In Pursuit of Profit
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Companies that post salary ranges may choose to do so voluntarily, in the name of equity and transparency, or be required to do so by law. The idea is that by sharing salary bands job applicants are given a range of earnings to expect, eliminating the disparity that can occur when some groups of candidates are less likely to negotiate for a higher salary. Salary ranges should promote fairness and ensure employees are compensated appropriately for the value they bring to their employer.
So, why are employers and job seekers alike in an uproar about salary ranges? Let’s look at what has gone wrong and how both employers and job seekers can respond to position themselves well in today’s job market.
Our recruiting experts are giving you their analysis on how to read salary ranges and maximize their usage to find the right fit between candidates and companies.
The Salary Range “Problem”
Everyone hates salary ranges. It may sound harsh, but it’s true! Employers don’t want to give them, and job seekers can become disgruntled if they don’t max them out.
Recent job market news reports show that today’s job seekers feel duped by the salary ranges that companies are providing in job listings. The problem seems to be stemming from a difference in how job seekers and employers view the ranges.
Employers sharing salary ranges are typically showcasing the full range of earnings that someone can earn while in that role, not how much they can expect to receive when hired into the role in initially. For example, if an open role is listed with a salary range of $75-125K, in many cases the employer has no intention of ever paying a new hire that top $125K figure because if they did, there would be no room for the employee to grow over their time with the company. Instead, they may be budgeting $70-90K for a new hire based on experience. The employer is usually trying to indicate where the role maxes out for a highly experienced employee that has exhibited consistently high performance with the company over several years. Their goal here is to give the employee a picture of not only what they can expect to receive initially but also what they can reasonably expect to be earning after they have established themselves in the role.
Job seekers, on the other hand, seem to be largely perceiving salary ranges as their expected earnings in the role upon being hired. As a result, highly qualified candidates are getting increasingly frustrated when they are being offered substantially less than the salary range cap. Using that same example of a job posting with a salary range of $75-125K, a professional currently making $100K may apply, thinking they could realize up to a 25% increase in their salary in this new role, only to start the interview process (or even get all the way to the offer stage) and find out that the role offers a starting salary of less then their current compensation. This is clearly not a desirable position to be in for either the candidate or the employer, because it wastes everyone’s time. But there’s another kind of problem emerging as well – AI usage in hiring is further complicating the matter. In some cases, a top candidate’s expectation that they would be compensated at the highest end of the range is actually disqualifying them from the search entirely because AI usage in the candidate screening process is preventing them from even getting to the interview stage even though their stated salary requirement is within the posted range for the job they’re applying for online because it is above what the employer is willing to pay a new hire.
Why Even Have Salary Ranges?
If there are so many problems with salary ranges, why do companies even have them? Well, in some states and cities it’s legally required equity initiative, so organizations in those areas don’t have a choice. But in other areas organizations are trying to follow suit with today’s market demands, their industry, or hiring trends at large. Ultimately, despite their issues, salary ranges are making strides in the way of pay equity and can be used well as an effective hiring tool – to weed out candidates that aren’t a good fit for the role before they apply and to showcase the potential for growth to prospective employees. Both are a win-win for employers and job seekers, but only if you know how to use them.
How to Interpret Salary Ranges
Employers and job seekers interpreting salary ranges differently is a major source of tension, but it doesn’t need to be. How should both groups view salary ranges to better align their expectations? Ultimately, there’s not a single correct answer. The right way of handling how to view salary ranges is in communicating your expectations and asking clarifying questions so everyone is on the same page.
Employers should be forthcoming about whether a salary range indicates a potential starting salary or the possible salary for that role across all team members (new hires and veteran employees). Job seekers should feel comfortable asking questions about whether the salary range just covers base salary or whether that includes other compensation like a one-time hiring bonus or ongoing performance incentives.
Candidates should also be able to get a sense of who generally gets the top and bottom ends of the range. If the salary range is across all employees in that role, the obvious answer is that new hires will be towards the bottom or perhaps middle (for highly qualified applicants) of the range while more tenured employees will be at the top end of the range. However, if the salary range is for new hires, aim to understand what kinds of skills and qualifications will be used to differentiate candidates. Often, savvy job seekers can uncover some of this information themselves by looking at the “preferred qualifications” on the job listing or on similar job listings for the same company.
Even with significant communication around compensation, it can still be tricky for candidates to know where to position themselves in the job search process. Determining what you’re worth is difficult for anyone, especially if you’ve been at a role for a long time prior to starting a job search. This is one reason why the savviest job seekers use a recruiter to help them land their next role. A professional recruiter has a breadth of job market experience that you don’t have and can not only present you well to hiring companies but also help you navigate the negotiations process to ensure you get what you’re truly worth.
How to Use Salary Ranges Effectively
Key Takeaways for Job Seekers:
Key Takeaways for Employers:
When you need an experienced accounting and finance recruiter to represent you, reach out to us! We specialize in placing accounting and finance professionals into mid-to-management level roles and would love to help you find your dream role today. Are accountants hiring accountants into accounting roles, so we understand what you do and what you’re looking for in your next role.
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