Imagine you are an employer interviewing a potential candidate for your Chief Human Resource Officer Role. You are a mid-size non-profit firm and need a strong leader who can champion the change needed to accelerate growth in the agency through an aggressive Strategic Plan. You know you need a top-notch candidate and you are willing to pay a competitive salary but you are also a non-profit so every dollar counts and you need to ensure you are not completely giving away the bank.
You advertise for the role and resumes start flooding in. You select your top 5-10 resumes and start doing phone screens. You ask the standard questions..."Why are you looking?", "Tell me about your leadership experience?", "What are you looking for in your next opportunity?" and some, not so standard questions..."If you had the ability to start your own company, what would it be and what would your mission and vision be?" (real question that was asked of me in an interview once!). You get through your opening questions and begin to ask the knock-out questions. You know...those questions that you ask that will either progress a candidate to the next stop or knock them out of the running. You wind up the pitch and begin to lob the ball..."What are/were you making in your current/last..." Let me stop you RIGHT there! No! Stop talking! Do not pass GO. Do NOT collect $100. Why, you ask? I mean, this is a standard question, right? We NEED to know if we are in the same ballpark as the candidate, right? Nobody wants to waste their time interviewing somebody for a position if the salary is not the right fit and you certainly don't want to waste the candidates time. I get it. Trust me, I do. But let me tell you why that one little question is stressing the WHOLE recruitment process.
More and more states are making salary questions during the interview stage illegal. New York just passed a law making it illegal for employers to "inquire" about an applicant's salary. Employers that become aware of an applicant's salary must also not rely on that information in determining compensation offers, although how it would be determined whether or not the information was used in crafting the offer is yet to be determined. The New York state law makes salary questions pre-offer stage, or using salary information to craft a compensation offer an unlawful discriminatory practice under the New York Human Rights Law.
New York was not the first state to implement such a law. Under a New Orleans' Executive Order that went into effect in January of 2017, salary inquiries are banned for applicants applying and interviewing for city positions. While this current order only applies to city positions in New Orleans, I would not be surprised to see this expand; either city- or state-wide, especially in light of more legislation popping up across the country.
The Expansive Pay Equity Law went into effect in Oregon in October of 2017 (although civil penalties against employers are not permitted until January of 2024). While this law is similar to other salary ban laws, under Oregon law, employers are not able to confirm salary history before making an offer, even if given without provocation, by the candidate.
Puerto Rico's Equal Pay Act, which went into effect in March 2017 takes things one step further. In addition to banning salary inquiries pre-offer, the Act also requires that employees of different genders are paid the same compensation for comparable work. The Act also clearly defines permissible reasons to differentiate comp. Additionally, the Act states that an employer cannot prohibit an employee from discussing their own salary or requesting the compensation of other employees in comparable positions directly from their employer. While there are Federal Laws that prohibit employers from denying employees the right to discuss wages, such as language under the National Labor Relations Act and the Pay Secrecy Act, PR's Equal Pay Act is the first legislation that requires employers to provide an employee's wage information to other employees, when asked. Employers would need to obtain written consent to disclose compensation information from the requested employee though. There are also specific retaliation clauses in the Act.
Similar laws have been enacted in Delaware, Massachusetts, and California and while the concept behind them is admirable - closing the wage gap between the genders - is this really the most effective way to do so?
Payscale seems to think so, but not for the reasons you would expect. In a September 5, 2017 Harvard Business Review, Lydia Frank - VP of Content Strategy for Payscale spoke about a recent study her company conducted on this very subject. The results were surprising. One would think (based on the overwhelming urge to jump on the "thou shall not ask" bandwagon), that disclosing salary would be detrimental to one's compensation offer. That's not what Payscale's study showed. in fact, results indicated that women who refused to disclose salary information were offered 1.8% LESS than women who did disclose. Simultaneously, men who refused to divulge salary history received offers that were typically 1.2% HIGHER than men who did reveal their salary.
Those results seem to indicate that banning salary questions doesn't really have the impact that was hoped. Although, it may be too soon to fully throw the baby out with the bathwater, the data definitely gives pause to the assumption that salary conversations carry automatic negative consequences for women. But why would women discussing their salary histories and future needs, or not, have ANY impact on their salary offers? Again, we go back to the Payscale study that Lydia Frank spoke about. Because no true quantifiable data yet exists, a few assumptions were made. One assumption is that"[p]eople react negatively when women negotiate for higher pay", while the other may be that "[e]mployers may assume women who refuse to disclose pay earn less". I won't even get into why those assumptions infuriate me on this post, but look out for a WHOLE NEW blog post on why women should not be silent!
For now, the laws are here to stay, so what can employers do to ensure they are complying while also getting the necessary information out in front of candidates and not wasting anybody's time?
Make sure you have accurately priced your position based on your internal compensation philosophy, internal equity, and external market benchmarks. First, you need to decide where you stand as a company in terms of compensation. When it comes to the market, do you want to meet the market, lag the market, or lead the market? Once you know the answer to that question, and have gathered the necessary internal equity and external market data on what similarly situated positions are paying, you can accurately price the position.
Don't be afraid to advertise the range for the position. Or, if you can't get your boss or Executive Leadership to buy into this practice, make sure it it one of the first things you discuss in the interview. Don't jump off the starting block with it; that would be like going on a first date and asking the other person if they wanted to have kids before the bread even hit the table; but make sure that you do bring it up early. A simple statement, like "We have marketed this position in the $43k - $55k range. Is that in your desirable range?", would be sufficient. Again, we don't want to waste anybody's time and why play games? If you have priced your job correctly, you should not be concerned with overpaying for the position or insulting a candidate by coming in grossly under market value. Also, if you are lagging the market, such as a non-profit organization, or a company going through a transitional phase, talk about that up front and highlight the benefits of working for the organization, e.g. opportunity, growth, medical, dental, 401(k) match, etc. Believe it or not, people are in the market for more than just their base salary. Figure out what makes your company great and sell it!
Be clear about the compensation potential. Maybe you can't pay market value straight away, but there is bonus potential, or opportunities to increase compensation in 6 months based on attaining competencies or performance indicators. Don't leave money on the table and potentially risk losing a great candidate by not discussing it.
Be ready to walk away. Be prepared to know that not every candidate is going to fit your salary range and that's okay. The right candidate exists. There is nothing worse than trying to fit a size 11 into the perfect size 10 red pumps (Trust me...I've tried!). That is yet another reason to discuss salary up front. Again, I go back to dating. You would never wait until you fall in love and are ready to get married to discuss your religious or philosophical views. Why would you wait that long to discuss salary? Put it out on the table early (but not too early) and let the chips fall where they may.
Most recruiters have their formula for success so it may be challenging to change the thought process or strategy, but believe in the process and know that somewhere out there, your unicorn does exist. It just may take some creative maneuvering and an extra special sprinkle of magic pixie dust!