A healthtech company reveals salaries for every role in its careers page

If the last drawn salary is low, the organisation can get a new employee at a lower compensation. If the last drawn salary is high, there is negotiation based on the salary range linked to the role, said Sonica Aron, founder of HR advisory firm Marching Sheep.

Experts say companies lose this leverage when the salary is revealed upfront. Hence, the secrecy. This secrecy permeates to even employees who are reluctant to discuss salaries with peers.

LinkedIn’s Workforce Confidence Index 2022 revealed that just one in 10 Indian professionals discuss their salaries with coworkers they trust (13 percent) and peers they trust in other companies (9 percent).

When Indeed conducted a survey of 1,500 people living in the United States in 2022, 38 percent said that discussing salary with others is taboo, and 23 percent said they do not want to be judged for how much money they make.

Few companies in the west have an open salary policy. This includes social media management platform Buffer, software company Glitch, and Starbucks. In India, it is even rarer: Only SaaS start-up Sahaj has revealed salary information transparently.

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Even Healthcare’s cofounder Mayank Banerjee said ambiguity about compensation is the biggest friction point in hiring and a sure way of creating distrust and resentment within teams, not to mention higher employee churn. He said salary negotiations are also often unfair because some bargain better, which is not a skill set for the job.

“Time is of the essence in an early-stage start-up and we are certain that being totally upfront about compensation helps us avoid long negotiations,” Banerjee said. Listing salaries for all roles sets a precedent for trust and transparency from the get-go, he said.

“This forces us to pay the same for the same skill level regardless of the university people went to or the companies they worked at,” Banerjee added.

In the Indeed report cited earlier, 75 percent said they are more likely to apply for a job if the salary range is listed in the posting and 56 percent said they would be more likely to apply for a company whose name they do not recognize if the salary range is listed in a posting.

Not without loopholes?

A new salary transparency law came into effect in New York City this month that require companies to provide the minimum and maximum salary range for any job posting.

However, many have already complained about how certain companies have seemingly found a loophole — keep the salary bands very wide making the actual salary tough to guess.

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Balasubramanian A, a VP at TeamLease Services, agrees that the revealing salary information enables transparency, but also says that deriving a correlation between transparency and reduction of attrition is an oversimplification.

“Sharing the salary openly helps with the process of pre-onboarding,” he said. However, whether new recruits stay or leave depends on their experience after joining, he added.

Salary transparency may also discourage someone who is a perfect fit for the job if their expected remuneration is slightly higher than specified. A company could miss out on a candidate who is better skilled than others and seeks a 10-20 percent higher salary.

“This is a sub-optimal outcome for the organisation,” he said. While the better candidate may cost more, the organisation will still get more value out of him or her. But if the “budget is set in stone,” the better candidate may not even apply, he said.

Secondly, the budget for a role is based on the organisation’s P&L and its understanding of the going compensation for that role in the market.

“They may get it wrong too and end up making wrong hires,” Balasubramanian added.

Thirdly, specialised roles may not be a great fit for this model, which can be good for standardised roles, which are well understood.

HR experts said it might be feasible for start-ups to be more transparent about salaries because they have fewer employees.

“Also, this could help with the start-up’s brand image building with ‘transparency’ as a key factor,” said Narayan Bhargava, CMD of Calibehr, a business solutions provider.

Does it work?

Even Healthcare has 90 employees and hasn't reported any voluntary exit in the past two years.

According to Anurag Shrivastava, CEO of HRNEXT, who has specialised in hiring HR professionals since 2006, confidentiality makes it easier to ensure the most productive employees are rewarded better and programmes are created to help retain them.

“Compensation is as much a strategic piece of information as any intellectual property of the company,” he said.

It forces organisations to worry more about pleasing people internally rather than using compensation as a tool to both reward and hire the best possible talent, Shrivastava said.

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If companies posted salaries publicly and employees found out that a new recruit was paid more than them, it could be a real issue, explains Bhargava of Calibehr.

“The fear for companies is if they post the salaries, internal employees will be aghast at how much less they’re earning in some cases,” he says. “A wide discrepancy in compensation among employees could be created.”

Banerjee agreed that this practice might lead to difficult conversations if someone’s current salary falls just above a certain fixed bracket.

“But they are not considered to be good or experienced enough to move up a level in our initial offer,” he said. In such cases, the start-up allows some flexibility in trading off some equity for an increased salary.

Hybrid model

TeamLease’s Balasubramanian suggested that organisations use this in a hybrid manner. Such a practice would work for campus hiring, where the roles and candidates’ backgrounds are more or less standardised. However, for lateral hiring, organisations can choose to be more flexible, he added.

“For specialised roles, a minimum budget is taken, rather than a hard-and-fast number at the outset,” Balasubramanian said. In such cases, many organisations learn about the market only when they start talking to candidates, he said.

Banerjee of Even Healthcare said the start-up wants to be a place where people feel they did some of their most impactful work.

“That means it probably wasn’t easJy, but hopefully, you look back on it and think it was worth it,” he said.

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