According to a Washington State University study, the practice of utilizing large salary ranges in job postings may discourage applicants and negatively impact recruiting, even if more states are mandating firms to disclose income in job ads.
For instance, research participants showed skepticism and a lack of faith in an advertisement featuring a sizable wage range of $58,100–$152,500; some even referred to the range as “dishonest,” “disingenuous,” and “ludicrous.”
According to Kristine Kuhn, the study’s author and a researcher at the WSU Carson College of Business, “It’s not just a choice between including a pay range or not—how compensation information is communicated matters, and at least in this study, having a very wide range might send a negative signal to potential applicants.”
Three separate tests were used in the study, which was published in the Journal of Applied Psychology, to better understand people’s responses to wage ranges that were described as “highly ambiguous.” In every trial, participants watched advertisements with varying price points, some with a large difference of $50,000 or more, and some with a small difference of $10,000, and they were asked to rate the employer.
In general, the study participants were more inclined to view employers as less trustworthy and to react negatively to job adverts with broad wage ranges. The pattern held for a wide range of research participants, such as recent job seekers, college grads, and students.
The explanation of the wide salary range appeared to influence participants’ reactions differently as well. Participants were significantly less drawn to the organization if, in addition to the wide pay range, there included a statement indicating that the amount would depend on the job candidate’s qualifications. However, participants’ perceptions of the employer were improved if the job advertisement included a more objective explanation and said that the amount would depend on the candidate’s location.
According to Kuhn, there is likely a “goldilocks zone” of a compensation range that is just suitable for the business and allows for some flexibility without deterring potential hires. Employers and job applicants may still bargain, even though legally they might have to provide an expected pay range.
Indeed statistics from August showed that pay transparency was now featured in around half of U.S. job postings—the greatest rate yet. With more states and cities passing pay transparency legislation, the number is anticipated to trend higher.
According to a study by Payscale, pay transparency generally increases employee retention rates and lowers turnover. Companies “must also communicate how pay is determined, why it is competitive to the market, and how it can be progressed,” the research states, to promote clarity around remuneration.
Principles of pay transparency are especially crucial when current employees notice job postings advertising their roles. To draw and retain talent, employers need to be ready for queries from staff members and be able to talk about pay decisions.