Why is Pay Transparency So Hard For Employers?

Why is Pay Transparency So Hard For Employers?

As more companies and HR professionals look towards salary transparency as a way to improve the hiring and compensation process, I have been thinking a lot about what makes a good salary range. There is no one right answer, as each organization needs to consider different factors when determining its pay positioning.

At its core, a good salary range should allow for in-role development and recognition of the fact that a single role can encompass a broad spectrum of performance, experience, and results. It should also provide continued compensation growth without requiring promotions as the only way to earn more. A majority of employed American adults would switch to a company with more pay transparency, according to a 2022 report from compensation software company Beqom.

However, while a wide salary range may have many benefits, it also comes with significant challenges. For one, it can be difficult to manage and maintain, leaving the organization more open to bias or inconsistency. It also often leads to top earners being paid less than their actual value.

That said, if your salary range is too narrow, you risk not being able to hire or retain key talent due to a lack of upward mobility, or if it's too wide, it may seem like you're sharing unrealistic numbers to be dishonest about your pay positioning. And ultimately, any salary range is only a starting point. The true work comes in determining pay position strategy, reviewing the process and results for bias, and communicating the outcome and philosophy to candidates, employees, managers, and leaders on the why and how.

You can use best practices and data-backed strategies to make sure your salary range is fair and effective, whether you want to be more open about salaries or just improve your compensation strategy as a whole. Some of these include using a competency-based approach, performing regular pay audits, and encouraging ongoing feedback between employees and managers.

Do you have any thoughts or opinions on what makes a good salary range? What are you seeing in your organization? Share your thoughts and ideas in the comments below.