In the last few years, different states have adapted to adopt varying levels of regulations to increase pay transparency. In a prior article, we worked with Accel to publish what’s happening in the United States. Read more about it here.
Today, we’ll focus on the broader implications of pay transparency – most importantly, how that affects candidates during their job search.
Having access to more information around what you can expect to be paid gives candidates more power in knowing if this opportunity is the right fit for you. Here are three things you should dig into:
It’s important to understand what your total compensation package would look like at a company. Your offer can be made up of multiple components, that when added up, equal your total compensation.
Compensation packages may not include all of these components, but here’s a common formula:
Questions to ask your potential employer on the components of compensation:
With the new pay transparency laws in many states, companies are now required to develop a reasonable salary range a candidate can expect to be paid for the position.
When setting pay ranges, companies can pull from multiple sources:
A pay range includes a low end, midpoint, and a high end of pay. Typically, companies identify the midpoint, then develop a range around that midpoint based on their internal practices. For example, some companies develop ranges from 80% of the midpoint to 120% of the midpoint from their chosen dataset, but there are no set rules for how companies develop a reasonable range.
Here’s a sample pay range:
When you see such a pay range listed, you can calculate that the midpoint for this range is $100,000. You will need to ask questions to better understand a company’s compensation philosophy and how ranges were developed.
Questions to ask your potential employer on how the pay range was developed:
While companies have different philosophies, candidates should generally NOT expect to be hired towards the high end of a range when you are first joining a company. Candidates are typically placed between the low end and the midpoint of the range to allow room for potential learning and growth. As you progress at the company, and learn new skills in your role, you can receive pay increases to bring you closer towards the high end of the range.
Reaching the high-end of a band is a great time to discuss a promotion or lateral move to another area of the business that may make sense for your career growth. Asking for a different career ladder is a great way to do so.
The visual below shows one way in which these ranges are calculated.
Questions to ask your potential employer to know where you can expect to fall within the range:
Compensation remains a way for companies to demonstrate their values, most notably their commitment to their team. How transparent a company is on their compensation program and their willingness to answer your questions can tell you a lot about the general trust and openness they may have with employees on a number of topics that impact your overall experience.
While transparency regulations have doubled in the last five years, some companies have more proactively taken a leap to help both candidates and employees feel more trusted within their organization. So…will you let transparency determine who you work for next?