What Microsoft’s pay transparency means for tech leaders

Microsoft recently disclosed that it would publish salary ranges for all U.S. job postings. Here’s an overview of the move and how it may affect the tech job market.

Earlier this month, tech giant Microsoft announced that it will disclose salary ranges in all U.S. internal and external job postings by January 2023. The announced date coincides with a Washington State requirement for large companies to disclose pay but goes above the requirement in disclosing salaries nationwide rather than just for Washington-based jobs as the law requires.

For job seekers, this should reduce the awkward conversations many have had where recruiters ask for pay expectations and candidates ask for ranges in an attempt to get one party to disclose a pay range before the other. For other employers, Microsoft’s move will set the bar to disclose and provide a considerable source of market intelligence for job seekers and other employers.

For tech leaders specifically, Microsoft will now be providing a reference point for pay ranges for hundreds of technical roles that likely match your organization’s current and potential roles.

Suppose you’ve spent time with your HR colleagues: In that case, you probably understand the challenges of pay benchmarking and salary range calculations, so you now have a solid benchmark that’s yours for little more than the effort of finding an appropriate job posting.

Your potential and current employees will also have access to the same data. At some point in January of 2023, you should assume they’ll be trolling the Microsoft jobs site and attempting to find a posting that maps to their current position to perform their own pay benchmarks.

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Start your preemptive planning

As a leader, it’s worth planning what to do should your current pay ranges be significantly higher or lower than what Microsoft publishes to the open market. It’s certainly true that your company isn’t the same as Microsoft, and job postings can be nuanced. Still, if nothing else, consider the response you’ll provide when an employee arrives at your desk with a job posting in hand that shows a significantly higher pay range for what they perceive as the same role.

Your highest performers are also the most likely to be interested in benchmarking themselves against others. Salary is an imperfect comparison metric, but it’s highly impactful and increasingly available.

If you provide an incoherent response or a “we’ll look into it” with no follow-through, there’s a high probability you just caused that employee to launch a job search. Contrast that with having a formal pay evaluation process to which you can refer the employee in partnership with HR. You may already have this type of process for tech or other roles, and scheduling some time with your HR colleagues to discuss the impact of Microsoft’s pay transparency should be a minimum response to the announcement.

You should also consider what differentiates your company from Microsoft or other large companies that will likely follow their pay disclosures. Factors like the geography of the role, experience, education requirements and skill expectations may be obvious differentiators. As a company with technology as its core product, Microsoft likely pays its product-oriented technical staff more while expecting more output.

Also, consider what your company provides that Microsoft does not. Perhaps you provide the potential for different experiences or career tracks that are not solely focused on building tech-based products. You might offer a higher quality of life, or you may offer a unique and distinct culture.

Should you consider disclosing salary ranges?

Another element of the Microsoft salary disclosure is whether other companies should follow suit. If nothing else, this discussion will trigger other considerations, like how salary ranges are determined and refreshed, where and how you’re attracting tech talent, and whether employees fall into general pay bands or have outliers and inconsistencies worth investigating.

In the tech world, a combination of several states issuing or considering pay disclosure laws and companies pressured by Microsoft’s move will likely trigger more disclosures, especially at larger companies. Whether these moves “trickle-down” to the smaller markets remains to be seen, but there’s a short window where your company could make waves by following a pay disclosure strategy.

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Pay disclosures might remain the sole province of big companies like Microsoft and Amazon in the near term. Still, they immediately impact anyone with tech employees as they attempt to attract and retain talent. Considering the impact, planning how you’ll respond to employees’ “self-benchmarking” and asking whether disclosures might help your company are all intelligent moves regardless of the size of your tech shop.