‘Wanted: Business analyst — salary of $137,000 to $206,000’

As for the former head of HR at Indeed, Paul Wolfe is a “big believer” in pay transparency.

“I think in the U.S., there should be a federal law. We've seen some of the states and cities implement laws, New York City, being one of the most recent ones, and California,” he says.

“We actually went to pay transparency or pay range transparency at Indeed, internally and externally, five years ago.”

That kind of openness is better both for job seekers and employees, says Wolfe.

“From a leader perspective, not even an HR leader perspective… it just makes the pay, the compensation conversation with your employee so much easier when that range is out there and you are honest and clear with them about why you're giving them a four-per-cent raise or a three-per-cent raise based on their performance and where they stand in the range of the salary for their role.”

Broad ranges raise questions

However, employers are facing criticism as they seemingly skirt legislation around pay transparency. Many in the U.S. are posting very broad salary ranges; for example, a job ad in the Wall Street Journal for a “head of news audio” at the publication gives a salary range of US$140,000 to $250,000. Similarly, a job ad for VP senior business management analyst at Citi gives a range of US$137,000 to $206,000.

“I call — excuse my language — bullshit on it, they shouldn't do that,” says Wolfe.

“This [legislation] is about base salary right now; I do think bonus target ranges and equity ranges or any other type of sales and kind of compensation ranges should become public as well.”

Broad pay ranges in job ads don’t make job seekers feel confident that the employer will be treating them fairly, says Kun Huo, co-author and assistant professor of managerial accounting and control at the Ivey Business School at Western University.

“You could assume that they're going to try to lowball you, given the low range of the salary; but people who are really going to negotiate may say, ‘Hey, no, that's a great opportunity.’ So then that may attract people who are really aggressive at negotiating, and the people who are more agreeable or conscientious may not even apply.”

The push for pay transparency is similar to that around ESG (environmental, social and governance) reporting from employers, he says, which leads organizations to look for and publish the most favourable thing possible, while hiding the negative.

“You don't have the standardized ways to calculate or audit those numbers, and you get greenwashing,” says Huo.

“When you talk about job ads and companies trying to circumvent [the rules], I see the same thing: ‘Oh, this legislation, we'll muddle through,’ so they don't want to invest to provide relevant information.”

Roughly two-thirds (66 per cent) of Canadian employers reveal pay in job ads, compared to 78 per cent in the U.S. and 80 per cent worldwide, finds Indeed Canada.

Good and bad for the employer brand

But pay transparency has become a really important part of the employer brand, says Robert Boersma, vice president of operations for North America at Talent.com in Montreal.

“It's a chance for employers to either gain the trust of applicants or lose the trust of applicants, and the US$0 to $2 million [range] schtick is a trust loser, for sure,” he says. “Companies who do that can actually expect to lose the talent war that's going on right now because rather than applying blindly, people are not going to apply at all for those.”

And employs may want to up their game, because pay transparency is a popular sentiment: 84 per cent of Canadians say they would support a pay transparency law that requires employers to disclose salary ranges in job postings, according to a recent survey by Talent.com.

Maybe that’s because 43 per cent of Canadian workers don’t feel like they are receiving a fair salary, or because six in 10 think that salary transparency would increase pay equity across gender (61 per cent) and race (57 per cent), finds the survey of 1,534 people in October.

It's pretty ubiquitously understood that this means transparency both internally and externally, says Boersma.

“It puts people on an equal playing field; in a sense, it's like bidding on a house without knowing the house price when you go and you interview for your job, and you take a job without knowing the salary ranges.”

Greater transparency allows the discussion to move from being a subjective to objective in talking about the factors a company uses to decide where people should fall within a pay range, such as experience or KPIs, says Boersma.

“These are factors that move you up and down that pay scale, but at least you're in the right neighborhood.”

The push for greater clarity around compensation has been growing for a few years, as seen with Ontario passing the Pay Transparency Act in 2018  — though it was subsequently shelved after a new government took over — and the Pay Equity Act coming into force in 2021 for federally regulated employers, requiring the disclosure of compensation levels.

More recently, Prince Edward Island modified its employment standards so that pay ranges or expected pay have to be made public in job ads. Employers are also prevented from seeking pay history information from a candidate and from punishing workers who ask for data around salaries.

South of the border, California recently passed a law requiring all employers based or hiring in the state to post salary ranges on all job listings, following similar moves by Colorado, New York City and Washington state.

Getting it right

There's a lot that goes into pay transparency and becoming public with your pay ranges, says Wolfe.

“There’s a lot of behind-the-scenes work from an HR and a compensation perspective and a leadership perspective. And it's tough work, but it's good work, at the end of the day.”

Even if it’s not legislated, employers should prepare to be more open about their pay, according to Boersma.

“Larger businesses who probably already have those salary bands in place should work to make sure that those equities are not out of whack in advance… make sure that you have those equity conversations before that becomes public information,” he says.

“And smaller, medium companies that maybe don't have that structure or have those salary bands for those positions, well, now's a good time to take the hint and get working on that so that you're not pushed into a corner when that legislation does come into play.”

Most of the legislation does not cover bonus or commission pay but jobseekers should understand the factors that create somebody's salary range or salary band, says Boersma.

“Companies need to be prepared, and managers need to be prepared, to educate their employees on ‘Here are the factors we as a company really feel are important in terms of deciding compensation.’”

And it shouldn't be HR only that has to bear that weight.

“All of the management, that company needs to be able to comfortably have that conversation,” he says.

“Be clear about what causes somebody to be higher or lower within the band of a specific job. What are the things that the company really values? Maybe for a growing company, that's revenue production. Maybe for a more stable company, that's margin protection or cost savings.”

Pay transparency can be a great tool for recruiting talent – but there are potential downsides to consider, says one expert.

This a big undertaking, says Huo, co-author of the paper Pay transparency: silver bullet or kryptonite?

“When you start comparing, say, individual to individuals, peer with peers — let's just toss the racial, gender all the other stuff out — it's basically an exercise of ‘What's equitable pay?’ So that means the firm needs to be confident that if they are prepared to pay more to someone than another person, the firm has to be able to back it up.”

One of the drawbacks is that many managers are not confident in giving different salaries or bonuses based on performance, because they don't have good information, he says.

“That, over the long term, leads to dissatisfaction. But if you do right, if you have good performance measures, good data, the pay transparency can be a good thing because it shows that ‘Hey, good performance is being rewarded, the organization cares.’ It's a meritocracy, and it becomes a virtuous cycle.”