“You don't talk about money” — who doesn't know the famous German proverb? How much people still live in this country is also reflected in most job advertisements: According to an evaluation by index market research, in August 2020, only 11.6% of almost 800,000 job advertisements from 248 job boards, 196 print media and the Federal Employment Agency had any information on monetary remuneration¹ — while the salary statement has long been common practice in other European countries such as Great Britain or France.² What the salary statement has to do with fairness and transparency Why Germans still don't like talking about Lynn Schäfer, People & Culture Expert at homee, told us in an interview about money, what job seekers actually want in terms of salary transparency and what first steps companies can take towards transparency. Look forward to exciting insights and lots of inspiration for your company — enjoy reading!
TalentsConnect:
Hi Lynn, let's start right away. In the end, how important is it really to include the salary or at least a salary range in job advertisements?
Lynn Schaefer:
The topic of salary in job advertisements is really exciting — and in the end, there is much more to it than just a number. But we'll get to that in a minute. Studies and surveys show time and again that providing a salary or even a range is extremely important for many job seekers. After all, salary is still the top criterion when it comes to employer attractiveness and the decision for a new job: In a stepstone study from 2020, “salary and financial benefits” were at the top of 96% — and 64% of respondents even rated the salary as “very important.” ³
And as far as the reporting of salaries in job advertisements is concerned, there are also figures: In a 2019 survey by adzuna, for example, 74% of respondents said that they find a salary statement useful and 60% that they would be more likely to apply for the same job if it included salary information than without²
In a further survey of 4,145 participants in 2020, Softgarden found that 50.6% of applicants support general disclosure of salaries within companies.⁴
TalentsConnect:
Ok, as you can see, you definitely want to read something about the salary in the job advertisement. Does it also have an effect on companies if you then provide salary information?
Lynn Schaefer:
So from my own experience, I can say that it can definitely have a positive effect. When I advise companies that have problems finding staff, the first step is, of course, to look at how the company is currently structured. I'm doing a social media check and, of course, also looking at the current job advertisements and looking for adjustments. I actually presented a TalentsConnect case to a company — namely like you Sales Development Representatives Speaks — which also states a range for the starting salary. My client found this exciting and in a new job ad, we tried it out directly and also specified a range. And in fact, there were more applications than usual. Unfortunately, the customer did not set up tracking, so we can't see how the applicants actually moved, but since the salary was really the only thing that was different than usual, we can assume that the number of applications also had something to do with it.
TalentsConnect:
Now you could assume that such a “simple adjustment screw” at first glance could then be tried out by any company right away. How many companies are already doing this? And why isn't everyone already doing it?
Lynn Schaefer:
Yes, you'd think so. Unfortunately, the adjustment screw is not quite that simple. Currently, only — or indeed, depending on which angle you want to look at it from — can you find any information about remuneration at all in around 11.6% of all job advertisements. And many of these include primarily hourly wages for trainees or working students, collective wages, minimum wages, etc. Although you might think for now that tariffs and trade unions would generally provide more transparency, this is by no means true for all sectors of the economy.
In other European countries, on the other hand, it is completely normal to communicate salaries transparently, in Great Britain or France, for example. So it also seems to be a bit of a German cultural phenomenon, along the lines of “you don't talk about money.” Many employment contracts actually still have a clause that confidentiality should be kept about the salary — although this is actually not really legal at all. Since 2017, there has even been the Pay Transparency Act, which is intended to enforce equal pay for men and women for equal or equivalent work. In companies with 200 employees or more, you can then ask about the salary of the opposite sex in order to prevent or reduce gender pay gaps. Otherwise, the topic in Germany is simply still treated very secretly to a large extent — for whatever reason! Although I'm starting to feel that something is changing...
TalentsConnect:
What consequences do you think salary figures have for companies? Or to put it another way: What do companies have to do so that they can position themselves transparently and fairly both when it comes to acquiring new talent and among existing employees?
Lynn Schaefer:
As I said, it's just not that easy. Making salaries transparent has, of course, consequences. There are a few exciting examples of companies that you can take a look at.
In the USA, there is the company Buffer, which cites transparency as the most important company value. They say “Transparency creates trust and trust is the basis for good cooperation” — and they pull that off really hard. From trainee to CEO, everyone knows what the other person earns and how the salary came about. And not just internally, You can also read it on the Buffer website
And in Germany, too, there are companies that work transparently with their salary formulas. Sipgate, for example, led the”Lean Salary Framework” one and since then they have been constantly developing it. Very exciting, I can only recommend everyone to take a look at it.
Another exciting example was the experiment by the Hamburg-based agency Elbdudler, which tried out the “standard content”, i.e.: Equal pay for everyone and then employees could pitch why they deserve a pay rise and if so, how much.
TalentsConnect:
Equal doesn't mean “fair”...
Lynn Schaefer:
No, that's right. In the end, I think that only worked with the Elbdudlers with restrictions and the system was further developed.
For most people, it's no big problem if they find out that someone in a similar role deserves more — as long as they can understand why. With a transparent formula that includes experience, length of service or location, this is no longer a problem and the system ensures greater fairness overall. But how many companies are committed to values such as “transparency and fairness” and then only implement them up to a certain point? I think that is also what transparent salaries are really about: Fair treatment and appreciation.
TalentsConnect:
Absolutely. And it can also have consequences for companies not to communicate transparently...
Lynn Schaefer:
Definitely Because even though salary is a decisive factor for a new job — it is not the only reason to stay with a company. And yet the salary at work can also be demotivating. Many companies increase salaries in annual meetings, etc. by 2-3%. If you change companies, on the other hand, you have the chance of a salary jump of 10-20%. If companies were to include the costs of fluctuation, they could also grant their employees the larger salary jumps right away.
TalentsConnect:
Let's get back to the topic of job advertisements. Apart from salary information — what else can companies pay attention to in terms of transparency and fairness?
Lynn Schaefer:
As I said: 60% of job seekers would rather apply for a job with salary information than for the same ad without information. If such disclosure, even if it is just a range, which always has internal consequences, is not yet possible, then companies should at least convey that they value their employees and pay them fairly. I recently came across an absolute negative example: An online job ad had a long catalog of tasks and requirements for candidates — so far, so good — and then there was only a single sentence about “What we offer.” And that was also a very meaningless sentence like “we offer an attractive working environment” or something like that. Nothing more. If the requirements and the offer are already so visually extremely unbalanced, then as an applicant, you can't even get the feeling that this is a fair relationship on equal terms!
TalentsConnect:
That's right, it should already be visually balanced, and we can confirm that as well. And of course, a transparent salary stands for general transparency in the company. What would you recommend to companies as a concrete first step? Where and how can anyone start?
Lynn Schaefer:
It's very clear: A change from zero to a hundred can completely backfire. On the other hand, I can only recommend getting started:
Salary ranges, or even hourly wages for student assistants, etc. — this can be implemented relatively easily and quickly.
Then I always recommend getting lots of inspiration. How do other companies make their salaries more transparent without fully disclosing them? What else is included? How do companies develop their salary models and can something work in their own company in return? Do we prefer to communicate formulas down to the last decimal place instead of numbers? There are really many factors that you can talk about and that offer future and current employees great added value.
And of course, the whole thing shouldn't be a short-term project that solves a problem quickly, but should be thought of in the long term and on an ongoing basis. What does the company actually want to achieve with it? Become more modern? Implement corporate culture?
+ Don't just jump over your knee quickly and question your own goals first
+Gather inspiration and see how other companies implement it
+ Show calculation and formulas instead of actual salaries
+ View it as an “ongoing” project that is constantly evolving
TalentsConnect:
Thanks for these starter tips! What else would you tell the companies out there to close?
Lynn Schaefer:
I can only advise companies to address the issue. More transparency around salaries can be an absolute booster both internally and externally! As the various studies show, more transparency is required from outside, and the whole thing can also mean real added value internally. It not only contributes to greater fairness, but also promotes a sense of appreciation when you, as an employee, can contribute to your own salary planning and have real clues as to whether you feel that your own remuneration is fair and appreciative. Ultimately, pure financial compensation is a hygiene factor. You choose a company based on a salary, but you don't necessarily stick around because of it. For this reason, companies should not “just” provide information on salaries quickly and quickly, but should really look at the issue holistically.
TalentsConnect:
Lynn, thank you so much for the interview!
sources:
¹ Salary information in job advertisements: status quo and pros & cons, 10.11.2020, personalmarketing2null.de
² Survey: Germans want salary transparency in job advertisements, 11.01.2019, Adzuna
³ Stepstone Report: employer attractiveness, 03.2020
⁴ Survey - Dare to be more transparent: Salary in the application process, 2019, softgarden
More inspiration:
Auf Augenhöhe — the movie (more about the Elbdudler story)
Lynn Schäfer on the Direct 2 Talent podcast
