Published Pay Ranges In Job Descriptions
With Colorado passing a pay transparency law requiring employers with employers in CO to publish full salary ranges on job postings, there has been a huge backlash among employers, especially as it pertains to hiring in Colorado. The law is well intentioned, but it obviously was not drafted by anyone in recruiting and I doubt recruiters were actually consulted, and I will tell you why.
This is a slippery slope that a lot of employers are not willing to address publicly. My opinions are based solely on what I know as a recruiter and are suppositions built on my own experience, so take that into account. I have been an active participant to all parts of the process I am outlining here (at some point in my career, so I am speaking from experience).
In addition to the system information I outline below, there is the fact that pay ranges may change regularly based on how the employment market is affecting them, and it is time consuming to keep job postings up to date. For illustrative purposes, let’s take a potential example: when respiratory therapists were in high demand during covid19 in NYC and their job was literally life-threatening, there may have been a bump to reflect “hazard pay”, but now that the pandemic is under control there, pay returns to normal ranges. A published pay range in October 2020 would not be relevant just a few months later. Pay ranges — especially hourly roles — can change regularly, and they are also dependent on cost of living in a specific area. Denver wages are probably higher than Paonia, and a company with multiple locations would need to have multiple job listings for the same job — which leads me to understanding job posting limitations and the process for actually opening a job.
There are some fundamental truths about how a job gets approved, opened, and published, and it generally has to do with budget and software systems. The larger a company is, the more complex this process can be. I’ve mentioned before the role of HR and Recruiting is to legally and operationally manage the resource that happens to be human — in this case/perspective, that resource is no different than laptops, chairs, desks, health insurance premiums, or office supplies. It is a FIXED COST from a budget perspective. Every open position starts as a number in the annual budget. It becomes what is known as a “position number”, tied to a specific business unit and managed by the leadership in that business unit. If there needs to be any change to the approved amount, or a new resource added to keep the company/employer functioning, there is an approval process that starts with HR partnering with finance, then runs through the employer’s established budget approval process.
Once the position number is approved, HR works with the hiring manager and a specialized professional called a Compensation Analyst to determine the pay range for that specific role (in larger companies; in smaller companies it may be HR/recruiting or someone in Finance). The Analyst looks at existing internal salary/pay information as well as external resources (called “salary surveys” — see my article on vetting “experts” for more details). The range becomes a fixed amount between a low, middle, and high numbers. Those ranges are already established and are based on the experience, education, and skills needed in general for the same basic job title across the company; hiring managers can drill down on specific skills needed, but the job itself, and the pay range are predefined and pre-approved based on an annual review of what is needed for the company. That position number is usually managed by some sort of system called a Human Resource Information System; associated with each position number is the salary/pay (payroll), the cost of benefits (benefits administration), the basic benchmarks for performance evaluation (HR), and time off (HR). BTW, “time off” can come with a monetary associated cost and having too much unused time leads to financial liability (read here if you are interested).
Once a position is evaluated and approved in the HRIS, when the hiring manager is ready to start hiring against an unfilled job (whether by new approved “headcount” or attrition from an existing approved position number), then they get together with their recruiting partners to individualize the job posting that will be used to attract talent (this is what you see when you look on a company career site, LinkedIn, Indeed, or any other job board). Here is the really important part of the process: MOST COMPANIES ALLOW ONLY ONE JOB POSTING FOR AN APPROVED JOB OPENING. (The exception to that is generally what is called a “pipeline” opening for job that has a constant need with little variation on the actual skills needed — like customer service reps, tellers at a bank, retail cashiers, delivery drivers, etc.)
So now let’s examine the realities of posting one job. A hiring manager can hire LOWER than the approved amount for the position, but they cannot hire HIGHER without going through the same budget approval process that already occurred, and often they may need to compromise with downleveling (i.e. an approved, also open senior role will downgraded to a midlevel role and cannot be staffed higher) for another approved position to a lower level to preserve their overall budget. If a hiring manager only has one approved open role, they can only hire to the level that is approved, unless they want to try and make a business case for hiring a specific person above the approved level.
Publishing a salary range will discourage anyone that is more senior from applying to a role that could absorb experience across multiple levels. If the band is opened at a more senior level, and (for a non-OFCCP compliant company) someone that is less qualified applies they are going to assume that they will qualify for the published salary range — which is not necessarily true. The role will be downleveled — closed, re-opened, re-leveled (re-salaried) and re-posted to accommodate their experience, and they will be paid according to their appropriate salary band. Depending on how underqualified they are, the top of the lower band may overlap the bottom of the approved band, but it could also be significantly less based on how they compare to EVERYONE ELSE IN THE ENTIRE ORGANIZATION WITH THE SAME JOB AND SIMILAR EXPERIENCE. So either way, there will be either frustration/hurt/anger for a candidate that needs to be downleveled, or the BEST TALENT for the job will never even consider the job because the posted salary is too low for them to consider it or be interested.
Here is the reality in my significant amount of time as a recruiter: EVERY CANDIDATE I chat with about salary gravitates towards the top end of any range discussed; it is human nature. It doesn’t matter how fair the range is, or what the additional components are (i.e., equity, paid perks, how much insurance the company pays, etc.) job seekers ALWAYS FIXATE ON THE TOP OF THE RANGE. When I was looking at jobs that had an advertised range, I only considered the top of the range, because I knew I was well-qualified for it. But when the recruiter mentioned their definition for the selection criteria, I realized there might be less money offered. I was indignant, felt devalued (before I had even started the process beyond an initial conversation), and unhappy. And I understand intimately how the process works.
So, this is my personal SUPPOSITION why companies with remote jobs are hesitant to hire anyone in Colorado. There may be additional factors as well (and I have suspicions about those, but that is a much longer article.) I’m not justifying or condemning the law or the companies shunning CO, just laying out the process for job seekers to understand the mechanics and rationale behind how job postings actually work.
