405.627.6326 matt@whyhr.guru

Have you ever gone through the process of interviewing potential employees, finding one who’s a great fit for your organization, making an offer, and then being turned down because the offer did not meet their expectation? Or perhaps you have previously interviewed for a job and walked away from an offer for the same reason?

It’s a lot of time and effort for both the employer and the prospective employee to go through the entire process and then discover that pay expectations don’t align. The willingness to set your pay structure and clearly list it in your job postings has many benefits. Being transparent with your pay structure requires a shift in thinking for many companies, but it can save you time and frustration and ultimately result in more satisfied employees.

In decades past, workers didn’t talk about their salary with their colleagues and friends. It just didn’t happen. But younger generations in the workforce are shifting that culture, as is the rise of technology and websites that report salary ranges for both large and small employers. The way raises work are changing, too, as many companies move away from rewarding tenure with automatic raises and look instead at skills and responsibilities to determine pay.

However, many companies still take the attitude of trying to hire the best talent they can for the cheapest rate. They ask candidates to list their salary expectations in a cover letter and will lower what they know they can pay for the position based on what the candidate says. Or they make their final decision based on getting the cheaper candidate instead of the one that’s truly best for their organization but on the upper end of the budget they’ve set for that position. But does that really benefit the company or the employee in the long run?

The more strategic approach that benefits everyone in the process is to develop pay bands or salary ranges for each position at your company. Find out what the fair market value of the position is and set up a pay band for each position based on the market value and your budget. As you make an initial job offer and consider future raises for that position, stay within your identified range of what that position pays.

Save time in the hiring process

Using pay bands and being transparent about your salary range saves time during the hiring process. By advertising the pay range in the job posting, it allows candidates who are looking for a higher rate to self-select out of the position. This saves you the time of processing their application and potentially interviewing them and making an offer. On the side of the applicants, it lets them move on to applying for other positions that better suit their needs.

Increase employee retention

Ultimately, being transparent about pay impacts employee retention as well. When you are paying fair market value, your employees know they are being paid what they are worth and feel valued for that. You remove some of the risk that they’ll jump ship to a competitor who’s paying more for the same position. Of course, your company culture matters for retention as well, but some employees will value dollar signs over culture if you’re paying under fair market value.

Set clear expectations for future growth

When it comes time for raises and annual reviews, having a defined pay band based on the job’s duties and qualifications helps set expectations for future raises. That specific position has a cap on what it pays, regardless of tenure at the company. For employees who want to grow beyond that position, work with them on adding new responsibilities or support their efforts for further education or certification to move them to the next tier.

Protect against discrimination in the hiring process

Setting pay bands for each position and clearly communicating the pay range on job postings also helps reduce age or gender discrimination in the hiring process and within your company. If the posted position requires at least five years of experience, it requires at least five years of experience. You eliminate the tendency to negotiate down with one candidate because they have less experience than another while still meeting the minimum qualifications. Likewise, if an employee is at the top of the pay range for their position and wonders why they didn’t get a raise, the answer is clear.

Shifting toward a mindset of transparency with salary ranges benefits both the employer and the employee. It saves time, increases retention, and sets clear expectation for future growth by paying people what their skills are worth. It takes the salary requirements game off the table and helps you attract the talented workers you need for success as a company.

Need help moving your company toward pay transparency and determining what the pay range of each position should be? Reach out to us today for a consultation. We’re here to help.

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