Are Employers Acting in Bad Faith With Unrealistic Salary Ranges?
By Suzanne Lucas
New York City’s new law requiring job postings to have salary ranges went into effect earlier this month, and the response was stunning.
Stunningly awful in many cases. CitiGroup, for instance, posted a job with a salary range of $0 – $2,000,000. This is a ridiculous case of a company complying with the letter of the law and yet giving out precisely zero information.
Why is this happening?A fascinating exchange occurred on The Wall Street Journal’s podcast, “Your Money Briefing.” Podcast host J.R. Whalen asked WSJ reporter Theo Francis why companies were giving ridiculously broad salary ranges. Whalen gave the following reasons:
- Companies want to “preserve the option” of hiring people of all skill levels.
- Companies want to ensure they don’t exclude people with high salary demands.
- It’s HR laziness.
- They have no idea what this means in practice.
- They don’t want their competitors to be able to get the upper hand.
Employers are clearly resistant to this law. A similar law in California (passed but not yet in effect) faced opposition from the California Chamber of Commerce, which called it a “job killer” and said SHRM was concerned about causing wage compression.
Whatever the causes, HR laziness is not the cause. Typically, jobs are graded, and salary ranges are set before the job is posted — even when the salary range isn’t shared with the candidates. The recruiters almost always have the salary range information before they post the job. And it’s guaranteed not to be $0 – $2,000,000. (You would think CitiGroup would have the lower range at least at minimum wage, rather than proclaiming the possibility that they’d be ready to illegally have someone work for them for free.)
But salary transparency has been on the rise for years. The law is new, but being more open with salaries is not new. And Colorado didn’t implode when their pay transparency law went into effect.
Marianna Hrynyshyn, co-founder and CEO of ABC Recruiting, Inc., dismisses the idea that HR is behind the broad ranges. Salary transparency is “not scary for a recruiter,” she says. “We are not trying to find the cheapest candidate, and even if someone manages to do the best deal with a candidate, they will be approached by other recruiters with other offers. And cooperation may end sooner than planned.”
Recruiters know the market is challenging, especially in high-demand roles, and that fake salary ranges don’t help attract candidates.
The people who are resistant to posting pay information, though? Management.
An HR executive at a global multibillion-dollar company said (under conditions of anonymity for obvious reasons) that it’s not HR and it’s not recruiters who are averse to disclosing compensation ranges. It’s the senior leadership. They are terrified of salary information getting out. They don’t want competition to get the upper hand.
And so while companies may be interested in having options to hire at all levels, they can easily do that by giving reasonable salary ranges. For instance, you can advertise an accounting position and add the following:
Entry level pay: $X – $Y
Mid-level experience pay: $Y – $Z
Even just putting in $X – $Z gives more information, especially if the job description clearly indicates that it will be based on experience.
Not wanting to exclude someone for too high a salary demand is a ridiculous excuse. There is a limit to how much you will pay, even for the best person in the world. No company will fork over $2 million for the best administrative assistant in the world, so use the accurate top salary range.
Colorado was a test run for all this, so companies can see what it meant in practice (although New York City is a different demographic). Pay transparency did not cause the end of the world in the state.
Having exaggerated salaries can, however, cause problems — both for current employees and future candidates.
A Harris Poll found that 70% of job seekers found it harder to get a good new job than expected. While inaccurate salary ranges aren’t necessarily the cause of that, they could have an influence. By posting unrealistic pay details in an attempt not to drive away the top candidates, people who would do a great job aren’t getting offers that they think are reasonable.
Stacie Haller, career counselor, executive recruiter, and contributing editor at ResumeBuilder, told HR Dive, “Displaying a very wide salary range does not help anyone.” And it may make things worse as far as salary transparency is concerned. Candidates want to see realistic ranges.
Realistic ranges would seem to fit the law’s requirement that salary ranges are posted in “good faith.” This means that people need to expect that this range reflects the actual budget and range. As this hasn’t made it to the courts, we have not seen how good faith will be defined.
The ultimate aim is for companies to stop posting outrageous ranges and give information that candidates can use to assess if the job fits their career goals.