HR, recruiting, and people teams are BUSY. Between the new California pay transparency law that went into effect this January, seemingly continual updates to hybrid and in-person work requirements, and ongoing efforts to integrate DEI processes into hiring — there’s plenty to implement in 2023. During our latest Everything People Related discussion we brought together incredible people, recruiting, and HR leaders and offered them the opportunity to discuss the most pressing needs for the year and support one another towards their goals.
We highlighted their top concerns (hint: pay transparency was a big discussion topic) and recommendations, below.
Accurately communicating pay transparency is a top concern
Many organizations are in the throes of determining how to best communicate and disclose pay bands to their teams to comply with the new pay transparency laws. Additionally, leaders are working to offer context, communicate how these pay ranges were determined, and provide clear expectations for promotions and pay increases.
Remember: Compensation should be clearly outlined to all current employees before you begin to post salary ranges on top hiring sites. Creating a clear explainer for compensation policies will demonstrate your commitment to clarity and transparency for all employees. Share how your compensation structure works, and be sure to offer employees clarity on what steps they would need to take to be promoted or receive a raise. Provide insights into how you offer both equity and pay so employees can fully understand their total compensation.
Remind employees of critical yearly milestones. If performance, raises, or promotions are being assessed at a particular time during the year, communicate this to employees in advance so they can understand expectations for their role and future opportunities. This will make it easier for them to work towards their goals.
Data around compensation is always changing
Finding accurate data for employee compensation levels is difficult due to delays in market information. Remember: the data gathered from hiring and pay-scale platforms is always most useful when combined with insights from internal company sources (hiring managers, recruiters, etc.).
Listen to your recruiters and hiring managers! As the initial entry point for most prospective personnel, recruiting teams often have incredibly useful compensation expectation insights. A great way to ensure that recruiter feedback is being taken into consideration (you always want to paint a full picture of the hiring landscape you’re grappling with) is to have recruiters send a weekly or bi-monthly report for each department that’s hiring. This report should be tailored to the department head and include data on the open roles, the stages that candidates are in for the interview process, and feedback from the candidates.
This weekly report will often lead to more relevant discoveries about compensation — especially for specialized and hard-to-find roles. Even if a candidate isn’t fit for a role, you can always save their information for future use.
Location-based pay scales vs. role-based compensation: it depends
Location-based pay bands have their merits — but we’re seeing a shift in how these bands are implemented. The pandemic has led to a more distributed workforce. Therefore many organizations have begun to determine pay bands according to the role rather than the location of the applicant in order to attract the best talent possible (especially in remote or hybrid work situations). However, location-based pay bands are still a popular compensation structure for roles outside of the US, where the country in question has a drastically different cost of living.
Sure, many companies have re-implemented in-person work, but many have decided to continue distributed hybrid or remote work processes due to talent availability. Many technical recruiters and companies have found that when recruiting for a specialized role within the US, it’s often best to pay fairly for the role regardless of location. After all, if you were ideally hoping to hire someone in San Francisco for a specialized position, but you were unable to, so instead, you hired someone in Nevada, does it make sense to adjust their pay when you were willing to pay a California salary for the role? And if the talent is producing the same amount of high-quality work, whether it be in California, New York, or another more affordable state, does it make sense to adjust pay? Perhaps not.
However, pay scales tend to change when you compare a US salary with a country with a far more affordable cost of living. Many organizations have implemented pay adjustments for employees living abroad in affordable countries full-time.
Ensuring compliance with the new state pay transparency laws (California is just the latest to jump on the transparency bandwagon) is one thing; managing the process and communicating these changes is another. We imagine teams will take several different approaches based on their size, company culture, hiring needs, and remote or in-person work process. But regardless, clear communication and setting of expectations for current and prospective employees is paramount to successfully managing the process internally and externally. We look forward to hosting more HR, people, and recruiting team discussions and sharing the insights with the broader community.
