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Why it’s time to include compensation ranges in job postings

The question of compensation is often a riddle—a cat-and-mouse game between recruiters and candidates that leads to frustration. It doesn’t have to be that way. 

Why it’s time to include compensation ranges in job postings
[Photos: Jerome/Unsplash; Sharon McCutcheon/Unsplash]

Changing jobs is one of the most significant decisions we make. It’s right up there with deciding to get married or buy a house. And for most job searches, the process goes something like this: You draft a résumé that captures your experience. Then you browse listings on career sites and job boards, hoping to find an opportunity that aligns with your ideal location, industry, and experience.

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If you’re lucky, you can get a sense of a company’s culture and how it works from the job descriptions, career site, social media accounts, LinkedIn, Glassdoor, or whatever other channels are available. But there’s one thing you’ll rarely get an accurate read on at this stage: compensation. Why is that?

The way we’ve always done it

One of the biggest obstacles to new ideas is tradition. It casts a shadow over the field of human resources and dictates much of how the function operates. Legacy as dogma.

Recruiting teams are intrinsically wired to hold back on disclosing compensation because of procedural norms (at best), or in order to hold leverage over candidates (at worst). Despite legal attempts to change this approach in some states, compensation discussions often remain opaque. 

Not all companies let legacy dictate their approach, however. Liberty Mutual, Buffer, Publix, Enterprise Holdings, Basecamp, and others all include compensation ranges in their postings. Buffer even provides a transparent salary calculator to help candidates understand how their compensation compares to the cost of living. 

Want to join them? Here are several reasons why you may want to consider adding compensation in job descriptions:

Cost savings and operational efficiency

Companies invest a lot in recruiting. Shouldn’t they want to maximize the return on that investment? 

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The job of most companies is to attract talent. They invest heavily in building employer brand narratives that highlight all of the great things about working at that organization. Ping-pong tables? Check. Artisanal kombucha? You bet. Why put so much effort into getting candidates to read your job descriptions and then leave them wondering about one of the most important aspects of the opportunity?

Legacy recruiting metrics and incentives make recruiting a volume game: focusing efforts on the top of the funnel with the view that more candidates equal more hires. That might not be the right strategy. What if recruiting teams instead prioritized getting the right candidates into the pipeline?

When you think about the time it takes to attract, process, screen, and interview hundreds of candidates, wouldn’t it be more productive to focus on candidates who’ve already self-identified as open to your compensation range?

This view was a driver behind Enterprise Holdings’ decision to begin including compensation ranges in their job descriptions. “As an organization, we’ve always tried to be transparent and open about our opportunities to make sure people understood what the role was and what to expect,” says Marie Artim, vice president for talent acquisition, in a recent episode of my podcast, 21st Century HR. “As part of that, we really understood that people want to know what the role pays.” 

What could your recruiters get done with the time they’re spending chasing candidates who would opt out if they had a clear understanding about compensation? For companies that don’t set compensation expectations early in the process, the time cost extends further into the interview process, as managers spend time interviewing candidates they have no shot at hiring. 

Candidate experience

Candidate experience, or CX, has been a trendy topic in recruiting for years. Sites like Glassdoor, Indeed, Fairygodboss, and more are key reference materials for most candidates’ job search. So it’s not if they can learn about your hiring practices, it’s what they will learn.

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What better way to establish an expectation of openness and clarity than being upfront about salary ranges? This view is reinforced by a company known for its progressive hiring approaches, Basecamp.

“I don’t think there’s any reason to obscure it, hide it, or stall on it,” Basecamp CEO Jason Fried told me. “If you wanted more salary, this isn’t the job for you. If you would have taken less, this is an even better job for you. Everybody knows everything—us and them—there’s no asymmetry there. It just feels right.” 

The aim of a job description should be providing an accurate portrayal of the company, role responsibilities, required skills, and experience necessary to do the job. If you can couple setting those expectations and information with a compensation range, you’re creating more informed candidates and allowing prospects to make better decisions. Even those who don’t apply will appreciate the clarity.

In a hiring landscape where it’s increasingly difficult to stand out and get a candidate’s attention, this is a clear way to achieve that. 

Retention

One of the common objections to sharing comp ranges externally is a fear that it might upset internal employees to know current market comp ranges. This assumes they’re not talking with their colleagues or reading external sites for market data—a risky assumption. 

Opening up about compensation isn’t easy, but it doesn’t have to be insurmountable. Too often companies don’t look within to uplevel their existing employees with market rates. They have to pay X to hire external talent today, but many existing employees were hired at Y and given nominal annual increases.

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The reality is employees know more than you think, and they’re more willing to talk openly about their salaries than ever before. (Just look at the Google doc that upended the art world when 2,000 museum workers posted their salaries online.)

If you’re serious about retention, you need to address this proactively and openly with your existing employees. As tenure continues to shrink and talent is more fluid, not being open about compensation ranges may cause your employees to look around more, as they don’t understand the career paths and comp ranges in their current role.

Still not convinced? Go deeper into the stories behind the decisions of Basecamp and Enterprise Holdings to include compensation in the podcasts below:

Basecamp’s Jason Fried:

Enterprise Holdings’ Marie Artim:

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This post is part of a new Fast Company series on 21st-century human resources practices. The series explores new approaches in the field of HR. Each month, we’ll cover emerging practices, HR technology, diversity and inclusion, and other areas related to the future of work. You can view the full series here.

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About the author

Lars Schmidt is the founder of Amplify, an HR executive search and consulting firm that helps companies like Hootsuite, NPR, and SpaceX navigate the future of work. He is also the cofounder of the HR Open Source initiative.

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