted ranges often have some room for negotiation. Alex Immel shares, “Even if there’s a reasonable pay range on the job description, I’ve been told by some recruiters that their company only posts the low to midpoint of the pay band they actually allocated for the role, not the maximum. So, oftentimes candidates are extended an offer that’s at the high end of the pay range posted on the job description (or slightly higher) and they think it’s a great offer.” This tactic makes sense for companies that do not wish to tip off their competitors on what they’re willing to pay talent. If a company offers the top of the range (or in some cases, exceeds the range with an offer), the company may be able to nab top talent without triggering a bidding war.

Dorothy Dalton notes, “Organisations also have to build in some flexibility to allow them to respond to shifts in the market for top/scarce talent.” Private companies and companies operating outside the jurisdiction of salary transparency laws will have even more room for negotiation.

As such, Jacob Warwick encourages professionals to explore beyond stated limits: “The most talented professionals will benefit from the added transparency of the market rates and compensation expectations AND will not treat the information as gospel or let it lessen their creativity of exploration and problem-solving.” Those willing to explore their own market value have always fared best in securing lucrative compensation packages. Salary transparency laws have not changed that.

Ezra Singer encourages professionals to negotiate even after receiving an offer. He reminds job seekers, “Keep in mind that once you are made an offer – there is still frequently room to negotiate. Candidates may be fearful that negotiating will result in harming the relationship and/or in the worst case having the offer pulled. These fears are generally unfounded. Attitude will be critical in terms of how you ask. But showing enthusiasm for the role, talking about your value, and being reasonable in your ask regularly results in enhancements of the offer.” An offer is not final until you sign, so be prepared for a conversation.

Possible Negatives of Salary Transparency

While Salary Transparency was expected to advance pay parity for underrepresented groups, it does not guarantee it. Willingness to self-advocate and explore market value remain key factors.

Ezra Singer advises candidates, “Ask for the Top of the range. Some studies have shown that, when asked about compensation expectations, men are likely to ask for a number at the high end of the range. In contrast, women are more likely to ask for a number in the middle of the range. That is self-defeating. If asked about compensation expectations, it is very reasonable to respond that ‘Given my experience and the value I will be bringing to the company, I am hoping to be paid at or near the top of the range’.” Ezra’s script avoids giving a concrete number to encourage further movement.

With new salary transparency laws came some unintended consequences. Jacob Warwick braved a discussion of possible negative outcomes of salary transparency laws. “One con, and I believe this to be a significant con for job seekers, is that transparency laws will kill exploration and creativity in compensation. Job seekers tend to read a job description as a set of rules set in stone. Psychologically, it's because people tend to be obedient to authority.”

Jacob Warwick provides an example, “The range says 225,000-275,000; therefore, it must be fact. What if you have all the skills and a bit more but expect $300k? Would the company really miss out on top-tier talent over $25k? What if the role evolves or becomes more complicated during the interview process? Is the range still capped? Do you avoid applying because the top end of the range is only $25k under your expectation? Do you even bother to ask? Or do you think you know the answer because there is a posted range? Maybe, maybe not. Most will abide by the rules as written. This is a shame because it hampers innovation, shuts down creativity, and dissuades people from pushing forward, negotiating, or challenging expectations. Especially for up-and-coming executives.” Salary transparency informs expectations, for better and for worse. A low range may discourage top talent from applying or from pursuing their true market value.

Additional unintended consequences of salary transparency laws may include talent migrations to private firms and locales offering higher unposted salaries as well as greater use of third-party recruiters and employee referral programs that could perpetuate homogenous hiring practices.

Beyond Salary Transparency

Job seekers will fare better if they consider base salary as only part of an offer. Ezra Singer reminds job seekers, “The term salary transparency means different things in different states. In most states, it only refers to salary — and not total compensation. The higher up you go in an organization, the smaller the percentage of your compensation consists of salary — with a greater percentage consisting of annual target bonus and long-term pay. It is critical to get an understanding of these other components in evaluating a job offer.” Additional components may include a sign-on bonus, relocation expenses, car allowance, memberships, extended/unlimited paid time off, and more.

Dorothy Dalton points out, “Salary transparency can shift the focus from base salary onto bonus and other reward schemes connected to performance reviews, which can be riddled with bias and discriminatory practices too.” Even if base pay starts to even out, this does not mean total compensation packages will align. Do not assume salary transparency laws will secure pay parity. Complacency will instead perpetuate further pay disparity. Dorothy Dalton continues, “Fixing salary transparency in isolation is only part of the solution and will not necessarily solve pay inequity on its own.”

Alex Immel hopes that one day we’ll see even greater transparency around the full compensation package. “The ideal scenario is that companies post the exact salary for the role including all other parts of the compensation package (bonuses, equity, benefits, etc.). I think we’re pretty far away from getting to that point but we’ve started to take the right steps in that direction.”

Bottom line — plan to negotiate even with salary transparency laws in play or you could very well leave money on the table.