“Money, get away. You get a good job with good pay and you’re OK.” – Pink Floyd
I’ve been introduced to hundreds of people looking for jobs over the course of my career, and when I tell them what industry I’m in, they want to know why it’s so dang hard to pull even a simple pay range from a recruiter.
Nobody should be an apologist for this practice. Employees who aren’t compensation specialists have an incredibly difficult time figuring out what they should be paid at their current organization. While talking to your fellow employees about your wages is a protected activity, it’s not something that happens every day.
This idea of an employee somehow knowing their worth isn’t very realistic, in spite of the outrage due to a high profile recruiter demanding just that. Being a great negotiator shouldn’t be the standard for how we pay fairly — and it certainly won’t help you in court in a pay discrimination case. More and more state and local laws are siding with employees, either by demanding that companies furnish the pay range for a position or that they aren’t allowed to ask salary history.
I’ve found there are very few recruiters who like this practice. Sure, they’ll give the company line about how they approach posting salaries, but recruiters in general are too busy to try to play salary negotiation games.
But — and you knew there was a “but” coming — there’s a reason why this is so tough.
Compensation isn’t something that’s picked on a dart board (or, it shouldn’t be). Instead, there’s a mixture of hard data gathered typically through surveys, normalization, and strategy that takes place to determine what the right salary should be for any given position.
It sounds straightforward enough, but there’s a reason why so many companies are dependent on traditional compensation survey and data providers or software and data services like Salary.com or Payscale.
For one, it’s actually pretty difficult for a company to get salary data from competitors in the same industry without running afoul of a few laws. Not surprising, antitrust and labor regulations generally frown upon competitors appearing to collude with one another. But this isn’t a legal column.
There are also age-old challenges with compensation data. The data starts aging the minute it’s collected. Compensation data providers must balance the cost of having fresh data with how much the market will bear for that data. Even if the data is fresh when a company first gets it from a provider, they may not be updating it at a regular pace. A survey done in 2019, bought in 2020, and updated across the board by 2021 would be considered up-to-date by many organizations.
The biggest challenge is more technical in nature, though: Pricing a job is tougher than ever. In the era of remote work, for instance, showing a simple range is an exercise in futility. If a company is accounting for a candidate’s physical work location, a range could exceed five figures for some jobs. That’s on top of other considerations, like the skills, experience, specialization, and competitiveness for that particular job role. For roles that aren’t easily defined, you’re stuck exploring comparables and then extrapolating that across all of these other factors.
What does this look like in real life? Let’s talk about a remote marketing manager for a software firm that wants to be market rate in higher cost of living cities and in the top quartile for those living in lower cost of living areas. It’s a job that could easily start at $70k for someone with just a few years of experience in a low cost of living city. It’s also a job that could easily start at $200k for someone with deep, specialized expertise in a high cost of living city.
Is it really helpful to put out a range like $70k – $200k for a position like this? Of course not, and it really makes a company look like they don’t know what they are doing, even if there is a clear strategy driving it.
So, companies have the choice of looking like complete idiots in this situation or they just choose not to disclose publicly — which is fine outside of a few places in the U.S. Instead, they’ll choose to do what millions of job postings do all the time: Omit one of the most wanted pieces of information about a job and have candidates trust that they are going to come in at an attractive rate of pay.
For companies with a solid compensation strategy, it seems like a prime opportunity to lean on partners to offer a technology solution.
Back to our example, imagine that instead of that $130k range, a few simple questions on a website or from a chatbot could give you something closer to a $10 or $20k range. Imagine if that same technology could also get instant feedback on that compensation. You think you’re at market rate, but you’re actually lower than what you hope to be.
Even simple geolocation that dynamically generates the pay range for a particular region could at least take care of location-based discrepancies.
Pay equity continues to be a huge topic and for recruiting, it’s one of the key ways you can help your organization deliver on diversity, equity, and inclusion goals. Making sure people are paid fairly the minute they step foot into the organization corrects so many issues down the line. And it all starts with knowing and sharing as much as you know about the salary up front.