A study from Washington State University suggests that as more states mandate employers to disclose pay in job ads, adopting a strategy of using very broad pay ranges might negatively impact recruitment.
The research revealed that participants in three different experiments tended to react unfavorably to job ads featuring extensive pay ranges, perceiving those employers as less trustworthy.
Influencing perceptions
While previous surveys indicated that most people trust organizations that include pay ranges in their postings, this study underscores the importance of how potential pay is presented in influencing perceptions.
“It’s not just a choice between including a pay range or not—how compensation information is communicated matters, and at least in this study, having a very wide range might send a negative signal to potential applicants,” the researchers explain.
How the job ad explained a broad pay range had a notable impact. In one experiment, participants were less drawn to an organization if a wide pay range included a statement tying the offer amount to the candidate’s qualifications. Conversely, a seemingly more objective explanation linking the offer to the candidate’s geographic location improved perceptions of the employer.
Lack of disclosure
Traditionally, many U.S. job postings did not disclose numerical pay information. However, transparency legislation in several states, including Washington, California, Colorado, and New York, now mandates listing pay ranges due to evidence suggesting it enhances equity.
Recognizing a rising trend in job ads featuring wide pay ranges, a study conducted three experiments with different participant groups to assess the impact of this practice. Some participants encountered ads with extensive salary ranges (e.g., a $50,000 or more gap), while others saw ads with narrower gaps of around $10,000. Participants then shared their perceptions of the organizations behind the ads.
Across all three experiments involving college students, college graduates, and individuals with recent job search experience, ads with larger pay ranges generally garnered less favorable impressions compared to narrower ranges. In the last experiment featuring a wide pay range of $58,100-$152,500, participants expressed cynicism, describing the range as “dishonest,” “disingenuous,” and “ludicrous.” Some participants questioned whether the top range would genuinely be offered, regardless of qualifications.
However, there were outliers who viewed the large range positively, seeing the high top number as an indication of potential “room for growth without needing a promotion to another job.”
Smarter recruitment
Ideally, the researchers believe that using a pay range should help to streamline the recruitment process and ensure that both recruiter and applicant are broadly on the same page.
This doesn’t always occur for smaller organizations, however, especially if they lack clearly-defined job structures. In such instances, the job is more likely to be tailored to the characteristics of the applicant.
“There probably is a goldilocks area of a just right pay range where it gives the employer some flexibility without sending negative signals to prospective applicants,” the researchers conclude. “Also, while from a legal standpoint, they may be required to advertise an expected pay range, employers and job candidates can still negotiate.”
