Publishing open salary ranges when hiring

Salaries are a tricky topic. In Finland, salaries are usually not published in job ads. Yet, our tax records are somewhat public – I can look up (almost anyone earning more than 100 000 € a year (before taxes) online for free. Or I can call or visit the tax office and lookup practically anyone, regardless of what they earn. I also see how much tax they paid, how much of the total earnings were salaries, and which portion was from capital income.

Yet, only a few people I know are open about their earnings, how much salary they get, or how much tax they pay. It certainly is weird. Many people – and sometimes myself included – seem to associate earnings with your capability or value as a person. I know this isn’t how you’re supposed to think, but if your colleague earns 500 euros more each month, he must somehow be a better person than you are, right?

When Microsoft announced that they’d strive to publish open salary ranges in the future for all of their internal and external job opportunities, I was delighted. In all fairness, the ambition is only for US-based jobs right now. Hopefully, this will be a global thing in the coming months.

I’ve since thought about this more. Why don’t we publish salary ranges for all open jobs, then? I’ve done this somewhat irregularly when I’ve hired for my own companies. Roughly in the spirit of “Your expected salary range will be between 5500 and 7500 euro per month”. My somewhat unwarranted fear was that I’d get candidates asking for 7500 euros a month without the skills and experience to show for it. That didn’t happen. What did happen, though, is that I perhaps did not get less experienced people applying, as the salary range set an expectation of the level I was hiring for.

From now on, I’ll commit to publishing open salary ranges for open positions. I often have a model where a portion of the salary is based on performance instead of having a fully fixed salary so that the range can be somewhat extensive. Think “5500 to 9000 euro”, and this is not to say I wouldn’t prefer paying someone 9000 euro a month, but the performance would have to be exceptional to reach that level.

Microsoft cites pay transparency as one of the reasons for publicly posting salary ranges. It is an aspect there. Yet, I think this takes out the guesswork for external candidates. It’s tough for candidates to guess what the salary level is before committing to the process of applying for a job – which you might not want to do unless you knew things like the salary, benefits, working hours, and responsibilities. Again, the challenge is that many candidates might have a skewed expectation of salary ranges – especially for a company such as Microsoft. “Well, you’re the most financially successful company in the world, so surely you can pay me to triple what I earn now,” goes the thinking. Companies also often become successful partially because they have a rigid financial culture.

All in all, I’m happy we’re finally opening up the salary ranges. I’ve felt it’s long overdue, and I, for one, will aim to hold the flag high with this movement.