Compversation #29 - The Tale of Goldilocks and Salary Ranges

Of all the measures included in the EU Pay Transparency Directive, probably the one that best appeals to candidates is:

Starting in 2026, companies will be required to display salary information on job postings, either as a specific figure or as a salary range.

For a long time, it was easy to assume this expectation was driven mainly by younger generations. A 2024 Adobe study of more than 1,000 post-secondary and recent graduates found that 85% were less likely to apply for a job if the company didn’t disclose the salary range in the job posting.

But in reality, this concerns everyone. A recent survey of 5,700 employees (of all ages) by The Stepstone Group found that 89% of those in Germany and 92% in the UK would be more likely to apply if a specific salary or salary range was provided. 

While recruiters and candidates seem to agree on the importance of salary ranges, companies face a major headache: what is a suitable maximum gap between the lower and upper limits of the range?

The European Directive doesn’t define any limit. And depending on a country’s specific transposition, we don’t know how this will play out, as individual governments have full discretion here. They could decide to legislate to prevent companies from undermining the spirit of the law by posting overly broad ranges. 

But this outcome seems unlikely. In the US, several states require salary ranges on job ads, but none impose a maximum width. And in Europe, among the 13 countries that have already published their draft transpositions of the directive, none have introduced a numerical limit either.

Still, the width of salary ranges remains one of the few uncertainties in the directive, and it could slow some companies down.

But I believe common sense and good faith can guide companies toward salary ranges that are juuust the right size: useful, meaningful, and fair. 

Too narrow: you lose flexibility 

At first glance, it’s easy to understand why companies hesitate to reveal salary ranges that are too narrow. Doing so might overly constrain recruiters, limit flexibility in hiring, and even frustrate existing employees if they discover they’re paid below the stated range for a similar role.

When I speak with HR leaders or compensation and benefits managers, I often observe that many would like to sidestep this risk, at least initially.

But let’s remember that transparency cannot begin at the reporting or job-posting stage. It actually begins with analysing existing pay structures — a time-consuming and costly effort that involves identifying and correcting historical inconsistencies. 

Transparency also depends on an intentional compensation strategy that companies must align with their values and culture. Without that groundwork, defining a salary range upfront feels impossible, even with reliable market benchmarks. 

And even companies with more mature HR processes may choose caution: they publish broader ranges to preserve flexibility for recruiters. They hope this will protect them from legal risk.

In truth, even in good faith, it can be difficult to set a narrow range for certain types of roles.

A 15% to 20% gap between a range’s lower and upper limits may work for junior or lower-skilled positions: for example, a range from €26,000 to €30,000 seems reasonable for an early-career role with limited variability among candidates.

But this logic doesn’t hold up for more qualified, specialised, or strategic roles. In expert or leadership positions, compensation varies significantly depending on individual background and experience.

For example, based on our exclusive market data, in companies with 100 to 200 employees, a female CFO sitting on the executive committee may earn anywhere from €85,000 to €150,000. In this type of role, you’ll find professionals with 12 years of experience and others with 30. Companies can legitimately remain open to a wide range of profiles when hiring.

Therefore, a company may, in good faith, publish a range of €80,000 to €120,000 for the same position.

But a 50% difference would be inexplicable and unjustified for a junior or lower-skilled job. Defaulting to wide ranges isn’t an ideal solution either.

Too wide: you lose candidates’ trust 

“Companies Posting Wide Salary Ranges On Job Advertisements Are Making A Mockery Of Pay Transparency Laws.”

So read the headline of a Forbes article published in June 2023, just as several US transparency laws came into effect.

Companies tried to get around the laws by leaving too much uncertainty around pay, and candidates quickly grew frustrated. In New York, many people took to social media to call out companies (by name) that posted ranges with gaps of more than $100,000.

Loss of trust, fewer applications, reputational damage: that’s what companies risk when they try to dodge their obligations. For this reason, a 2023 Washington State University study shows that overly wide ranges are perceived as dishonest by candidates.

Any negative effects on the employer brand of a company trying to sidestep the law won’t take long to materialise; I believe this alone will be enough for the market to self-regulate.

This applies even in sectors where talent is plentiful. In the age of social media, bad press spreads fast, even for companies in a position of strength.

A reasonable path: good faith 

There’s no ready-made solution to the salary range dilemma.

But if I had to make a prediction, I’d say that many European countries will choose not to impose a maximum gap. Such a rule would be impractical and potentially counterproductive.

More likely is a good-faith clause, as seen in some jurisdictions. This clause could be enforced in several ways: through labour inspections (triggered by audits or reports), an expanded whistleblowing mechanism for employee representatives, or potential legal action. It would target clear abuses without preventing companies from legitimately posting broader ranges in justified cases.

Companies won’t be able to skip the transparency exercise: they’ll need to review their pay structures, build a coherent compensation strategy, and determine the budgets and priority they assign to each role.

Market data will help them identify the right level of variation needed for each position, depending on the diversity of available profiles. And of course, Figures can support you with this step. 

My inbox is always open if you want to discuss it!

To continue the conversation 

Companies Posting Wide Salary Ranges On Job Advertisements Are Making A Mockery Of Pay Transparency Laws — Jack Kelly, Forbes

In 2022, the first US transparency laws were enforced. By 2023, salary ranges were still excessively broad, frustrating candidates and observers, including this Forbes columnist, who acknowledges the “headache” that salary ranges pose for management.

Job ads with wide pay ranges can deter applicants — Sara Zaske, Washington State University 

A Washington State University study reveals that excessively broad ranges can harm recruitment.

Wide salary ranges put jobseekers off — Jane Simms, People Management 

A 2024 research-driven article finds job adverts with very large gaps between the minimum and maximum salary can make employers seem untrustworthy and discourage candidates from applying. It’s a great illustration of how pay transparency laws can be undermined when ranges are too wide.