Ambiguity in advertised compensation: Recruiting implications of nominal compliance with pay transparency legislation.

Abstract

Pursuant to legislative mandates the proportion of job postings that include wage and salary information has rapidly increased. However, many organizations comply by advertising very broad salary ranges. Here, we examine how the width of a pay range influences prospective applicants' perceptions. Although in other contexts people often exhibit a preference for vaguely specified gains, we draw from decision and signaling theories to hypothesize negative reactions to highly ambiguous pay ranges and test them in three preregistered experiments. In Study 1, business students evaluate a job posting with the width of the salary range manipulated between subjects. Study 2 tests for moderating effects of ambiguity explanations using a within-subjects manipulation of pay range width counterbalanced across two job postings and a sample of college graduates with relevant work experience. In Study 3, a diverse sample of recent job seekers predict a salary offer for a hiring vignette in which both the extent of ambiguity in the advertised pay range and the chosen candidate's qualifications are manipulated; their qualitative impressions of the organization are also analyzed. Results provide converging evidence for modal aversion to high ambiguity resulting from negative effects on perceived organizational trustworthiness and skewed predictions of salary offers. Practical implications of this aspect of pay transparency are discussed, as well as broader theoretical implications for understanding outcome ambiguity effects in domains where decision makers vary in their beliefs about underlying reasons for vagueness in communicated information. (PsycInfo Database Record (c) 2024 APA, all rights reserved).