Are Posted Salary Ranges Really Accurate?

While more jobs may be including salary ranges in their posts, the information provided may not always be accurate. While they may not clearly tell you the salary for the role, they do give you some information you that may be able to use to determine if applying is worth your time.

Keep in mind, compensation practices and systems vary, but most companies pull generic pay ranges automatically into the posting based on role’s job band in their HRIS (Human Resource Information System, like WorkDay or similar), but the job band may not reflect the range for that specific role within the band.

Example: Let's say Director of Talent Management falls within Band 7 in a company. Let’s also assume this role is in demand because there aren’t a lot of people with this skillset in the market (or it requires a specialized/unique skillset), then the company will most likely pay a market premium. The posting will probably just show pay band 7 data, without specific modifiers based on the role or market.

I've had several clients apply, get an interview, and when they tell them their salary range that exceeds the posted range the recruiter just says "No problem, we have room to get there."

In my opinion, there's too much of a disconnect between Talent Acquisition, Compensation, and hiring managers and that drives gaps in posting accuracy. Budgets are often owned by managers, compensation sets pay philosophy, and Talent Acquisition posts and screens based on budget and compensation practices.

So, how do you make sense of any of it?!

Let’s take this posting language as an example:

In recognition of certain U.S. state and municipal pay transparency laws, Company X is including a reasonable estimate of the compensation range for this role. This is an estimate offered in good faith and a specific salary offer takes into account factors that are considered in making compensation decisions including but not limited to skill sets, experience and training, licensure and certifications, and other business and organizational needs. It is not typical for an individual to be hired at or near the top of the salary range and compensation decisions are dependent on the facts and circumstances of each case. A reasonable estimate of the current salary range is $70,720 - $126,880 per year for the role of Program Coordinator, Health Systems Unit - Global Pediatric Medicine.

So, what does that even mean?

1) Pay Transparency Laws Are Complicated.

Because pay transparency laws are still largely varied and each state and locality has it’s own standards, companies have generally taken a risk adverse approach here and will comply with the broadest standards to meet minimum requirements.

2) Companies Can Essentially Pay Whatever They Want.

Companies still have complete control over compensation decisions. There’s no pay requirements for roles, outside of minimum wage and other Fair Labor Standards Act requirements. One company can pay $150k for a Program Coordinator and another can pay $75k.

3) Compensation Practices Generally Discourage Paying the MOST.

Compensation philosophy generally discourages paying people at the top of a range because they fear compression issues. Pay compression occurs when someone is in the top of a salary band and are in jeopardy of being paid more than the band, particularly if they get a merit or performance adjustment. This bumps up against the next level, but the job requirements have leveled this role at a certain level for a reason.

(Maybe I should tackle job leveling in another post!)

4) Compensation Ranges Are Broad.

Most reasonable companies define a compensation range somewhere close to 80-120% of a market midpoint. When the job is benchmarked, there’s a midpoint that’s the salary level that represents the market value of the job. Basically, based on compensation data and studies, the midpoint indicates what someone should “reasonably” be paid for that role in the market.

5) The Midpoint is Your Friend.

Using the Company X description above, the midpoint is most likely $98,800. That tells us that the company is probably paying people in this role, or has a budget for this role, somewhere closer to that mark.

In general, I’d calculate midpoints and use that to build your range for the job. Also check out this video I shared a while back for more details on finding good compensation data to support your research.

I'd use a general rule of thumb that if you're within 10-15% of the posted range, apply. If you're way off from the midpoint, it may not be worth your time.