Why most employers don´t reveal the salary?

Dalibor Šumiga Behavioral marketing/Neuromarketing, Marketing

Imagine a job interview at a marketing agency….
Employer: “What salary would you be happy with?”
Candidate: “Average salary in the IT industry – 1700 euros?”
Employer: “Where did you hear about that average salary amount?”
Candidate: “From the results of a research presented at a conference.”

This is a very likely scenario in the next few months in Croatia after the research on average salaries was presented at .debug, developers conference by Bug.
The research was presented and conducted by Tomislav Grubišić, founder and owner of several successful companies.
Using the example of Tomislav’s research, I would like to point out several psychological factors behind the issue of salaries, the labor market and the decision of most employers not to publish salaries in job postings.

ANCHORING EFFECT

In the famous experiment of Daniel Kahneman and Amos Tversky, the respondents were given the task to spin a wheel on which there were two options, you could get the number 10 or the number 65.
Researchers then asked participants, what percentage of African countries are members of the UN.
The average response of people who turned 10 on the wheel was 25%.
The average response of people who turned 65 on the wheel was 45%.
This phenomenon is called the anchoring effect – the reference number on the wheel, although totally unrelated to the question about UN members, influenced the answer.
You will get the same thing when you publish the salary rank. It isn’t a problem if you immediately get the ideal candidate who is worth that money, the problem is if you get a candidate you will say goodbye to after 3 months.

THERE IS A LIE, A DAMN LIE AND – STATISTICS… ..

Imagine you are in a stadium whose capacity is 30,000 people. What is the average value of each stadium visitor? If everyone has a salary of 1000 euros, let’s say the average value of each visitor is 1000 euros.
Now, imagine Bill Gates enters the stadium. What is the average value now? On average, all stadium visitors are millionaires….
In Tomislav’s research, only 6% of respondents are from marketing. Still, most of them will surely talk about how they heard that the average salary in their industry is 1700 euros. How many copywriters do you know which have a salary of 1700 euros? Or an even better question – how many Facebook calendars does that copywriter need to write to cover a salary of 1700 euros?

ALL EMPLOYERS ARE EVIL, ALL EMPLOYEES ARE GOOD

If a person applies to 200 job posts and doesn’t get a job in any of the 200 companies looking for employees, is the problem in the companies or in that person?
What is the statistical chance that all 200 companies hate that particular person?
I have personally seen two stories like this on LinkedIn. Do you know what these stories have in common? Even after they told their story, which was liked by thousands of people, none of them got the job… They allegedly started their own projects; you can follow how they are doing; not what they write but what the financial results show….

YOU CAN’T PAY ME AS LITTLE AS I CAN WORK…

The monthly salary is usually calculated as 160 working hours, including a hot meal break.
There are various studies that show that you should be ecstatic if an employee manages to work a productive 120 working hours.
For a long time, economic experts have been saying that the problem is not high taxes but low productivity. Everyone will get paid for 160 hours even if they don’t work more than 100 hours, and research shows that we are productive for about 4 hours a day.
Does anyone point out this problem on social media? Of course not. This psychological phenomenon is called self-serving bias. Instead of defining what self-serving bias is I will give you a very vivid example…

What happens when YOU go through a red light at a crossroad?
“I’m in a hurry, I don’t usually do that, but now I really had to…”

What happens when SOMEONE ELSE goes through a red light at a crossroad?
“Look at the fool! Someone will get killed! You reckless idiot! ”

We are not self-critical enough when it comes to us, but we are very critical when it comes to others…

GROSS AND NET, MINUS AND PLUS….

How many employees know the gross amount of their last salary? I would say very little….
Yet it is all the cost of the salary for the employer to pay, so we can get this famous net salary amount which is supposedly small.
Let’s look at a concrete example of a company owned by Tomislav Grubišić who conducted research mentioned before.

IMPORTANT: I found information about salaries on the official website of FINA, info.BIZ, but colleagues from Tomislav’s companies sent me new information with a note that publicly available salaries do not include non-taxable income or student salaries. Non-taxable income is taken into account in the amounts below and certainly improves the average; However, I assume that student salaries would reduce it.

In 2021, Tomislav’s company Bornfight had a reported turnover of 3.2 million euros and an average salary of 1600 euros (on info.BIZ the salary is 1200 euros). If we don’t look at the salary listed by info.BIZ, that is about 100 euros less than the average from the research. Imagine what would happen if Tomislav raised the salary of all employees at this moment in order to get an average of 1700 euros in his company.
Since Bornfight’s profit in 2021 was 6000 euros, Tomislav would bring his company into the debt. What is the point of entrepreneurship if the company does not operate positively?

The other two companies owned by Tomislav, Degordian and MediaToolkit, belong to the group of companies whose primary activity is marketing. So they could get into those 6% of respondents from the survey. The average salary in these two companies is 1300 euros in Degordian (1000 euros according to info.BIZ) and 1600 euros in MediaToolkit (900 euros according to info.BIZ).
Even though these are excellent salaries, we are now even further from the average salary from the research.
We are talking about successful companies that are regularly declared as the employer of the year….

IN A COUNTRY WITH 3 MILLION EMPLOYER BRANDING EXPERTS….

Have you ever tried to give advice to a surgeon on how to perform your surgery?
Or the pilot how to land the plane you are flying in?

You didn’t? Why not? Because you are not competent to give advice to people who have been educated for years to be the best at what they do.

Can a man tell a woman who tells him about the difficulty of childbirth: “I can imagine how you felt…”? He can’t, unless you decide to break 20 bones in his body at the same time to simulate that feeling….

Then, why do people, who have never paid any salary to anyone other than themselves or not even that, have the need to give advice on how to run a business?

WE ARE ALL IN THE SAME BOAT, BUT WE ARE NOT ROWING EQUALLY WELL….

Henry Royce, the founder of Rolls Royce, has introduced a practice in which each employee signs on the part he produces. Why? To know who is responsible if it is discovered that some part is poorly made.
Royce explained the reason for this practice as follows: “I paid you to make a working part, not a faulty part.”
Nowadays, this practice would probably be declared as mobbing…

If I’m not mistaken, the latest information I came across says that it takes about 45 days to recruit a new employee. Without prior testing, and very often even if you have tested a person, there is a good chance that you will get a candidate who is not up to the tasks set before him / her.
Why?
Because more and more young people are entering the labor market coming from a school system that rewards those who memorize without understanding. Young people enter the labor market unprepared, most of them even without a basic knowledge of using Excel.

If you are already risking a 3-month trial period, it is not the same whether the starting salary is 1000 euros or 1600 euros. If you come across a good employee, it is the best money invested and only a stupid employer would not additionally reward such employee.
If you came across a bad employee, whom you will have to say goodbye to at the end of the probationary period, the amount you wasted could be shared with existing employees doing a good job, invested in advertising, or used in a million other good ways.

GRASS IS NOT ALWAYS GREENER ON THE OTHER SIDE AND EVERY MEDAL HAS TWO SIDES…

The average number of years an employee spends in the world’s largest companies, such as Apple or Google, is about 2 years.
Even if everything were great in those companies, there were no KPIs and there was a 2 hours a day, 4 days a week shift, how many employees are those companies hiring on a monthly basis?

Not all unsatisfied employees in the world can just get a job at Google.

As you can see, things are not as black and white as they look, and the research above proves it.

Because there are always people who intentionally or accidentally consider every comment malicious, I must emphasize that I don’t know Tomislav personally, but I don’t doubt for a second that his intentions are noble and honest. The problem of salaries and a general understanding of how business works is a problem we all have to deal with.
But this problem is primarily of a psychological nature and that is how it should be approached…

From all this information I have given, what will you remember?
Just what you like and what confirms your beliefs.

And that’s why the whole labor market, all parties involved, have to work on financial literacy and destigmatization of entrepreneurship – there are bad employers, but there are also bad employees. Not everyone can have senior level salaries if they don’t have “senior level knowledge”, but they cannot get senior level knowledge and senior level salaries if they are not productive.

Forget stupid quotes like, “Your company would replace you tomorrow if something happened to you.”
Yes, they would replace you, not because they don’t care, but because the business doesn’t stop, clients don’t ask.
Well, in most cases, you would change your company if you get an immoral offer. Let’s not be hypocritical, every human always thinks of himself first.

When John F. Kennedy visited NASA’s Space Center in the 1960s and met a janitor cleaning the hallway, he addressed him with the following words: “Hi, I’m Jack Kennedy. What do you do here?”
The janitor replied, “Mr President, I’m helping put a man on the Moon.”

I don’t know if this story is true, but it’s a wonderful example of what the labor market should look like – if everyone does their job the best they can, the result can’t be missed…

* All salaries mentioned in the text are expressed as net amount.