As an HR manager from a mid-size or robustly growing company, should you reveal your salary range when recruiting new candidates? If you disclose your salary range in your recruitment ads, what are the associated risks in salary range disclosure, and what can you focus on to attract remote workers for job applications apart from salary disclosure?
1. Conquering the tough competition
According to a McKinsey digital report, 80% of the tech workers laid off in 2022 managed to secure a new position in 3 months, and the job openings outnumbered the laid-off workers 1.
Despite the massive layoffs in the tech industry, demand for talent remains strong. Similarly, the need for hiring tech talents in developed countries like Germany will continue to grow; there are currently 700,000 open positions in Germany now, and it is expected to reach 780,000 by 2026.
Likewise, the US Bureau of Labor Statistics projected a 25% of job demand for software developers, quality assurance analysts, and testers in the next 8 years. Currently, there are 162,900 openings for the stated positions, and the job demand is expected to reach 203,625 in the coming 8 years 2.
From a hiring point of view for startups to mid-size tech companies, software developers are able to create unique and differentiated products that stand out from the competitors, bringing creativity and technical knowledge to the table to increase user demand. Tech companies must therefore acquire the correct candidate to assist the business in scaling fast in an evolving business environment.
2. Focus on the employment attributes to avoid global competition
Practically, big companies like MNCs are more open to disclosing pay ranges in job listings to use attractive salaries to attract high-quality candidates. When there is a potential talent acquisition war between competitors, MNCs can adjust or increase the budget to win the acquisition competition.
Gartner research has conducted a recent study with software engineering talents to understand the top 10 employment attributes that lead them to decide to join a company. The result shows that compensation is undeniably the top factor that the majority of the candidates (55%) will first decide on when applying for a job, followed by work-life harmonization (39%) and location (30%).
As a mid-size company, not disclosing salary information might give you more negotiation range to attract top talents and at least get the first contact from job applicants with impressive profiles.
What can you offer besides an attractive salary to attract highly skilled candidates? An interesting study found that 42% of employees would choose a new employee benefit rather than a wage increase if the offer is within an extra $200 incentive. If you are hiring from Asia, it is important to understand different employee benefit needs.
Instead, hiring managers can emphasize other attributes that job seekers value, as indicated by Gartner, such as work-life balance, possibilities for professional advancement through training, and remote work opportunities highlighted if you are transitioning to a remote company.
3. Should you consider pay transparency?
Pay transparency has been a hot topic, especially spreading rapidly and advocated by public US academic institutions to decrease the gender pay gaps significantly 3.
In reality, Buffer, a reputable social media management tool company, has started to implement the salary transparency policy since 2013. The company believes that trust and unity will be established among its employees in doing so.
All of the salary data can be viewed openly not only among Buffer's employees but also by the public. If you want to view Buffer's salary information, here is the link.
As we can see, Buffer's pay transparency has led the company to positive branding and enabled the company to be well-known as a generous employer. However, here are a few things to consider when you implement a salary range disclosure approach in your job listing:
- When hiring from anywhere, are you using value-based compensation, location-based compensation, or a mixed approach?
- How would the same team member with similar years of experience and skillset feel when their peers living in the capital city get higher salaries?
- How would the resigned employee feel when seeing their replacement hiring ads with the salary range disclosed?
- How would a position with a lower salary range feel when their perceived workload is higher and they are underpaid?
- Will it discourage your ideal candidate from applying if the salary range doesn't match their expectations?
4. Pay transparency and job motivation
Here is a study from Elsevier Journal that examined the effect of salary transparency on job motivation for your evaluation. The 5-hour experiment using the decoding psychological method along with a compensation contract with 88 participants revealed that employees who perceived that they were underpaid reacted negatively to pay transparency 4.
If the employees perceive that the relative pay is aligned with their performance and contribution, in other words, they are neither overpaid nor underpaid from their perception; there will be no overall motivation effect on their work performances.
Interestingly, low performers who perceived they were overpaid or the pay exceeded their expectations and capabilities will improve their performances to align with the pay.
A caution advice is that unless you are sure that your company is offering the best compensation, either aligning or exceeding the candidates' expectations, revealing your salary range could bring positive effects to encourage employees.
On the contrary, if team members perceive that they are underpaid compared with their peers could harm your company's turnover rate. Ultimately, you wouldn't want your employees to compare your range with companies offering competitive pay or demand an answer to why their teammates are getting a higher pay range, isn't it?
5. Compensation varies across countries
Another crucial aspect to consider is that not disclosing the salary range in the job listing gives your company more flexibility, negotiation, and bargaining power according to the candidate's skills, experience, locational factors, and hiring city's cost of living if you hire from anywhere.
For instance, if your target country is to hire a remote worker from Australia, the average annual salary in Hobart, Tasmania, is AUD 45,933, while it is AUD 90,800 in Sydney.
Hiring candidates from different countries can be even more complex. A Junior data scientist might cost you USD 112,000 from the US, while hiring a similar position in Indonesia is USD 17,000, considering the country's currency and salary benchmarking.
When hiring from developed countries versus emerging countries, what are the salary differences in acquiring web developers, DevOps Engineers, Cloud engineers, data scientists, UI/UX designers, product managers, etc.?
Furthermore, employee statutory contributions, payroll cycles, OT compensations, and termination policies vary across countries. Therefore, it is vital to collaborate with an EOR to understand the hiring compliance issue in the country you wish to hire from to avoid potential legal offenses.
6. Focus on remote perks
A poll from Business Insider with 188 employees who worked from home showed that 55% are willing to accept a lower-paying job to keep working remotely 5. However, 80% are willing to work in the office a few days a week or in hybrid mode to exchange for more money, including remote capable workers who have the ability to work from home entirely.
As such, advertising the keyword "Fully remote" or hybrid work arrangement with clear incentives or allowances could help to attract more candidates as remote perks without salary disclosure.
A workstation could cost you up to USD 18,000 per year. If you have decided to go fully remote, consider transferring the cost to perks for remote employees, such as remote workstation stipends like furniture set up for the home office, which can be attractive to job applicants.
Relating to point 1 about the employment attributes that drive software engineers to join a company, work-life harmonization can be another tip to attract remote team members if they are already working remotely.
Enabling flexible working hours can aid a lot in work-life harmonization for employees to work in certain core hours for video conferencing as synchronous work hours and allow them to allocate flexible time when working asynchronously.
7. Focus on candidates that are having aligned values with your company
"Employee retention is all about making them fall in love with your company's culture".
Attracting talents to join your company is the beginning of your journey to building a successful team. However, ensuring long-term success requires focusing on retention as the ultimate goal.
Finding candidates that align with your company's core values is crucial in a long-term retention perspective. As a remote company that hires from anywhere, team members usually communicate via team meetings or video calls. A sense of belonging or attachment to the company can be difficult to establish due to the lack of face-to-face interaction and team bonding.
In AYP, we are proud of our company culture. Even though we work in a distributed workforce, we believe that we can make a social impact for companies to get access to talent from hiring from anywhere and bring better job opportunities for the Asia Pacific market. With these aligned values, we are keen to attract talents with similar values to offer HR technology solutions for this world.
8. Hiring from anywhere across the border
Salary range plays a crucial role in attracting and retaining top talent. Whether you decide to disclose your salary range based on the above considerations that we have pointed out, managing a remote team can be very challenging, especially when it comes to hiring from different countries and setting employment contracts according to other countries' Labor law and statutory requirements.
If you intend to test the market by hiring from a foreign country, setting up an HR department and a local entity might be costly and troublesome. Partnering with an EOR (Employer of Record) can assist you in ensuring that your compensation practice aligns with the market standards and legal requirements.
To date, AYP has assisted over 100,000 customers in expanding globally with 2,400,000 payslips paid out in 130 currencies compliantly. Are you interested to learn more about remote hiring? Chat with our expert and get a FREE customized solution!
References
- Closing the tech talent gap: Adopting the right mindset
- Software Developers, Quality Assurance Analysts, and Testers : Occupational Outlook Handbook
- Research: The Complicated Effects of Pay Transparency
- Revisiting The Mixed Effects of Pay Transparency on Employee Motivation
- Most remote workers say they'd take a pay cut to continue being allowed to work from home, a new poll shows
