Across every industry, there are many different salary ranges that you come across - but what should actually dictate your income in reality? In this blog, we decided to delve into the topic of salaries and the factors that contribute towards the decisions from both an individual and businesses perspective, whilst also discussing the big debate of whether salaries should be included in a job description.
Companies go through a comprehensive decision-making process in order to set their salary ranges for current and future employees - however this is typically subject to change over time, whether in the short-term, or longer-term, in order to keep up with market changes and unpredictable circumstances.
There are many different elements that are taken into consideration when employers decide how much they should be paying their employees - whether that's including the type of industry, job roles, business profitability, talent pool, laws, or economic conditions - the list is endless.
Other factors that employers have to consider when establishing a salary range/pay band are minimum and maximum pay rate criteria, and also opportunities for individual salary increases, all of which change constantly in line with varying factors.
It's quite clear that each salary tends to vary on the employer and industry - however, the simplistic theory of determining a salary is pretty straight forward. The more people who can do the same job, the lower the wage for that role - as more people can supply the business with the same type of labour. When it takes a special skill or education to do a job, wages are pushed up as fewer people can, in theory, supply their labour to the required standard - but what are the most common deciding factors?
The Factors
When hiring and deciding on an employee's salary range, there are plenty of factors that contribute towards the final decision, so we have decided to discuss some of these in more detail. Here is what we have found:
- Education: Your level of education is a quality that could potentially have an impact on your salary range. Earning a degree from a top University will typically have a positive influence on pay, but this also leads to more issues, and a higher sense of 'expectation' from the outset. Your education may not always affect your salary range, nor should it. Some employers prefer to judge your ability by performance and experience over where your education took place.
- Experience: More often that not, salaries are influenced by years of experience within the industry, meaning that the more experience you have, the higher salary you're usually paid, and expect in the first place. Employer's typically include criteria, which may require 10 years of experience within a particular industry, however you're still able to apply for the role - but it could result in a lower pay band simply based on your experience.
- Performance Levels: Many employers factor in an individual's performance which is an important variable when being considered for a pay rise or promotion. Even if you're applying for a new role, this information is always important to your prospective employer, as it can give a better picture of what you're capable of. Arguably, performance is the most important indicator of an individual's capabilities, and in turn, their worth in the market today.
- Location: Location is a primary factor used in deciding pay rates and developing salary ranges for any job. Your location can make a great difference to how much you're paid, but this is directly related to other factors such as living costs.
The above factors relating to salaries sparked our curiosity at TRG - so we decided to ask our followers on LinkedIn what they thought was a reasonable factor when considering an individual's salary - the results certainly give us an insight into the most important factors for potential employees in 2021.
Asking the question 'What should salary depend on?', performance took the lead with 78% of participants voting this - followed by seniority at 11%, location and 'other' both having a response of 6%.
Salaries & Job Descriptions
After looking into the 'typical' factors that contribute towards deciding a salary range and also gaining first-hand insights into what our own followers and candidates think about this, we noticed that another interesting topic of discussion is that salaries aren't always listed in a job description.
Pay is one of the most major factors in whether a potential candidate takes on a new job - or even applies in the first place. But for some employers, the 'politics' of stating salaries publicly on a job description can potentially complicate things.
"In traditional corporate environments, the salary is often hidden because it's a game of cat and mouse trying to figure out what salary the candidate is currently on, what they're expecting, and what the company is willing to pay," - Tom Harmsworth, UK Managing Director, WeMaintain.
However, the lack of disclosure when it comes to stating pay and salaries can impact potential talent from the very outset. Giving the potential candidates an expected salary upfront allows them to understand whether a job will be financially suitable and beneficial to them. This links with data from a LinkedIn survey in 2018, where 61% of respondents said that compensation was the most important part of a job description.
After seeing these figures, it once again made us curious about what our LinkedIn followers thought - so we created another poll to see what individual's thought about salaries and job descriptions.
With the question being 'Do you think salaries should always be mentioned in a job description?' - the response rate was great and provided us with a true insight into these opinions. A staggering 85% of respondents went for yes, with just 8% of people voting no and 7% saying they don't mind if it's not included.
Even with results like this, employers are still leaving out compensation details in job advertisements, often with the fear that it may put them at a competitive disadvantage, or cause resentment among existing staff.
However, there is now a growing global movement to make salary transparency the new norm. There's an increasing body of research to show that companies who are forthcoming about their salary ranges, can actually attract better and more diverse talent - making salary transparency a better way of creating a more equitable workplace.
After looking into the topic of salary ranges and whether they should be stated in job descriptions - it's clear that there are plenty of factors that contribute towards the final decision. Furthermore, when a salary is mentioned in a job description, it's more often that not beneficial to the company and future employees.
We would love to hear what your thoughts are around salary ranges and what contributing factors should determine it. Do you think performance is the overall factor, or do you think it should be based on things like location and/or experience?