Pay transparency is here to stay. An increasing number of states and cities follow New York City, California, Colorado, Nevada, and others by passing laws requiring companies to share the salary or hourly wage ranges in job postings. Some require companies to share salary ranges with candidates if they request them. 

Whether mandated by law or not, it’s clear that job seekers and employees want to know they are paid fairly and have access to equal opportunities. In a recent survey, a full 98% of workers said employers should disclose salary ranges in job postings, and more than half would refuse to apply for a job that did not disclose the salary range. For companies to adapt, they must create a structure and have a clear plan for establishing the pay range for all job postings. 

Step 1. Determine a compensation philosophy

Get your hands on market compensation data that align with your industry, and decide which market percentile you’d like to target for each functional area in your organization. Align the target percentiles with your business needs, meaning define the target percentiles for jobs essential to company goals and growth. 

This might mean targeting higher percentiles (e.g., 65th or 75th) for technical roles, like Software Engineers, and meeting the market at the 50th percentile (or median) for finance and accounting functions. When determining percentiles, also consider the unique skillsets required for the roles. For example, if Financial Analysts are required to know SQL programming, you might need to place premiums on the ranges. 

In addition to market percentiles, companies should also leverage local vs. geographic differential market data. 

Once compensation ranges align with the overall company strategy, your recruiters will be fully equipped to meet with hiring managers to identify the job level and scope needed to fill the role. And, Finance teams will be able to more thoughtfully budget salaries for the year.

Step 2. Identify business needs

To know which compensation ranges to look at, hiring managers and recruiters must be on the same page and identify the level criteria (or compensable factors) the job requires. 

They should work together to align the open position to the company’s established job levels and potentially create a short range of levels for which they may hire. Recruiters who understand the responsibilities and knowledge required for the job will be able to better recruit for the role. 

Step 3. Include level criteria language in the job opening

After the leadership team defines the compensation philosophy and identifies business needs, recruiters can begin working on the job post. 

The job posting should have elements of the level criteria embedded within the job description. This means including the desired years of experience, skills, and knowledge required, aligned with the established job level and the compensation range for the role. 

Step 4. Be as transparent as possible

The compensation range should include a base salary and on-target earnings (like commission), if applicable, and any additional compensation information (e.g., stock options). 

The range’s minimum and maximum should align with your compensation philosophy, and it’s recommended to use 85% of the midpoint and 115% of the midpoint to establish the range. It’s also important to have a pay range and guidelines for recruiters on how to use it to ensure consistency in offers.

Pro Tip: Factor in internal employee average (and/or median) compensation data to tweak the ranges, as needed, to ensure the ranges posted are internally and externally equitable.

If the open position is eligible for variable pay, like an Account Executive, in addition to the base salary range, include the on-target earnings (OTE) opportunity (e.g., base salary + target commission). If the company offers equity, also mention it in the compensation package. 

Below is an example of a salary range within a job posting. It also includes language about how individual compensation packages are based on various factors unique to each candidate since their job level and location/country may impact the compensation structure.

Last but not least, put the compensation ranges in their own section (don’t clump it together within a paragraph, so it’s difficult to find). 

The Outcome

Companies must stay ahead of the curve to attract top talent with their pay transparency efforts. A transparent compensation structure, supported by market compensation data, means not only being transparent with applicants but also equipping recruiters with career paths and compensation ranges. 

Involving managers in job leveling and establishing career paths is also essential in cultivating a transparent company culture. Managers and employees will perform better when they know the criteria and expectations for each job level. 

Transparency in compensation is more than including salary ranges within job postings; it sets the tone for the company's culture and builds trust across the organization.

About Kamsa

Kamsa is an all-in-one strategic compensation management platform for base salary, total cash, and equity. Our hybrid approach to compensation, powered by our proprietary market compensation data, provides leaders with a platform to make informed pay decisions. Kamsa’s market compensation data goes through a rigorous validation process to ensure reliable data that companies can leverage out of the box.