Platinum Unplugged #9: Negative Consequences to This Common Salary Question!

If you caught my last blog entry, DisruptHR Indy 2.0 – Highlights!, you read about DisruptHR Indy! I shared highlights from all the great speakers.

The topic of my presentation was “What Is Your Current Salary?” “None of Your Business”. Check out this video! The format was 5 minute presentations with 20 Slides changing automatically every 15 seconds. It’s intended to be a fun, refreshing, cutting edge event. In this format, presentations aren’t perfect, so don’t judge too harshly! Below the video is a written version.

How many of you have been asked for current salary in an interview?  Kind of harmless…but kind of not. A little personal. I will discuss the following:

  1. Why I think companies are still asking.
  2. Negative consequences to asking this question.
  3. 3 Benefits to changing your approach.

Why Companies Are Still Asking

  1. Leverage: Having current salary information can help justify a lower offer. Sometimes intentionally, sometimes unintentionally. Once you have the information, it’s tough not to factor it in. At Platinum Recruiting we do business with 50+ companies each year. I can’t tell you how many times someone got an offer that I know for a fact that would have been higher had the company thought they were making a little more.  
  2. Control: Employers love to control the process. This is understandable and it use to work great. Times have changed. Candidates, especially the best, aren’t as receptive to these practices. This approach is backfiring occasionally.
  3. It’s Old School! Companies look for employees that won’t do things just because “that’s how we’ve always done it.” Yet, that’s exactly what’s happening here. Here’s my bet: Most companies that are still asking for current salary have NOT made a decision to keep asking. They just haven’t stopped. 

Negative Consequences

  1. Cost someone a lot of money! Someone starting their career at $55,000 stands to make $600,000 more over their entire career than someone starting at $50,000. I’m not suggesting you over pay. I’m suggesting that having current salary can and does result in offers lower than someone would otherwise get. Thus, unfairly costing that person a significant amount of money over the life of their career. For all of you W2 employees, think about this: Your merit increases are based on percentage of base salary. Annual bonuses are often a percentage of base salary. You can add external offers to the list in many cases. At higher levels, stock options/RSUs are often a provided as a percentage of base pay. So you can see where being underpaid early in your career can really add up over time.
  2. You risk starting your relationship on a bad note. If candidates think you’re trying to gain leverage or have control over them in the process, is that a good first impression? Some people won’t care. Others will. And the “those that will” category is growing.
  3. Gender Wage Gap. Do you believe this is real? If so, and you’re asking for current salary, you’re contributing to the problem. If a woman is underpaid, gets an offer at least partially based on her current, low salary, the problem follows her from company to company. It means her base pay remains low, her annual bonuses are lower than they should be, her merit increases are lower than they should be.

Do you want to be part of the problem or part of the solution? 

If you’re not part of the solution, you’re contributing to the problem. Even if it’s unintentional. Time are also changing:

Massachusetts and New York Have Made it Illegal for Employers to Ask for Current Salary!

Execution 

  1. Ask for salary expectations! That’s it. You’re just changing one question. It can be hard to break an old habit. Some people have asked for current salary for a long time. It might take some time to adjust.
  2. It’s a change in mindset. When considering the negative consequences, it makes sense that there should be a shift in this process/approach.
  3. Employers and candidates will need to be better at understanding and assessing market value. Some candidates will get aggressive and price themselves out of an opportunity. Some employers will miss out on talent due to not paying market value. Similar to market conditions that correct over time, both sides will learn to be better.

3 Benefits to Changing Your Approach

  1. Make Better First Impressions: The process is like dating. If you make better first impressions, you have a better chance of landing the person you want!
  2. Attract & Retain More/Better Talent: Making better first impressions helps you attract more talent! Also, making offers based on market value instead of current salary will allow you to make more competitive offers in the long run. This will obviously help you attract talent. It will help you retain talent as well b/c it will be harder for other companies to recruit your people out. Or, for people like me to find them better opportunities.
  3. Save Your Company Money: The first 2 benefits will help save your company money. You migh spend more in salary but you’ll save a lot more than that in terms of lower turnover costs.

Most Common Resistance

“I want to be sure we’re in the right ballpark on salary”

Of course. We all do. You can ask for Salary Expectations, have a dialogue with that candidate, and still figure that out.

Why Is This a Big Deal?

I will admit, I did not use to think this was a big deal. Many of you are probably thinking the same thing right now.

Companies want to make more money. Spend less. I support that.

Candidates can accept or decline an offer, right?

Nobody is forcing candidates to accept a low-ball offer.

But, what if the system is rigged?

Check This Out:

I can personally turn down a low-ball offer b/c I’m confident I can get a better, more fair offer somewhere else.

But, I’m a white male.

What if someone else can’t be so confident? That person might need to accept that low-ball offer that is based at least partially on their low current salary. The problem follows them from company to company. Similar to the gender wage gap, this can be tough to shake unless they find a company that focuses on value versus salary history.

So. Who’s with me? Next time you interview someone….think twice before asking for current salary. Instead, ask for Salary Expectations!

 

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