If you’re like millions of other employers right now, you’re likely making job offers to candidates and setting new salaries as you do so. And while many employers feel increasing pressure to hire candidates as quickly as possible, it’s never a good idea to simply give a candidate whatever salary they ask for. While doing so may feel generous, it actually sets the stage for inequity in your pay practices. Instead, set your offer’s salary through data and transparency.
Before you can effectively communicate compensation packages to employees, you want to establish fair and equitable pay practices based on real-time compensation data. Making pay more equitable requires informed decisions when setting an open role’s salary. And informed salary setting leans on real-time compensation data for trends and benchmarks.
With real-time compensation data, you can:
This should never involve static, outdated survey data used in times of the past. Rather, it is about using current data from three critical sources:
What are team members being paid based on incumbent data on base pay, annual bonuses, and equity grants?
What do similar roles in similar industries pay across title, level of seniority, and location?
What are the guardrails your company sets for salary ranges? What market data can be used to help band together positions based on similar salaries?
The importance of having this data to create clear salary ranges is essential in creating equitable pay practices. Salary ranges “help employers control their pay expenses and ensure pay equity among employees. It is critical that employers have rational explanations for why they pay their employees a certain rate, and defined salary ranges help accomplish that.”
There has been a growing trend toward greater salary transparency that, in large part, started with the enactment of salary history bans over the past several years. This transparency trend, which relies on real-time, accurate information is not going anywhere, with data showing a sharp increase in the use of salary ranges in job postings.
Candidates are savvier now. They have more resources than ever before with social media and access to various employee review sites. Chances are they will find out what others are being paid, not only by you, but also by your competition. That’s why equitable, transparent pay can be a huge competitive advantage as you put those offers together.
Employers are engaged in “a hypercompetitive environment for talent, and open platforms are increasing the level of pay information available to current employees and recruits,” said Catherine Hartmann, North America rewards practice leader at consultancy Willis Towers Watson. “Employers that have yet to expand and become more transparent in their pay communication with employees will need to do so as top talent will demand it.”
Discussing pay expectations with employees and sharing information on how pay decisions are made demonstrates your commitment to transparency. This all provides employees with more confidence about what they are being offered compared to what else is out there.
According to SHRM, “Most employees (91 percent) who believe their organization is transparent about how pay decisions are made also said they trust that their organization pays people equally for equal work regardless of gender, race and ethnicity, SHRM's research found. Conversely, only 49 percent of those who believe their organization lacks transparency when it comes to pay decisions trust that employees are being paid equally for equal work.”
By using compensation data to develop structured pay levels, you will establish fair and equitable pay practices that are transparent from hire. In essence, you will provide that level of certainty candidates and employees require today. Knowledge is power. And having all of the facts gives employees some control in a situation they likely thought they had none.
Download our guide to learn more about how a data-driven approach to your compensation structure leads to more equitable and transparent pay practices.
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