For employers

The new playbook for

salary negotiation
in the age of pay
transparency
Learn what candidates expect in the process

of salary negotiation when pay ranges are

published in job ads, and what you as an

employer need to do to attract and retain talent.

Table of 3-4 5 6
contents Introduction
The game has changed
Shift to a culture
of pay equity
Determine the right
pay for the job

7 8 9
Put the pay range Explain Expect to
in the job ad the offer negotiate

10 11 12
Know when Plan for career Conclusion
to walk away progression
Pay transparency is the future

13 Additional resources
• Salary profiles with Payscale

• Related content

2
Introduction
The game has changed
Salary negotiation has changed.

It used to be that job candidates would apply for a job with little idea of what it paid. It was understood to be

poor form to ask about salary until the end of the interview process — after value had been established and

both parties were invested in moving forward. When an offer was made, confident applicants would ask for

more and employers would reward them for their pluck.

However, processes for salary negotiation that rely on “confidence” disproportionally

favor white men from affluent backgrounds. Women, people of color, people with

disabilities, and others with a minority status are less likely to negotiate because

they fear backlash — and numerous studies have corroborated the legitimacy of

that fear.

To address pay discrimination, salary history bans have been implemented in 17

states, forbidding employers from asking job candidates the question, “What is your

current salary?” during the interview process. The intent of this legislation is to level

the playing field for applicants of all backgrounds by ensuring that salary offers are

tied to the position in question and not what someone is making — perhaps unfairly

— in the position they are trying to leave. This is particularly important for helping

people who are more likely to be underpaid due to unconscious bias. In addition,

most states have also enacted pay equity laws in one form or another

that extend the intention of the 1963 Equal Pay Act to pay women and men equally

for the same work.

However, pay equity laws and salary history bans have not been enough to close pay gaps.
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Pay transparency legislation is having a bigger impact.
In the past, salary data was secret. Processes for determining pay were
States with pay transparency laws in 2022
opaque. Today, thanks to the internet and social media, salary data is

ubiquitous. Employees are becoming increasingly open about sharing salary

Washington
data both in person and online since younger generations now have much
Maine
Montana North Dakota
higher expectations for pay transparency than older generations. Minnesota
Oregon Michigan VT
NH
Idaho Wisconsin
South Dakota New York Massachusetts
Wyoming R.I.
Pay transparency has also been shown to close pay gaps, in part Connecticut

Iowa Pennsylvania
New Jersey
because it forces organizations to have a fair and consistent approach Nevada
Indiana
Ohio
Illinois Delaware
Utah
West Maryland
to how they pay. California
Colorado
Kansas
Virginia
Virginia
Missouri
Kentucky
North
Carolina
Tennessee
Arizona
As a result, pay transparency legislation is now on the rise. At the time of New Mexico
Oklahoma
Arkansas South
Carolina

this writing, ten states and New York City have adopted pay transparency Mississippi
Alabama
Georgia

Texas
laws to go in effect by 2023, which will require organizations to provide Lousiana

salary range data to job applicants upon request, or to publish salary Florida

Hawaii
ranges in job ads so that candidates know what they can make in the

position before they even apply. At the same time, thanks to remote work, Alaska

more and more organizations are looking to broaden their talent markets,

which means having to be in compliance with pay transparency laws for

every job posted.

The requirement of sharing pay ranges with candidates in advance of an

offer will upend the old salary negotiation process. The new process will

emphasize fairness and place pay philosophy and company values at the It’s going to be a lot of work — especially for
center of the discussion. Organizations will need to shift from a culture organizations set in traditional processes — but those
of pay secrecy to a culture of pay equity, establish formal processes for that make the effort will be ahead of the curve and the
determining salaries, consistently publish pay ranges in job advertisements, most attractive options in the modern workforce.
train recruiters and hiring managers on how to explain salary offers in detail,

and set expectations for employee growth opportunities.

4
Shift to a culture of pay equity
Know what fair pay means and why it matters to your organization.

When organizations get to choose, pay transparency is usually preceded by pay equity to make sure

that internal employees aren’t dismayed by what new hires are being offered, which can lead to a lack of

engagement, turnover, or even lawsuits. However, with pay transparency legislation, organizations are

being forced to publish pay ranges in job ads. This is driving increased interest in pay equity, but many

organizations have a lot of work to do before they can get there.

Organizations do not need to have perfect pay equity to comply with pay transparency laws, but it

creates risk to publish pay ranges without perceived pay fairness. In the short term, some organizations

are broadening ranges, picking and choosing which jobs to advertise, or including only pay minimums

where legally acceptable.

However, it should be obvious that internal pay equity would be immensely beneficial. For this reason,

employers should be undertaking a long-term strategy to embed continuous pay equity into the culture

of the organization. Achieving actual pay equity is a complex, multi-step endeavor requiring investment

in formal pay structures, compensation strategy, and pay analysis on a regular basis.

But the first step begins with the objective.

Why is pay equity important to your organization? What is the risk of employees discovering what

other employees are making? If pay discrepancies between individuals are earned, how are you

communicating what factors constitute higher pay? Do you expect employees to ask for raises when

these factors are met, or do you address pay progression proactively and pay equity continuously?

Being able to answer these questions and communicate the answers up, down, and throughout

the organization is foundational in developing both your pay strategy and your approach to salary

negotiation in the new world of pay transparency.

5
Determine the right pay for the job
Use multiple sources of salary data and know how Employers use salary data to benchmark jobs and determine appropriate pay

employees move up the range. ranges according to their compensation strategy. To get pay right, employers

must first have a firm understanding of the job as well as how it fits into the
Although starting with a pay strategy centered around pay equity is the ideal,
broader structure of the organization and how competitive pay needs to be to
most organizations have too many pressing hiring needs to wait for that effort
fill that position.
to be completed. Often, the real first step is determining the right pay for the

jobs you need to fill right now.

Additionally, it is important to think about how employees are slotted in the

pay range according to compensable factors such as experience, proficiency,

This isn’t always easy, either.
and performance. Your approach to this should be consistent for all hires

and should be a critical component of the interview and salary negotiation

The process begins with gathering market data, but not all organizations go
process.
about this in the same way. SHRM recommends referencing multiple salary

data sources, usually three at minimum, in order to triangulate fair pay from a
For organizations still working on their compensation strategy, job
few different lenses. Payscale compensation software offers three types of
management, and market pricing, Payscale offers numerous resources in
proprietary salary data — employee-sourced data, HR market analysis data,
the form of research and insights as well as industry-leading compensation
and peer data — which can be combined with third-party traditional survey
management software, services, and data.
data and integrated within the same Payscale compensation management

platform, such as MarketPay or Payfactors.

Triangulate data sources

to help create confidence
Employee-sourced data in reliable data

Analysis and alignment Strategic

HR market analysis data to comp strategy pay range

Peer data

6
 Put the pay range in the job ad
Job seekers don’t trust companies without pay transparency.

There are pros and cons to publishing pay ranges where all employees can see them. When done correctly, pay

transparency can boost trust in HR, reinforce company values, streamline the hiring process, and raise morale in

the workforce. But it can also lead to jealousy, hostility, and turnover, especially if pay practices are viewed as
JOB OPENINGS unfair or pay communications are poor.

However, with pay transparency becoming law in some states and sure to spread to others, organizations really

don’t have the option to reject pay transparency for much longer.
DEVELOPER IT ANALYST

There is no doubt that candidates prefer jobs to have published pay ranges. In fact, research shows that

job seekers do not trust companies that don’t publish pay ranges. Job seekers prefer not to waste time

interviewing for positions that aren’t a step up for them in compensation, especially as the application and

interviewing process has become longer, more complicated, and more frustrating over time. Employers that
Required skills Required skills
publish pay ranges communicate to job seekers that they have their act together when it comes to showing

they value employees. From the candidate’s perspective, why bother to even interview with a company that

can’t demonstrate this? This perspective will grow as pay transparency becomes more common.

Pay range Pay range

Still, if you are not going to publish pay ranges in job ads, you should at least be ready to provide the pay

range at some point during the interview process. Recruiters should also be trained to explain how candidates

are slotted along the pay range. For example, do you aim to bring less experienced candidates in below the

median? Do you target the middle of the range for more experienced candidates? What is the likelihood that a

candidate would be offered a salary above the median?

These are questions that job candidates will want to know the answers to so that they can frame their skills and

experience in the best way during the interview process to get the best offer.

7
Explain the offer
Make sure candidates get the full picture.

Let’s assume you have a candidate who has made it all the way through the

interview process. You are mutually excited. It’s time to make an offer.

When you make an offer, it is critical that you explain the details of how you arrived at it.

Ideally, you will have already explained your compensation philosophy as an organization

and what salary data you used to determine the pay range. You might even encourage the

candidate to make a salary profile with Payscale as third-party validation that the offer

you are presenting is fair.

The candidate should know the pay range already, so include it when you make the offer.

Train recruiters and hiring managers to explain where the candidate falls in the range,

the methodology you used to determine that placement according to the pay policies

discussed above, and the growth opportunity that your candidate has with the organization

both within that range and for future promotions.

A total rewards statement can be useful in this conversation. Recruiters should be trained

to discuss these statements as part of the offer process, including the monetary value of

benefits as well as which benefits are unusual and differentiating for your organization.

Include additional materials such as a benefits brochure to help your candidate carefully

evaluate the offer and give them time to consider the total package so they can make an

informed decision.

If you’ve done your job right, your candidate will be excited, and an acceptance

will be on the horizon.

8
Expect to negotiate
It’s normal for job seekers to want more.

Just because both parties have knowledge of the pay range doesn’t mean

that there isn’t going to be any negotiation. Pay ranges give candidates an

idea of what the job is worth, which will make them excited to apply and

stick with the interview process in hopes of getting an offer. Once an offer is

made, however, the candidate may express disappointment with where they

fell on the range or make a case for why they should be given a bit of a bump

up the range.

This should be accepted as normal. Of course, they may not get what

they ask for. The justification for increasing the offer must be grounded in

compensable factors and be defensible for how pay is determined across the

organization. But your candidate may have this justification. They might make

the case that their years of experience, proficiency, or special skills warrant

an increase of a certain percent. In this scenario, you will have to look at the

data to determine if a request for an increase can be met.

If pay cannot be increased to meet the candidate’s wishes, there may be other aspects of the total rewards package that

are flexible to sweeten the deal. You can consider an increase in variable pay, a signing bonus, or upgrades to benefits and

perks that are attractive to the candidate and in your power to award. Ultimately, you want your new employee to feel good

about the offer they accept and excited to lock in that start date. It’s also a good time to emphasize your company values

and your commitment to pay equity. Although job seekers will want the most they can get, you can persuade them that

sticking to a policy of pay fairness for everyone is in their best interest.

9
Know when to walk away
Prioritize candidates who reflect
your values and culture.

By this point, your candidate should know the pay range

before receiving an offer and be anticipating roughly where

they will fall on the range if both parties have done their

homework. This means you are less likely to experience the

crushing disappointment that sometimes happens when the

candidate’s salary expectations can’t be met by an employer It is also a common situation for a candidate to be

who really wants to hire them. involved in multiple interview loops with different

organizations and receive multiple offers. If another

However, you might still occasionally run into this situation. organization’s total compensation package is more

The candidate might expect to be at the top of the range appealing but the candidate prefers the position with

when there isn’t justification to do so, and when bringing you, they may try to use the other offer as leverage

them in that high with no room for growth wouldn’t be a to increase their starting salary. If you can meet

good experience for them as an employee. You might also a competitive offer for a great candidate without

disagree on premiums expected for skills or location, or other putting yourself in a dicey situation, go for it. But this

compensable factors the candidate may expect but which isn’t always possible.

aren’t part of your compensation strategy. Total rewards could

also fall below the expectations or needs of the candidate. When you can’t meet the demands of the employee,

the best option might be to let them walk. This

is especially true if the candidate indicates that

they don’t value your commitment to pay equity

or don’t respect your pay practices. A hyper-focus

on obtaining the highest paycheck possible could

be evidence that the individual is not going to be a

long-term fit for your organization.

10
Plan for career progression Employee lifecycle

Share pay increase processes and promotion opportunities.

Let’s assume that all goes the way you hope. Your candidate accepts the offer.

Congratulations; you have a new employee!

This is a time to celebrate. The recruiter is excited. The hiring manager is

excited. The team is excited. Your new employee is excited. There’s paperwork

and onboarding processes to get through, but this is a wonderful moment for

everyone who has worked so hard throughout this process. However, the work

doesn’t end here.

It is important to think about the whole employee lifecycle. Your new employee

is going to want to prove themselves as a new team member and will hopefully

be given clear objectives for their first 30, 60, and 90 days of employment.

Before you know it, though, they will pass their first pay increase cycle. This is

a good time to remind the employee of where they fall on the pay range and

how pay increases, variable pay, and recognition and rewards are earned within

your organization.

It is especially important for new college graduates and younger employees

who are looking to learn and grow fast, especially if they are brought into the

organization lower on the pay range. These employees may be entitled to

Communicating the process for pay increases
larger pay increases at more frequent intervals and may be anxious if they don’t
is especially important as not all organizations
understand the process for getting those pay bumps. It is also good to talk
manage it in the same way, so your new employee
through promotion opportunities for more proficient employees or those brought
may have misaligned expectations.
in higher on the pay range, especially if the possibility of rapid promotion was

discussed during the interview process.

11
Conclusion
Pay transparency is the future.

Pay transparency is going to gather steam and it’s going to impact the hiring process, especially

when it comes to salary negotiation. Although this can be anxiety-inducing for employers, pay

transparency will ultimately be good for both organizations and employees.

Pay transparency enforces pay equity. This is a wonderful development that will hopefully, finally,

close the controlled gender pay gap and mitigate other forms of pay discrimination. In addition,

pay transparency can help employees put a higher value on pay fairness, which can result in

happier hires who are willing to invest in the organization over the longer term.

Pay transparency and pay fairness can also have other powerful impacts. With the stress and

competition of “negotiating the highest salary” removed from the process of finding a job,

employees can have more confidence in their role and more clarity in how to grow with the

organization. With a more streamlined hiring process and increased retention, employers can

likewise focus more on creating rewarding employee experiences.

Organizations that make the shift to pay transparency sooner will reap rewards faster. Candidates

overwhelmingly want pay ranges published in job ads and are more likely to apply for jobs where

the rewards are clearly posted. They are also likely to respond positively to organizations that can

explain their pay strategy and publicize their commitment to pay fairness.

It’s true that pay transparency is changing salary negotiation. For organizations that are preparing

to ride the wave to the future, though, it’s changing for the better.

12
Resources
Payscale offers compensation management software, solutions,

salary data, and services to organizations looking to improve their

Salary profiles with Payscale

pay practices, achieve pay equity, and adopt pay transparency. It can be beneficial to encourage employees and job

candidates to start a salary profile with Payscale.

• Learn more about Payscale products like compensation
This experience provides individuals with a third-party
software and data to support your journey pay transparency
reference for pay ranges that can help bolster your pay
• Learn more about Payscale solutions that can help strategy by providing a complementary data point.
up-level your pay transparency strategy

• Learn more about Payscale services like data Start salary survey

implementation and custom reporting

Related content
How Pay Transparency Closes The Impact of Fair Pay Perception
Pay Transparency Legislation Tracker Compensation Best Practices Report the Gender Pay Gap on Employee Retention

Download report Download report Download report

Read now

13
About Payscale

As the industry leader in compensation management, Payscale is on a mission

to help job seekers, employees, and businesses get pay right and make
sustainable fair pay a reality. Empowering more than 50% of the Fortune 500 in
198 countries, Payscale provides a combination of diverse and dynamic data
sources, experienced compensation services, and scalable software to enable
organizations such as Angel City Football Club, Perry Ellis International, United
Healthcare, Vista, and The Washington Post and to make fair and appropriate
pay decisions.

Pay is powerful™

To learn more, visit payscale.com

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