New salary transparency rules in certain provinces make compensation conversations easier in interviews, HR experts say, and level the playing field as companies know what competitors are paying.GETTY IMAGES
Before pay transparency legislation came into effect, Laura Risdorfer wondered, “Will I lose candidates because I don’t have a chance to talk to them?”
The strategic talent acquisition leader for the Montreal-based tech firm Workleap has often persuaded people to take roles for reasons beyond salary. But if promising candidates don’t apply because the posted pay band is too low, would she even get that chance?
She was not alone in the recruitment world in wondering how pay transparency rules – now in effect in British Columbia, Ontario and Prince Edward Island – would affect the search for talent. However, she and other experts say organizations can adapt quickly and even gain new advantages.
Ontario most recently joined the trend, with new rules that took effect on Jan. 1.
Under the Employment Standards Act, organizations with 25 or more employees must now include a pay range in any public job posting. The range must not exceed $50,000. Jobs paying more than $200,000 a year are exempt.
Ontario’s changes also include other requirements: Public postings must disclose whether the role is for an existing vacancy and whether AI is used to “screen, assess or select applicants.” Employers must notify interviewed candidates within 45 days of the most recent interview if a hiring decision has been made. Public postings and related records must be retained for three years.
Deborah Bottineau, managing director at global staffing firm Robert Half International, expected the new rules to create significant extra work. Instead, what she’s hearing from companies is that adjusting to the changes wasn’t as difficult as anticipated.
“There are a lot of advantages from an organizational standpoint, because you now know what your competitors are paying,” she says. “It creates this level playing field in the marketplace.”
Ali Akyol, an associate professor at the Telfer School of Management at the University of Ottawa, says the impact of pay transparency depends on how organizations implement it.
“If they make use of this new legislation effectively, they can increase efficiency and productivity in the workplace,” he says.
Ms. Bottineau says one way pay transparency benefits job seekers and companies is that it saves both sides from having to raise the often-thorny issue of pay during the interview process.
“If you’ve published [salary] information on the front end, as the interviewer you now don’t have to worry about when in the conversation you tackle compensation,” she says. “It just takes that awkwardness off the table.”
Ms. Risdorfer agrees salary transparency makes some recruitment conversations easier. She also says it can be helpful internally with existing employees.
“People don’t look at each other and wonder, ‘Is he better than me? Does he get paid more than me?’ There’s a whole psychology that is relaxed and that actually strengthens your culture,” she says.
The risk, Prof. Akyol notes, is that existing employees may feel underpaid when they see salary ranges for new hires or comparable roles elsewhere. That can hurt morale, productivity and retention.
To avoid this, organizations need clear policies outlining how salaries are set, he says. Well-defined promotion pathways can also encourage employees to stay, even if higher pay is available elsewhere.
“Assume that I’m underpaid and not happy about my compensation,” he says. “Then, okay, what are the pathways [within the workplace] for me actually to get to that compensation level?”
Ultimately, the simplest way for companies to avoid problems is to ensure their salaries are competitive, Ms. Bottineau says.
“If I’m out and I’m applying to five different organizations and the fifth organization is way off the mark in terms of the pay range, I’m not going to apply,” she says.
For her part, Ms. Risdorfer has no qualms about pay transparency anymore. In fact, she would like to see it adopted in her home province of Quebec.
“I sincerely don’t see any downside,” she says. “If you have a structure that is fair, equitable and clear with the managers, and if you’ve done your job with a well-established strategy, you’re just continuing what you’ve already been doing.”