At an Indeed all-hands meeting back in 2018, an employee asked CEO Chris Hyams a thought-provoking question: If Indeed believed pay transparency was useful for job seekers, why didn’t Indeed publish pay ranges in its own postings?
“My answer was: You’re absolutely right,” Hyams recalls. So began Indeed’s pay transparency journey, which started with an internal audit. Most job functions had clearly defined compensation ranges and a consistent benchmarking practice, but not all of them — the company had structure in some places but less in others. It had to bring everyone up to a rigorous standard. So Indeed examined what all of its employees were paid, identified inconsistencies, made sure salaries were competitive and created consistent structures for how people got paid moving forward — structures that Indeed could explain and replicate. It took a lot of effort, but it was important work. “Once we got to the point where we were ready to publish that data, we were better as a company than we were before,” Hyams says.
Today, Indeed includes pay ranges for all Indeed job openings and internally publishes all ranges up to the VP level.
Implementing pay transparency can seem like an intimidating process — but leaders shouldn’t turn away from this important movement. More states and cities are requiring various levels of pay transparency, which, ultimately, can be a huge benefit for job seekers, employees and employers. Indeed is now emphasizing pay transparency for jobs posted to its site by other companies. The goal is to have accurate, employer-verified compensation information for all postings on Indeed.
We spoke to Hyams, Glassdoor CEO Christian Sutherland-Wong (Indeed and Glassdoor are both owned by Recruit Holdings Co.), and pay transparency expert and UC Berkeley economist Ricardo Perez-Truglia to determine what key concepts about pay transparency are true, and which ones are simply myths.
Myth: Pay transparency means that everyone has to be paid the exact same amount.
No, employees in the same role don’t all have to be paid the exact same amount. However, they should be paid according to the same scale. “What pay transparency forces is some consistency, having some standardization, and then being willing to have conversations with people to explain, ‘Here’s the range, here’s where you are, and here’s why,’” Hyams says.
Within these structures, pay can still be linked to performance, experience and other characteristics. “It just requires leadership to be transparent around these reasons and, therefore, these reasons have to be logical, rational and fair,” Sutherland-Wong says.
Truth: Pay transparency means employers give up some power.
But that’s not a bad thing.
Historically, Hyams says, workers and their employers existed in a state of major data asymmetry. “Often, employers have access to information about pay ranges that, say, candidates and even team members do not. And it might feel to an employer that it’s useful to be holding more cards.”
However, job seekers are increasingly interested in applying to transparent companies. Leaving out salary information is no longer a competitive advantage; rather, it’s a way to lose talent before you’ve even had a chance to interview them. And if employees find out on their own that they’re not being paid equitably, they’ll quit. “Many companies fail to see the costs that they’re incurring in their recruiting processes and in their relationships with employees by not being transparent,” Sutherland-Wong says.
Employers may also worry that salary transparency means they can’t control pay within their organization. “There’s an element of truth in that,” Sutherland-Wong says. “It is a balancing of the scales when you start to provide more information.” Salaries, in other words, might well go up.
Myth: Posting pay ranges will turn off job seekers.
Job seekers really want to know this information. According to Indeed data, 67% of job seekers consider salary information to be the most important component of a job description when looking for new opportunities.
Like Indeed, Glassdoor lists pay ranges for all of its own job openings. “When I’m speaking to candidates, it’s one of the things they glow about,” Sutherland-Wong says. “They know coming in that we’re not going to lowball them and require them to have to go through an arduous process of negotiation.”
Listing pay in job posts means that job seekers can make more informed decisions about which opportunities they apply to. “There’s no question that some candidates might see a published range and say, ‘That’s too low, I’m not going to apply,’” Hyams says. “I think that’s a good thing. If someone applies, goes through a multi-week interview process and, at the end, gets offered a job and says no because it’s below what their expectations were, we could have saved everyone a whole lot of time.” Likewise, he says, other candidates apply because they’re excited to see a competitive pay rate for the role.
Myth: Full transparency is always best.
Full transparency is when everyone’s salary is available and identifiable. In most cases, this is not the way to happier employees. “A lot of people may feel very weird about talking about salaries,” Perez-Truglia says.
Perez-Truglia studied a policy in Norway, under which every individual’s salary country-wide was listed on a searchable online database. He found that this information led to gaps in happiness: The poor became unhappy to learn they were making less than others, while the rich became happier to learn of their status.
Comparing roles more broadly, on the other hand, can bring positive change. Perez-Truglia says that the vast majority of employees he has surveyed are in favor of having information about pay averages by position. While he says that lateral comparisons can bring up feelings of envy if there’s inequity, revealing how much superiors make, “If anything, has a motivational effect. Workers ask themselves where they could potentially be in the future.”
Sutherland-Wong says that employees may feel that their pay is private information. “I respect that,” he says, “and I think you get all the benefits of transparency by just publishing the ranges by job type. But I also encourage people, when they feel so inclined, to share their pay. I think the more we make this a non-taboo topic, the better for society.”
Myth: Pay transparency can be costly.
Yes, there may be some upfront costs. However, in the long run, pay transparency can be a cost-saving endeavor.
Some companies hire outside consultants to guide them through the process of auditing internal pay structures and implementing new strategies. HR may need to increase staffing to accommodate policy changes; internal salaries may need to be raised to solve inequities and issues with market competitiveness; and leadership may need training on how to discuss pay policies. “Of course, we found when we were going through this process, there were things that were odd, that some people were getting paid more or less,” Sutherland-Wong says. “The great thing about making this transparent is that it made us fix these inequities. That’s, ultimately, a good thing.”
Pay transparency — and conducting regular checks of how the policy is being implemented — is just one step toward closing the pay gap, particularly for marginalized groups who have historically been underpaid. “Having transparency doesn’t solve equity,” Hyams says. “But it’s very difficult to actually do anything that approaches equity without having transparency as a starting point.”
Being a transparent employer translates to stronger engagement with employees — and that’s great for business. “Historically, we’ve seen from Glassdoor ratings that transparent companies perform best when it comes to business returns,” Sutherland-Wong says. “We’ve studied this time and time again.” It makes sense: Good employers attract the best talent, retain the best talent, and get the most out of that talent. “It’s more expensive to replace someone who leaves because they can make more money somewhere else than to pay people fairly,” Hyams says. “And I don’t think there’s any sustainable business model in believing that you can benefit long-term from paying people unfairly.”
Truth: Salary transparency requires a game plan, conversation and iteration.
Companies need to consider the best strategy for their business and employees, which may depend on their industry, current company culture and so on. “The least you can do is ask your employees, ‘Do you need more information, what type of information would you like us to disclose?’” Perez-Truglia says. Based on that, HR leaders and executives can begin to plan how to act.
Implementing pay transparency policies comes with responsibility, Hyams says. “You have to help people know where they stand, where they’re going, and where they fit,” he says. “You take on the additional responsibility of having to have these conversations with people.”
Glassdoor, for example, has trained its managers on how to have more open conversations with employees. “In a world where pay is opaque, managers can get away without really explaining to an employee the reasoning or rationale behind what they’re getting paid,” Sutherland-Wong says. “But when it’s now in plain sight, it does require managers to be able to stand up and be able to have that conversation confidently.”
Pay transparency should be an iterative process. “Start incrementally and then see the appetite to get more transparent from that,” Sutherland-Wong says. That might include doing paid equity studies to ensure you’re still paying fair wages and adapting policies to improve methods and increase transparency. Being transparent isn’t a one-time policy change. It’s a commitment to a long-term, ever-adapting shift toward being a better company — it’s better for job seekers and employees, which means it’s better for employers too.
