Pay Transparency And The Evolving Job Hunting Landscape

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The Wall Street Journal recently published an article, “Salary Ranges Bring Changes to the Job Hunt,” that describes new state laws that mandate employers must include a salary range in their job postings. Already in effect in Colorado, and soon to be in California and New York, pay transparency laws are a game changer for everyone involved – the employer, the recruiter, and the job seeker. As more states adopt pay transparency laws, it may soon transform the job-hunting landscape in significant ways.

For employers and recruiters, posting a salary range reduces the time and expense of recruiting talent. First, online submissions will substantially decrease. Potential candidates only apply if they qualify for compensation within the posted range. Otherwise, recruiters and hiring managers could invest time and resources in candidates that ultimately refuse a job offer because the range falls below their needs or experience.

Additionally, as pay transparency becomes more prevalent, businesses that implement it may have an advantage in hiring top talent over ones that don’t or do the minimum required to be in compliance. Think about it. If you’re looking for a job, it is likely you will gravitate toward job openings that include a salary range and away from employers that do not.

Pay transparency doesn’t solve all of an employer’s issues. Studies show that job seekers believe they are at the top of a posted range when they most likely are not. That could lead to some awkward moments, but, overall, pay transparency benefits businesses.

From the job seeker's perspective, pay transparency has multiple advantages starting with the hope it will help eliminate pay equity issues. Pay transparency’s impact on equity issues can’t be measured and assessed until enough data becomes available, but in our current environment women and minority groups continue to experience pay gaps for the same work. In theory, if people can see the pay range employers can’t get away with paying less to whomever they can.

Pay transparency streamlines the hiring process. You won’t waste time pursuing a job that won’t pay your bills or whose range is below market (more on that below). The laborious stages of a job hunt can sometimes border on the ridiculous. A series of interviews may be spread over weeks, or even months. A marathon interview process that ends with a lowball offer is a demoralizing waste of your time. Pay transparency spares both parties from engaging in what will ultimately prove to be fruitless. A little knowledge can go a long way.

Pay transparency empowers job seekers to negotiate final compensation packages, but there are some important components to keep in mind:

• When companies post salary ranges, they can be broad. For example, a salary range can have a variance of tens of thousands of dollars between the bottom, midpoint, and top end of the range. Where a candidate falls in the range is based on education, experience, skill sets, and a host of intangible soft skills that may vary from job to job. However, your bargaining position increases with pay transparency. If you know the floor, you can negotiate from there.

• Employees are lines in a budget. There is a good chance that a company already knows where in their salary range they intend to pay. For example, a job posting lists the salary range as $65,000 - $80,000, but the company knows the offer will be $72,000.

• In states with pay transparency laws, employers may be forced to include pay ranges, but those ranges are still created by the employer. It is incumbent on the job seeker to verify the fair market value of the range. Use platforms like Payscale to research what you should be making. That way, you can be more discriminating during your job search by eliminating businesses whose salary range is below market value.

Lastly, pay transparency has a halo effect on the employed. It allows people to assess whether or not they are being paid market value in their current positions. If you believe you’re being underpaid, it is natural to think you should move jobs. However, if you see salary ranges for similar jobs at other companies that prove you’re being properly compensated, you’re more likely to stay put, value your current position more, and increase your overall job performance.

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Philip Roufail contributed to this article.

Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. Insider Career Strategies provides resume writing, LinkedIn profile development, career coaching services, and outplacement services. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercs.com.

Should I Jump Jobs For More Money?

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A recent Bloomberg article on the labor market, “Job Switchers in U.S. Tech, Construction, Are Getting the Biggest Raises,” (07/24/19) showed that in the month of June people who switched jobs averaged wage growth of 5.3%, with the sector technology clocking in at 9.7% wage growth. Wow!

With low unemployment, the current labor market has tilted in favor of the employee. In short, the job market is hot. Companies are trying harder to attract workers, so now seems like the right time to jump jobs before the global economy slows down and the labor market contracts.

So, let’s say you’ve got a job offer on your desk, and it includes a hefty increase in salary over what your current company pays. How do you evaluate whether to consider new opportunities based on money?

• You need to ask yourself – “Is the grass actually greener?” Offering more money than what you’re making now is one of the easiest ways a company can attract attention. An employer will conduct cost/benefit analysis of what can be offered to prospective employees, and based on those budgets they It’s an effective lever, and that is why there is greater wage growth at bigger companies (who have deeper pockets) than at smaller ones – they have the resources to offer more. However, salary is only one component of a compensation package. Do your own cost-benefit analysis. It may or may not be worth it.

• Remember those numbers from the article – 5.3% (average) and 9.7% (tech) wage growth? If you have a salary of $65,000 your 5.3% increase would be to $68,500, or an increase of $3,500. A 9.7% increase would total $71,300, or an increase of $6,300! That’s not a terrible place to start. But there may be hidden pitfalls. A salary increase may put you in a higher tax range, or there may be employee benefits you have now, like a 401(K), that are not offered in the new job. Run the numbers.

• More money does not make a job better, nor does it automatically make your quality of your life better. As you look at other opportunities, really examine all the facets of the job. Simple factors like commuting distance, transportation, parking, and daycare can easily offset some of the financial gains.

• Assess the risk. Jumping from one job to another is a risk every time. If you switch jobs too often, it may have a boomerang effect as potential employers may (fairly or unfairly) question whether you’ll stick around or leave as soon as somebody offers you even more money. And try to remember – company loyalty to employees is as much a thing of the past as Julius Caesar; all too often, excited new hires can end up in the unemployment line months after their start date when a corporate buyout or layoff occurs.

• You've run the numbers, assessed the risks of the new company, and the jump still looks good. Now do the same for your current situation. Ask yourself, “Am I happy in this job?” What would you be leaving behind? Pension? Benefits? Growth opportunities? A promotion? Co-workers with whom you’ve become friends?  Run it through all the quadrants, so to speak, and come up with your “true value” of staying and your “true cost” of leaving.

• Corporate culture. This is the all-important wild card. If you have “found your people,” that is much bigger than dollars and cents. If you are happy where you are, and why you are there, your unique “fit” with a company may be worth way more than a few thousand dollars. Especially if your new employer has a reputation for being a “challenging” environment.

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Philip Roufail contributed to this article.

Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. Insider Career Strategies provides resume writing, LinkedIn profile development, career coaching services, and outplacement services, including a free resume review. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercareerstrategies.com.

The Joy of Salary Negotiation

After you've sent a resume to a company, somebody in human resources will call you up to screen you for fit. Inevitably, they will ask you what you will be looking for in terms of salary.

This is where it gets tricky. It's kind of like a game of chicken – salary discussions, especially at the beginning of the process, are especially difficult because the first one to give away their position loses their leverage to negotiate.

Your goal here is not necessarily aligned to the company's goal in terms of compensation. Assuming the position is a good match for both parties, here's where your interests diverge.

Your goal as a job seeker is to get the best salary offer you can.

The company's goal is to get the best candidate into the position in the most cost-effective manner possible.

In other words - you want to get a boatload of cash; the company would rather you work there for free. The actual figure you agree upon is the reality.

Before we get into negotiation strategy, let's discuss a few facts about how corporate salaries are determined (by the way, this is a heavy simplification of the compensation process, so I'm sure that some compensation professionals out will have some information to add):

1. Companies - especially larger ones - usually have salary bands in which employees need to fit. For a particular position, there is an assigned salary range. For example, the company may have determined that they are able to pay between $15 and $20 per hour for an administrative assistant. The reason for this is that they don't want to have too much of a salary discrepancy between individuals doing the same type of job, but they want to have some wiggle room for folks with more experience.
2. Salaries are usually driven by market data. A company will subscribe (and often provide information) to compensation studies telling them what the market will pay for a particular job. The data take into consideration several factors - the skill set involved, competitive nature of the market, geography, what competitors are willing to pay and other information.
3. A company decides upon a compensation philosophy. This goes back to the market data described above. After looking at the data, company executives make a decision about their compensation philosophy as to how it relates to their compensation. A company looking to aggressively hire high-performing talent or that competes in a fast-changing market like technology tends to extend offers at the higher end of the range. Other companies may look to hire at the general market salaries, tending toward the average.
4. Companies often have less flexibility on salaries for recent graduates and entry-level hires. This applies to your newly minted MBA just as much as it does to your nephew who recently received their bachelor's degree. Companies will often have a concrete salary structure for these recent grads, with adjustments up and down for work location and the ranking for the school from which they graduated.
5. There's a lot more to consider in the offer than just salary - benefits matter. A lot. Companies often pay a great deal of money to provide a competitive benefits package. You know that health insurance the company's offering? Not every employer subsidizes the same amount to cover that, often leaving you - the employee - to pay a larger share of your premiums or co-pays.  There are other benefits, too - dental insurance, life insurance, disability insurance, tuition reimbursement, vacation time, holidays, company car, 401(k) matches and so on - into which companies can often pay dearly. A richer benefits package leaving more money in your pocket may give an employer a viable incentive to offer a lower base salary while still helping an employee make ends meet.
6. Variable compensation matters too. By this, I mean bonuses, profit sharing and long-term incentives. Not every job offers an incentive, which rewards the employee if they or the company has a good year. A bonus is real money, and a company's philosophy may be to offer a lower base salary in exchange for a desirable bonus target.

Here are some considerations when negotiating salary:

• It's to your advantage to avoid giving a specific expected salary figure until it's essential.  It's not always possible to hold off - a recruiter may really push for a specific number to ensure that you fit their structures - but try. It's ideal to see if it's a good marriage before locking yourself down to a specific number - this way, you keep your leverage.
• Sometimes ignorance can work in your favor. This isn't always true, but in certain cases it can be. If you're a recent graduate and an employer is asking you what you are looking for in terms of salary, it's okay to say, "I don't have a specific figure in mind, I am looking for a compensation package that is in line for a recent graduate with an MBA from my university." A similar approach also works well if you know you've been underpaid against the market, saying something like, "I'm looking for a salary that is in line with my experience and education."
• The employer may really push to find out your salary expectations. In which case, you may wish to consider taking a slightly different approach with your answer - "In my current position I have been earning $x, I am looking for a salary that will take into consideration the accomplishments and experiences I gained in my present role." You're not telling the employer you are asking for a specific figure - you're giving an idea of where you've been.
• Sometimes it doesn't matter what you want. See #4 above - the company may pay EVERYBODY the same for a certain job. You have the choice of taking or leaving the offer.
• Ask about the benefits. A rich benefits package has real cash value. Consider what you're being offered as part of the perqs as part of the total compensation.
• A sign-on bonus may make up the difference. There are times when a company really wants to get you on board, but their salary bands (or some other reason) may prevent them from offering a higher salary. Or maybe you are walking away from a bonus at your current job. A sign-on bonus might help close the gap during that first year.
• Be sincere in your negotiations. Assuming this is true - tell the corporate recruiter that you really want to make this work and that company x is clearly your first choice. Perhaps you are willing to meet somewhere in the middle of what was offered and what you asked for - tell them. The more you can make the recruiter feel that this is a partnership designed to meet a common goal, the better.
• The choice is ultimately yours. You don't have to accept the job at the salary offered just because the company offers you the position. If you've negotiated in good faith, then you should be able to walk away from an offer with no hard feelings. Which leads me to one last point...
• Avoid getting into the negotiations for counter-offers with your current employer.  It's not recommended - find out why here.

Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. He is a Human Resources professional and staffing expert with almost two decades of in-house corporate HR and staffing firm experience, and is a Certified Professional Resume Writer (CPRW) and Certified Professional Career Coach (CPCC).

Insider Career Strategies provides resume writing, LinkedIn profile development, and career coaching services, including a free resume review. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercs.com.