As of May 15th, New York City will require all employers with four or more employees to disclose minimum and maximum salaries on job descriptions. In an attempt to bridge the wage gap, FastCompany says, “Greater salary transparency gives job applicants more negotiating power, decreasing the odds of getting lowballed. Another reason New York lawmakers argued the law was necessary is to address pay disparities based on gender or race.” Being transparent about salary also moves along the hiring process more efficiently, as you immediately source out candidates who are willing to accept the salary.
According to a 2021 PayScale study employees are 50% more likely to leave their job in within six months if their employer is not transparent about salary. However, pay transparency still comes with its challenges. As more cities and states become required to disclose salaries, we’ve outlined some ways to approach the practice in a fair and appropriate way.
Be proactive
It’s likely, due to basic talk and the internet, that candidates already have a rough idea what their peers are making. So the bare minimum you must do is tell a candidate what they will earn. From there, many companies choose to go even further, disclosing the possibility of raises, how much their colleagues make, and how the salary aligns with the company’s business strategy. Training hiring managers on what specific information to hand over is crucial. BuiltIn elaborates, “Managers need to be trained to answer questions about salaries and have continuous conversations around employee performance, since they are the ones who determine promotions and individual salaries.”
Conduct compensation analysis
Running an analysis to determine pay based on market salaries would be the next step. According to Indeed, this takes a few motions to work through. Initially, you will need to gain access to nationwide wage surveys, which allow you to compare your salaries to competitors. Aften then defining job categories and which responsibilities are assigned to each one, you’ll then need to collect data based on several factors. Indeed says, “This requires organizing data about your employees to understand if your intended approach to pay is being applied. Data on race, ethnicity and gender may also be important in confirming there are no discriminatory trends in how your business compensates employees.”
Once you have this information, and you compare each position to the market average, you’re ready to make pay structure decisions and ensure they align with your company’s intended values.
Adjusting to this new practice
BuiltIn reiterates that pay transparency “helps put employees in charge of their own career growth, with an understanding of how each step would influence their salaries.” Knowing this information, as well as a company’s ethics, before starting builds trust in employees and creates a more inclusive environment. Pay transparency takes adjustment and effort, but can greatly benefit your company’s dynamic long term.
