Does Salary Transparency Help Hiring?

Salary transparency has become an increasingly important topic in recruitment. More job seekers now want to know not only what a position requires, but also whether the compensation offered matches their skills, experience, and market expectations. For employers, however, publishing a salary range can raise questions about negotiation, internal pay structures, and competitiveness.

So, does salary transparency help hiring?

The short answer is: it can, when implemented properly.

Salary transparency refers to the practice of openly communicating compensation information during the recruitment process. This can mean including a salary range in a job advertisement, sharing compensation expectations during an initial conversation, or providing candidates with a clearer explanation of how salaries are determined.

Research increasingly suggests that transparency can influence how candidates approach job opportunities. A 2025 National Bureau of Economic Research study found that salary disclosure requirements increased the share of job postings containing salary information and were associated with wage increases of 1.3% to 3.6%. The researchers also found no significant impact on employment levels or the number of job postings.

But salary transparency is not simply about putting a number on a job advertisement. Its impact depends on how companies communicate and manage compensation throughout the hiring process.

Salary Transparency Can Attract More Relevant Candidates

One of the biggest advantages of salary transparency is that it helps candidates determine whether a position is worth pursuing.

Consider a candidate with five years of experience who sees a job description that closely matches their background. If the salary is not disclosed, they may spend time applying, completing assessments, and attending interviews, only to discover later that the company’s budget is significantly below their expectations.

A transparent salary range can reduce this mismatch.

For employers, this means fewer applications from candidates who would ultimately reject the offer because of compensation. Instead, recruiters can focus on candidates whose expectations are more closely aligned with the available budget.

This can be particularly valuable when working with a recruitment company or headhunter. Recruitment partners can use the compensation range to identify candidates who are both qualified for the position and realistic about the opportunity.

It Can Improve the Candidate Experience

Salary is one of the most important considerations when people evaluate a new job. Keeping compensation completely unclear can make candidates feel that the recruitment process lacks transparency.

Providing a salary range early can create clearer expectations between employers and candidates.

It can also prevent a common recruitment problem: reaching the final stage of the hiring process before discovering that both sides have completely different salary expectations.

For example, an employer may have a budget of Rp 15 million to Rp 20 million per month, while a candidate expects Rp25 million. If neither party communicates expectations early, both sides could spend considerable time on interviews and negotiations before realizing that the gap is too large.

Transparency does not necessarily eliminate negotiation. Instead, it can make the negotiation more relevant.

Transparency Can Strengthen Employer Branding

Candidates increasingly evaluate companies based on more than salary alone. They also consider company culture, career development, flexibility, leadership, and how transparent the organization is during the recruitment process.

A company that communicates compensation clearly can demonstrate that it respects candidates’ time and expectations.

This can contribute to a stronger employer brand.

However, transparency needs to be consistent. Posting a salary range that is extremely broad may not provide much useful information. A range such as Rp 10 million to Rp 30 million technically communicates a number, but candidates may still have little understanding of what they can realistically expect.

The goal should not simply be to disclose a number. Employers should provide enough context for candidates to understand what determines their position within the range.

Salary Transparency Can Also Create Challenges

Despite its benefits, salary transparency is not without risks.

One concern is internal pay equity. If employees discover that new hires are being offered significantly different salaries for similar roles, companies may face difficult questions about how compensation is determined.

There is also the possibility of salary compression, where the difference between existing employees and newly hired employees becomes smaller or creates dissatisfaction.

Another challenge is that salary ranges can influence negotiations. Recent research published in the Journal of Applied Psychology examined how pay-range transparency affects job application preferences and salary negotiations, highlighting that the way employers design and communicate salary ranges can influence candidate behavior.

This means companies need to think beyond simply adding a salary range to job advertisements. They need a compensation structure that can support the information being shared publicly.

What Should Employers Do?

For companies considering salary transparency, several practices can make the approach more effective:

1. Use realistic salary ranges

The range should reflect the actual budget available for the position. Avoid unnecessarily broad ranges that provide little value to candidates.

2. Explain what determines the salary

Experience, technical skills, leadership responsibilities, certifications, industry knowledge, and performance expectations can all influence where a candidate falls within the range.

3. Align internal compensation

Before introducing salary transparency, companies should review whether employees in similar roles are being compensated fairly and consistently.

4. Communicate early

Salary expectations should be discussed during the early stages of recruitment rather than being treated as a final-stage negotiation.

5. Work with recruitment specialists

A professional recruitment company or headhunter can help employers benchmark candidate expectations, identify suitable talent, and manage salary discussions throughout the hiring process.

Read more: Is AI Literacy the New Workplace Skill?

Does Salary Transparency Help Hiring?

Ultimately, salary transparency can make hiring more efficient, but it is not a solution on its own.

The biggest benefit is improved alignment. Candidates know whether an opportunity fits their expectations, while employers can spend more time engaging candidates who are genuinely interested and financially aligned with the role.

At the same time, companies need to ensure that their salary ranges are realistic and supported by a fair compensation structure. Transparency without consistency can create more questions than answers.

For employers navigating today’s competitive talent market, the role of recruitment partners can become increasingly important. A professional recruitment partner can provide market insight, help benchmark compensation expectations, and connect companies with candidates whose experience and expectations match the position.

RecruitFirst Indonesia supports companies in finding and hiring the right talent across different industries and functions. Whether you are looking for specialized professionals, experienced managers, or strategic talent, working with an experienced recruitment partner can help make the hiring process more targeted and efficient.

If your company needs support with recruitment, talent search, or finding the right candidates for your business, contact RecruitFirst Indonesia to discuss your hiring needs with our recruitment specialists.