Should We Ask Compensation of Potential Hires? (Hint – yes)
You may have seen recent coverage of a new law in Massachusetts that makes it illegal to ask for a candidate’s current compensation. By barring companies from asking prospective employees how much they earned at their last jobs, Massachusetts is trying to ensure that lower wages and salaries do not follow these candidates (women and minorities chief among them) for their entire careers.
As the founder of a boutique staffing firm I have mixed feelings about this law. I have spent the better part of 20 years advocating fair and equitable pay for every candidate. We encourage our clients to make offers that are competitive to the market. We negotiate compensation for our candidates to the best of our ability with no thought given to race, gender, or age. If a candidate has been “low balled” over the years, we do our level best to get them recalibrated to current market conditions.
Based on experience – there is significant potential for this to be a problem. Here’s why.
Most companies don’t have nefarious motives for asking about current compensation. As part of a hiring process there are legitimate reasons to find out this information. If companies are not allowed to obtain this information it may backfire on the very candidates the law is trying to protect.
Assume a company is hiring for a newly created position. Since the company has no previous experience hiring for this set of skills, asking for current compensation helps them calibrate the role. Current compensation numbers can confirm their salary range or provide them the intelligence used to adjust compensation to be more competitive if necessary.
The law states that a company needs to reveal what the role will pay upfront based on what an applicant’s worth is to the company and not what he or she has made in a previous position.
Well that sounds great in theory. How does a company know what a candidate’s worth is just based on a resume or job application? The fact is each candidate’s worth is different to any given company. Furthermore, each candidate’s acceptable comp package is very different based on a variety of factors.
A company may decide after interviewing someone that they would go above their range in order to get that candidate. On the other hand, many candidates would trade off salary for a shorter commute, more time off, working remotely, or better benefits. The above doesn’t reveal itself upfront or in a job posting. Negotiations of this nature don’t come up until the interview process is well underway and the company starts to develop real interest. If a candidate decided not to apply because a salary number didn’t meet their expectations they may decline the interview.
Current salary is a jumping off point. While the law is there to protect candidates from being underpaid, I hope it doesn’t create an obstacle to the real first step in the hiring process – the interview! After all you can’t turn down the offer you never get.