The practice of seeing a new employee's payslips and throwing in a 10% hike over their last drawn salary is indicative of an "anyone can do this job" mindset and is widely prevalent in India. ‘If there's a role, there needs to be a budget. It's okay if you're not paying market standards, but you need to be honest about that,’ says Murugappan Meiyappan, a marketing leader, who sees pay transparency as a reflection of the organisation’s culture.
This piece comes from a very personal place.
Like almost every adult I know in the workforce, I have been a job seeker at various points of time. In nearly every instance of job hunting, I have felt helpless by the lengthy hiring processes, the lack of acknowledgement of applications and being turned down without feedback even after attending multiple interview rounds. In my most recent experience while job hunting in 2022, I realised that knowing the pay range for a prospective job almost always made the experience of applying for that particular job slightly better than others. I, therefore, decided to only apply to jobs that shared a range. I’m not alone. In a poll in late 2022 by global talent solutions firm, Monster, 98% of the respondents said that hiring companies should reveal the salary range in job postings with more than half of them saying that not seeing a salary range on a job posting would discourage them from applying to the job.
While there is no dearth of ideas and suggestions to make the hiring process more humane and less emotionally draining, sharing a pay range is something akin to a magic pill- an easily implementable idea that can make the recruitment process better for job seekers and givers alike. In the United States, eight of the states have made it mandatory for employers to declare the pay in job postings, covering over 25% of the country’s workforce. While India has no legislation mandating pay transparency, there is a case for individual organisations or entire sectors/ industries to adopt it, as a norm.
Though, why isn’t pay transparency the norm in India?
Despite 53% of talent professionals agreeing that pay transparency is extremely important in shaping the future of recruiting and talent (as per LinkedIn’s 2019 Global Talent Trends Report), actioning pay transparency is inherent with systemic challenges, in the Indian context.
‘Being an emerging economy, as a whole, India’s pay ranges for technology roles are fairly wide to accommodate varied skill sets in a high-growth environment. Most jobs have applicants across the pay range depending on different factors like role and experience. There are many organisations yet to embark on the journey of pay transparency in India. In organisations where pay ranges are transparent, new hires may feel that they’re being underpaid if they’re hired at the lower end of the range,’ says Rishov Biswas, a compensation strategy and rewards professional in the technology sector.
Practising pay transparency is also challenging for organisations that are not cash-rich or market leaders in their sector, according to Aarthi Sivaramakrishnan, a Senior HR Leader who consults with various organisations on their people strategy. ‘In cases where they are willing to make an exception and offer high salaries for certain candidates, this ruffles a lot of feathers within the organisation and causes an internal commotion. Organisations in poor talent density sectors also tend to guard salary information and pay ranges, because there is a risk of losing their top talent, whom they have worked very hard to find, to competitors’ she adds.
However, this does not mean that companies completely rule out any transparency, but instead put in place change management practices and institute transparency dialogue within to clarify why new staff are hired at different pay ranges could help manage any concerns that could come up (both from within and outside.) ‘Having detailed discussions and enablement sessions with internal and external applicants on the relevance of wide ranges and how pay is determined within the range can address their concerns,’ says Rishov.
Is pay transparency *really* beneficial to companies?
Being upfront about pay not only signals a culture of honesty and candour but can also reduce time and stress for job seekers, who don’t have to wait to get further in the application process to assess if the pay matches expectations. ‘I wouldn't want to spend 2 hours in 3 interviews and then find out that this employer can barely match my current pay, let alone offer a significant bump,’ says Murugappan. ‘When an organisation practices pay transparency, I see it as a sign that they respect my time and theirs. No employee is going to sign an offer letter without knowing the compensation on offer, so I don’t see why one should intentionally waste time for all parties involved.’
For talent managers and recruiters, a transparent pay policy can also aid them by attracting the most qualified and talented candidates without posing an inherent risk of them dropping out of the hiring process because of unmet pay expectations in the latter stages. Aarthi says ‘In my experience, the dropout ratio post offer roll-out is high due to misaligned compensation expectations, even if other factors such as role clarity and cultural fit tick the box. I believe that transparent pay ranges need to be a norm for candidates to feel psychologically safe even at the hiring stage. ‘
Pay transparency is a journey and does not begin and end with listing salaries on job postings. Rather, it is an approach to being forthright and upfront about both expectations and what is possible, in terms of rewards, benefits and compensation through the lifecycle of an employee. For instance, sharing what the interview process looks like, and what are the attributes that will be looked for are also important elements of transparency.
Julia Chacur, a Brazilian social impact professional who curates and amplifies remote job opportunities on Linkedin, says, ‘I've seen an organisation that actually paid applicants who moved to the interview stage for their time. Most organisations probably can't afford processes like this, but these positive examples acknowledge that the time applicants spend on the hiring process is valuable. So, even if your organisation can't do something like this, make sure you thank job seekers for their time and be mindful about not requiring unnecessary, bureaucratic steps that consume their time.” It is also important to ensure that the assessment processes are conducted in the highest ethical standard and that the organisation returns original and open files to candidates, if they don’t make it through. In the eventuality that the material does get used, it needs to be done with the candidate’s express consent and with compensating them for the same.
Can Pay Transparency lead to Pay Parity?
If we believe that employees doing the same work should be rewarded similarly, then pay transparency can be instrumental in ensuring pay parity. A 2022 study by IIM-Ahmedabad revealed that senior female executives in India earn only Rs. 85 for every Rs. 100 earned by senior male executives in the same position. Apart from gender pay gaps, salary disparities can also be traced to caste and religious discrimination, as well as the motherhood penalty. ‘For minority groups, pay becomes a debilitating factor, because they often come to the discussion table with tight elbow room for negotiation and with little insight into prevailing norms. I have seen women being hired at a couple of levels below men with the same level of competency and years of experience. For a variety of cultural and economic reasons, women accept this as a norm,’ said Aarthi.
Beyond simply declaring ranges on job postings, organisations should also attempt to drive a culture of transparency on rewards and compensation as a whole and across the employee lifecycle. ‘Organisations must encourage open conversations about pay. Yearly reviews must be done to ensure that salaries are in line with the market standards. Committees with employees from different backgrounds should be constituted to ensure overall parity and equity in compensation. Many unintentional biases tend to crop up, but it is the leadership’s job to ensure that they’re addressed effectively,’ says Murugappan.
One way to articulate an organisation’s standpoint, philosophy and practices on compensation is to draw up a ‘Compensation Policy’ and share it with employees. A comprehensive policy could help address questions and concerns during hiring, appraisals, promotions and transfers and be periodically updated. ‘Being transparent upfront about ESOPs, benefits and rewards could go a long way in building a healthy workplace culture. The cost of transparency is always lower than the cost of addressing discontentment,’ muses Aarthi.
Here is a quick guide she recommends for both companies and potential job-seekers:
> Start small, instead of a fixed figure, declare a range. If you’re unable to furnish that information, at least indicate a band wise figure. This is a great way to signal intent and can go a long way in helping job seekers put their best foot forward during the application process.
For job seekers:
> Demand to know the range when headhunted. While recruiters and headhunters reflect their client’s intent and say they don’t share the pay as a general policy, you will be on the back foot without this information. Ensure that the feedback that there is a need for pay transparency goes back to the hiring organisation. If enough job seekers ask for the pay to be out in the open, it will become the norm.