By Noura Dadzie
It’s no secret that Europe’s post-pandemic economy is facing a growing skills shortage. Nearly half of European employers are already having trouble attracting candidates. If left unresolved, it could lead to a global talent shortage of more than 85 million people by 2030. Little wonder, then, that companies are more interested than ever in how they can stand out from their competitors and attract the best employees. Our new study suggests that salary transparency is the way to do it.
Findings show that only 20% of jobs posted on Talent.com currently include salary information. This shows a clear misalignment between employers and job seekers, considering 98% of those surveyed said they want to know the salary of a job before applying and would be put off if salary wasn’t clearly stated. Furthermore, 79% would even support a law obligating employers to disclose salary ranges in job postings.
While organisations may be fearful that including salary information in job adverts could cause them to lose out on applicants, the result is actually positive. It filters out unsuitable candidates while potentially attracting skilled ones who may have otherwise not bothered. The bonus: this saves companies time and money. Although some might expect pay transparency to put increased financial pressure on a business, when you factor in the cost of unfilled positions for important roles and of turnover when unsuitable employees leave, it’s often a more economical choice.
Salary transparency could also attract a wider range of applicants, such as women and those from minority backgrounds, as it presents a company as progressive and inclusive. Some 71% agreed that wage transparency would help to close the gender pay gap, and 66% agreed this would also be the case for ethnic minorities. Disclosing pay from the start and continuing to be open about it means employees know whether they’re being compensated fairly and allows them to call it out if they’re not.
This is particularly pertinent when one considers that almost one-third of those surveyed reported they’d experienced pay discrimination and some even cited it as a cause for leaving their previous organisation.
Laying down the law
In a study we conducted in New York, 98% of job seekers indicated that it was important to know salary before applying. It’s no surprise then, that in parts of the US, that pay disclosure is now being enforced through litigation. It’s already a requirement across several states and cities, with New York City being the latest addition with its pay transparency law. Both Washington and California will follow suit with tighter legislation in January 2023.
It’s arguable that we’ll see a similar approach across Europe in the coming years, foreshadowed by the EU Pay Transparency Directive. Although this likely won’t be implemented until 2024, among other things it will require companies with at least 50 employees in member states to publish or provide wage details from the outset. It will also prohibit pay secrecy within an organisation and give workers the right to annually request information about their pay level and average pay levels, broken down by sex, for employees doing the same or equal work to them.
Until it becomes a legal requirement, companies would do well to enact salary transparency regardless as it will help them stand out from the crowd and establish trust. It could be the reason why someone might choose to apply for one job over another.
Being candid about pay won’t just attract top talent – it could also help retain it. Our survey found that 74% feel it creates a fairer environment at work, while 67% think it would have a positive impact on their professional life. Having an open discourse about pay within a workplace fosters an atmosphere of trust and honesty, and can build a strong relationship between management and employees. Both can lead to a higher level of engagement and job satisfaction, not only giving an organisation a reputation as a great place to work, but also positively impacting the bottom line thanks to a low turnover.
It’s worth noting that even if a salary range is advertised, a discussion may still be needed down the line. Our research shows that more than one third of people, particularly younger applicants and women, find talking about pay at job interviews difficult. The onus is not on the candidate to do so, however. It’s the company’s responsibility to facilitate these conversations. Managers need to be trained in how to talk about salary during interviews if they don’t want their job offer to be turned down at the final stage because the pay packet isn’t suitable.
In summary, being clear about salary from the very beginning could nurture an open and inclusive company culture, therefore encouraging more suitable applicants from a wider pool of people and helping retain employees once hired. All of this saves everyone time and significantly reduces recruitment costs. In the face of Europe’s ever-growing skills shortage, evidently, it pays to talk about money.
About the Author
Noura Dadzie boasts a successful track record in the digital talent acquisition sector. With over 20 years of experience in online recruitment and software-as-a-service solutions, After a prosperous career in the industry, Noura now manages and oversees British and International sales operations for Talent.com’s next-generation platform. The platform currently hosts over 50M jobs across 77 markets.