I have been observing subsequent parliamentary proposals imposing the obligation on companies to publish gross remuneration or pay ranges in job advertisements. According to the new regulations, the state could fine businesses for not observing this obligation or overstating the amount of remuneration in their advertisements.
For politicians, the matter seems simpler than reality. The problem is that there is no one good solution for all employers, just like in business there is no single model of operation for all organizations.
Looking at the pros and cons of any new legal regulation and being aware of the development status of Polish companies and their employees, I am definitely able to find more cons which I will try to briefly outline below.
I am familiar with the Anglo-Saxon business reality which market experts often give as an example. It is worth to know that the Anglo-Saxons do not require public disclosure of remuneration and do not impose penalties. Openness of remuneration in advertisements is simply a good practice to which the market has matured.
What are the risks as well as opportunities of obligatory imposing such practices?
The official remuneration policy is a benchmark for the company and its employees in the event of pay increases or recruitment processes. The lack of open remuneration policy in the company which must publish the salary in their job advertisement, can cause a lot of confusion - current employees will compare their wages to the wages from the job advertisement. This carries the risk of claims from current employees and often justifiable complaints against the employer. Therefore, first, it is worth working to encourage employers to create a transparent remuneration policy in the company.
It is also worth remembering that in many companies earnings are underestimated - below the market median - which is very often due to the lack of a possible increase in the organization. This can be influenced by a number of factors such as the stage of the company's operations or recorded losses.
Open communication between the employer and the candidate concerning potential earnings is a much better solution than a governmental order to publish salaries and subsequent sanctions for non-compliance.
In the UK, often given as a benchmark, it is the employer who decides when to publish the amount of salary in the advertisement. Good market practice has become a market standard for many companies and it often facilitates and speeds up the recruitment process. However, there are situations when an organization deliberately resigns from such a step.
In the English reality, not publishing the salary in the advertisement does not rule out revealing to the candidate a negotiable amount during the initial interview. This is a very common practice. In Poland, the candidate usually presents his financial expectations first.
There is a risk that offers with a specific amount of salary will be answered by candidates who are primarily guided in their choice of work by the amount of salary not by their skills or competences. Employees often believe that if their colleague in a similar position receives, for example 7,000 gross, he should get exactly the same amount. However, they often do not take into account years of experience, level of competence, transitions between companies or self-implemented projects.
In the advertisement, the amount of remuneration stated usually refers to a candidate who is close to "ideal". However, when entering the market, the candidate expects salary increase by approximately 20 to 30% on average, which very often does not correspond to the pay scale accepted in the organization!
Open salaries in the advertisement are also a sign for competition which usually responds to job offers with slightly higher remuneration or seemingly higher one including in the gross income potential bonuses. Such competition activities often generate bad feedback from candidates about the company. In turn, employees who do not know the details, start to compare with the competition inventing theories why they earn less.
If you are an experienced employer, you have an open remuneration policy, you know how much you want and are able to pay, then the publication of the amount of remuneration range can save time for both parties of the recruitment process. Many offers are rejected due to the large discrepancy between the financial expectations of the candidates and the company's capabilities. As a result, the candidate experience is primarily disappointment and anger at the lost time. After such a conversation, they may also share their negative opinion with friends, family and potential employees on the market.
The practice of revealing pay ranges may also work for lower positions in production, warehousing or at selected construction works. Such activities were visible in 2019 and 2018 among selected Polish companies in response to labor deficit.
An organization that has invested in a clear and open pay structure will rightly be seen as an entity that communicates with the market and employees in an open and transparent manner. This is one of the important elements of building Employer Branding.
In order for the disclosure of the salary at the recruitment stage not to be just a daydream of employees and a nightmare of employers, it is worth taking into account all the factors I mentioned and above all being aware at what stage of development our organization is.
Quoting the pay range - instead of a specific amount - gives you a greater flexibility in negotiations. In the case of the highest senior positions different rules apply - here, the remuneration discussions must take place behind closed doors.