As a society, America has an unhealthy obsession with money. We avidly read the “richest people” lists. The financial press and social media highlight how much Elon Musk, Bill Gates and Jeff Bezos are worth on any particular day. People ogle at the eye-popping earnings of athletes, rock stars and celebrities. Given our openness to being voyeurs of other people’s wealth, it’s curious why the same doesn’t hold true for the regular working person.
When you’re searching for a new job, one of the most important things you want to know is the compensation. Of course, there is the corporate culture, responsibilities and growth potential, but if we’re being honest, money talks. You’ve probably noticed that nearly all of the job descriptions lack basic salary information.
LinkedIn, the preeminent site for white-collar workers who are interested in seeking out new jobs and advancing their careers, conducted a study about the job description.The plan was to find out what elements of a job advertisement resonated most with job seekers. The respondents were asked to highlight the parts they found helpful, appealing or would make them more likely to apply. The company was surprised to learn that the salary range was the most highlighted portion of the job description. So, even LinkedIn wasn’t aware of the importance of transparency showing salary ranges for job seekers.
“While some companies may say they don’t list salaries because they don’t want the competition to know, that sounds like a losing strategy,” says Hannah Morgan, a widely followed job search strategist. Morgan highlights the deeper importance for openness, “When every company lists salary ranges, we’ll be closer to salary equality.” The lack of disclosure places applicants in a disadvantageous position, as “most people stink at negotiating and it’s not a skill required in many jobs, so why make inexperienced negotiators lose out on potential income?” Having a set salary would alleviate this dilemma.
There’s a combination of factors. By not offering a salary range, the company will receive more résumés. The ones that aren’t appropriate could be saved in their applicant tracking systems for future roles. As a recruiter, I’ve learned that if a company offers a range, let’s say from $100k to $150k, the candidate will anchor to the higher number. If an offer is made at $135k, they’ll feel cheated, as they believe they should have received the higher amount.
Diana YK Chan, an executive career coach, job search strategist and CEO of My Marketability, points out that if a company “discloses everything upfront, it encourages the candidate to negotiate for more if they aren’t being offered at the higher end of the compensation range.” Chan believes it’s more advantageous for companies to disclose the starting base salary, as it “helps candidates decide whether it meets their compensation expectations and whether they want to spend time applying for the job.”
Chan adds, “The total compensation package range can be disclosed later on in the interview process for those being seriously considered to see if they are in the ballpark.” She advises, “Job seekers should do their due diligence and market research to understand salary ranges, compensation and benefits, as it varies by industry and company size.” Chan suggests that if you’re interested in a company, you should check out online resources, such as salary.com, glassdoor.com and levels.fyi.
There’s something called the “loyalty discount” in recruiting. This term refers to an employee who worked at a company for a long time. When they started 10 or 20 years ago, it was a very low point. With only 1% to 2% raises, they’ll be considerably under market. Comparably, when workers job-hop, they’ll capture a 10% to 20% increase for each move. This creates a wide discrepancy in compensation amongst workers. The fear is, for companies, if they post the salaries, internal employees will be aghast at how much less they’re earning.
This leads to another issue. Should businesses share the salaries of employees for the purposes of openness and transparency? They say it’s taboo to talk about sex, politics, religion and your salary. These discussions usually end up in arguments, fights and ill feelings. There is an emerging movement to make salary discussions more open and acceptable.
Ken Lang, a career coach expert who offers sound actionable advice on LinkedIn and Clubhouse, says, “If companies posted salaries, and employees found out that a new employee would be paid more than them, it could be a real issue.” The employees who may be suffering from the ‘loyalty discount’ would likely complain to their bosses, human resources and demand a substantial raise or threaten to quit. This would force the hand of management. They could be pressured to raise salaries across the board, which would be a costly endeavor. Lang adds that the public sector is completely different, “as teachers and government employees can have their salaries scrutinized.”
Dan Roth, a technical recruiter at Amazon, says, “I believe companies leave off the compensation ranges because some people will not think twice and will blindly accept wages,” as they desperately need a job. He adds that the lack of disclosure “saves companies money.” Not knowing the salary bands, candidates won’t “ask for top of the range, if not over it.” He contends that companies should “disclose benefits and a range, but not bonuses, [as] each person is different” in their wants from a job. One person may prioritize an upfront bonus over salary, prefer more vacation time, better benefits and “that is why some level of ambiguity is acceptable.”
Claire Spence, an experienced executive recruiter, is a realist. “Whether we like it or not, everyone who does the same job is not compensated the same way for a multitude of reasons—not saying it is right or wrong, just that, it is.” Spence is fine with a company not sharing the salary range, as it “may accidentally be cutting someone out of the running without even realizing it.” She recognizes that the salary and other remuneration can be discussed during the hiring process. Spence contends that job seekers should advocate for themselves and fight for what they feel is a fair and competitive package. She says, “Compensation is, ultimately, what we negotiate it to be.”
Although it’s not illegal to share salary information with co-workers, corporations usually pressure people to keep quiet about it. Employees feel that they are left in the dark. They don’t know if they’re significantly underpaid or fairly compensated. Interestingly, rarely does someone claim that they’re overpaid.
Employees are starting to ask that everyone’s salary be made available for all to see. They’ll have a better understanding of what others are paid and where they stand. Workers contend that by knowing the compensation of co-workers and those at competing firms, it will empower them to take appropriate actions to remedy their pay.
With little opaqueness and transparency, it leads to frustration, hurt feelings and beliefs that they’re being taken advantage of or discriminated against.
A piece in the Harvard Business Review, by Todd Zenger, has an interesting take. Zenger writes that most people have “an inflated sense of self-worth.” They’ll claim that they contribute more than everyone else and are the most productive member of their team. If management informs this person that they don’t believe that’s the case, it leaves the employee in an uncomfortable position. There is a disconnect between their self-worth and what the company thinks of them. This dissonance may push the person to leave the company.
If an employee finds out that they are underpaid, compared to a co-worker, it will be easy for them to become bitter and unhappy in their job—even if they loved it before. They may also elect to leave. If they stay, the chances are that their work product will suffer and they’ll adopt a negative attitude. This will antagonize others and make the person and everyone around them feel uncomfortable. It can be easy for resentments to rise. Who couldn’t point out a couple of colleagues who seem to do the bare minimum? If you know their salary, it will make working with them that much more unbearable.
Tim Herrera of the New York Times is a proponent of sharing salary information, reporting, “There are direct, concrete consequences of falling victim to salary secrecy, including wage suppression and a lack of transparency around pay inequality, which disproportionately affects women and minorities.”
Many states have instituted laws that prohibit companies from asking how much a person currently earns or about their salary history. The laws were drafted, in large part, to help close the gender pay gap. This new law could greatly benefit a top candidate who is earning considerably less than what is being offered for a similar job at a competing firm. It could also have some big unintended consequences. Prior to the new law, before any interviews are conducted, a hiring manager or human resources professional will ask a candidate how much they are earning and require proof of their compensation.
Now that a candidate doesn’t have to disclose their salary, offers could greatly exceed this range. For example, if a person is working at a job earning $100,000, but has the skills, experience and background to do another job somewhere else paying $250,000, they will not be held prisoner to their current salary.
Chan wants her clients to “negotiate for more,” regardless of the stated salaries. She recommends that you should do homework to know the market rate, make sure that you offer a strong personal brand to earn the extra pay and communicate your value with the utmost confidence.
Using these techniques has been highly successful. “One of my clients went from nonprofit to tech at Amazon [and] her salary doubled,” Chan proudly said. She made sure to guide her job-seeking client to “not lowball herself by understanding the range of base salary, signing bonus, equity and stocks and taught her how to negotiate for more.”