NY pay transparency law upends agencies: 'Be thankful for your overworked HR department'

For agencies, and other businesses, this is a tricky situation because many companies simply never established consistent ‘salary bands.’ Now there’s a strong chance that a valued employee will see a similar role posted online offering more than they make.

“The obvious challenge companies will face is the tension the transparency will create with existing employees who are at the bottom of (or lower than) the shared range for a posted job similar to theirs,” says Debra Sercy, managing partner, Grace Blue. “You have to feel for the human resources and talent leaders – they’re the front line for the backlash that may result from employees who feel they are not fairly paid.”

So far, businesses are trying a series of workarounds that may not be viewed so favorably by prospective employees.

Here are some examples of these workarounds:

• Posting an absurd salary range. Some companies listed salaries ranging from $0-$2 million. “Companies that post wildly broad ranges could be seen as dishonest, which surely won’t align with their business values,” says Sercy.

• Failing to update existing listings. “Only one-in-five organizations are transparent in their salary range postings today,” says Tom McMullen, senior client partner and rewards expertise leader at Korn Ferry. “Employees will likely raise more questions about equity and fairness of pay than ever before.”

• Creating non-specific job titles. At least one agency has listed required job skills to gauge interest versus a specific title, writes the 4A’s in a recent white paper. The agency pulled its specific description in favor of language such as looking for “people that like to engage in creative solutions and critical thinking” versus “creative director.”

• Being nebulous about bonuses and incentives.

• Pulling job ads altogether.

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Here are some examples of what employers should be doing:

• Take a good look at your current postings immediately. “Employers should evaluate their job advertisements to ensure that such advertisements include a good faith salary range for any advertised job, promotion or transfer opportunity,” says Marisa B Sandler, employment attorney at Tannenbaum Helpern Syracuse & Hirschtritt.

• Develop a single source of truth. There needs to be an explanation regarding the differences between posted ranges and current employee compensation ranges. “Develop an overarching communications plan, segmented by audience (e.g. managers, HR, employees) regarding this regulation,” says McMullen.

• Share this compensation strategy with your employees. This way “they understand how and why people are paid what they’re paid at the company; narrow the salary ranges listed on postings to reflect some sort of reality,” says Sercy. Having a good story to tell and telling that story is key, echoes McMullen.

• Create different strategies for different levels. “For many agencies, their current recruitment approach often does not yield significant results from job sites like LinkedIn and Indeed. So publishing salary ranges may not support the need for entry to mid-level positions,” says Marla Kaplowitz, president and chief executive, 4A’s. “Companies should assess their business practices and values to determine the appropriate path related to their specific recruitment needs – especially for senior roles that have broader ranges related to the level of experience.”

• And, of course, keep a keen eye on Glassdoor and Fishbowl. “Agencies may consider having their marketing and communications lead/team monitor any potential activity specifically related to compensations,” writes the 4A’s.