March 12, 2009

Salary history: Will HR put up or shut up?

Filed under: For Managers, Hiring, Interviewing, Job Search, Recruiting

In recent postings (How to make more money, Why you should tell me your salary) we’ve discussed whether job applicants should disclose their salary history to an employer. This topic has taken wing elsewhere: On BNet (Should Jobhunters reveal salary requirements?), on PunkRockHR (Candidates, Salary, and Disclosure) and on Job Hacking (What happens when you don’t pay attention to statistics?).

Job hunters seem to clearly recognize why it’s not a good idea to disclose, even if some feel pressured to do so. (Hey, I don’t knock anyone who desperately needs a job and decides to disclose. But I think that’s a short-term fix and later the tire is gonna blow on you big-time…)

Some in HR offer all kinds of reasons to support their position that applicants should — or must — disclose salary history or forfeit their chance at a job. I find none of them compelling.

But I don’t think HR managers are dopes or even disingenuous. I think they’re brainwashed and can’t see past their own bureaucracy. So I’ve been trying to figure out how to turn the tables and help HR solve the problem without waiting for candidates to cough up their salary info. That way these employers won’t have to pass up good candidates.

So here’s my suggestion and my simple business logic. HR contends it’s legitimate to ask for an individual’s salary history and that the information is a crucial component when assessing a candidate. HR contends salary information should be shared in the context of a job application and interview to enable both parties to determine whether further discussion is realistic, and to ensure that if discussions lead to an offer, acceptance of the offer is a realistic possibility. HR contends that salary history helps an employer judge a candidate.

So here’s what HR should do. Following the same logic and rationale, at the point where HR would ask for the candidate’s salary history, HR should instead share:

  • The salary range for the position in question.
  • The salary history of the person who is now doing the same job, or who used to do the job.
  • The salary history of others in the department who do similar jobs.

The company’s salary history is a crucial element that helps a candidate assess and judge a company. It enables a candidate to determine whether there is a realistic opportunity to make a match, and whether further discussions are reasonable. It’s legitimate to share the company’s salary information in the context of the interview and application process.

If HR managers don’t insist on knowing a candidate’s salary history, then I don’t expect them to disclose any of this information. But I do expect those who rationalize that candidates’ salary history is necessary to the interview process to eat their own dogfood and make life easier for everyone by disclosing all three data points above. What’s the big deal?

Put up, or Go pound salt. I’m anticipating HR managers who suggest that company salary information is confidential: Put up or shut up. And I encourage bold HR folks who barely give a rat’s batootie about a candidate’s salary history to pile on and tell us how you hire good people without making job candidates heel.

[UPDATED 3/17/09] Some of the dialogue here stems from today’s edition of the Ask The Headhunter Newsletter: HR’s salary moxie.

60 Comments on “Salary history: Will HR put up or shut up?”
By Edward
March 21, 2009 at 9:22 pm

Scott

I did not miss anything in the stock metaphor, you actually pointed out what HR does when looking at salary history in regards to AIG and said it was incorrect. You stated: “AIG did have a solid earning history. You shouldn’t have bought AIG based on that.” That is what HR does when looking at salary history, they look at earning history. And yes, stocks are things, we trade things, we don’t trade people.

And yes, I can talk of ROI and not look at salary history because salary history doesn’t tell me what they can do for me, it tells me what someone else put a value on that person for. There are a massive number of variables that go into that number, and most you have no access to, so you are just guessing and guessing is bad business. So I find ways to test potential ROI and I really don’t rely on the past, but current performance and current expectations. You can test that, I do it all the time, I find it far more accurate. This goes back to the heart of my question, someone in HR show me the numbers of what makes their methods so great. Here and on the other board, nobody has. What sales manager, product manager, finance manager can do their job without quantifying their results in hard profit numbers? I don’t know any, so why can’t HR do the same? I’m not attacking, I’m asking.

And Scott, I am not here to convince you that my approach is better for you. In fact, I am sure we do not work at the same company, so if you use a method that is not as good as mine and you happen to be my competitor, it all works out in my favor if you keep doing what you are doing. I’m here to discuss the topic, not what is best for you, so don’t take it personal.

And no Scott, my 1% turnover is derived from understanding my target market of potential hires, my needs, my company’s needs and created a system that achieved the best results. One of those needs was to bring candidates into our interview process and treat them with respect and professionalisms, that means not wasting their time on filling out an application before we even talk (a serious waste of paper and time). Why have the information security risk before we even think this person is a fit? Second, we don’t ask for things like salary history, we don’t do credit checks, we do a background check. We also do a live test of their skills. Having worked in education and marketing, you learn how people like to inflate things, can’t blame them, the system pretty much begs for it. We spend a lot of time on our real work tests during interviews, it gets what we want. Why? I know people who climbed the ladder and don’t know much because they coasted. They can talk the talk, salary history shows nice progression with six figures, but when it comes to the rubber hitting the road, not much is. The current HR system allows these types to get good jobs, mine, I’ll take the guy with half the experience and twice the drive and I’ll pay him for the results. What I see is gets to the heart of what I’m looking for: Can they do the job? I can spent 4 hours in interviews the old way and not get that answer because HR never asks. Also I learn, how they handle pressure, uncertainly, change, the unexpected, all of which are pretty common for us. A nice sit down interview being asked to tell me your weaknesses, don’t tell me any of that. Do some people hate it, sure, chances are they would hate the job too if they got it. Or, they really can’t do the job, but man they can talk the lingo great! Or we get those few who come in and show us something totally new and we are left saying “wow, how do we find a place for this person?” The people in the latter group, if they made $50k last year and asked me for $100k and it was in an area where I knew I’d make millions with their skill, hell ya I would hire them at $100k and throw in a nice profit based bonus to put some fire in them. I might spend $150k in salary for that person but if they bring me $5MM in new business, well worth it.

By Chris
March 22, 2009 at 9:08 am

I work as a design engineer for a small medical device design company (<100 employees). The owner is very insistent on all candidates revealing their entire salary history.

When I got to that stage of my interview, I held firm and did not reveal my salary. Those were a few very tense minutes as the owner and I sparred over the justification of revealing salary history. (In real life, the only reason is to enable the employer to lowball an offer. All other reasons are rationalizations.)

In the end I prevailed, got an offer, and four years later, aside from the micromanagement, the job is still one of the better ones I’ve had.

However, one point that I have not seen made on this subject is that employees talk. Especially when they are frustrated with management or feel taken advantage of. Sometimes that is enough to compel one to share their salary info with a colleague.

In this way, I have learned that in my group there are two other engineers doing the same work I do (just as well, I will add) for about 30% less. (For the record, to save embarrassment I’ve not shared my info.)

So good for me for holding firm on the salary history, but my colleagues are talking, and they are disgruntled because they feel that they are being taken advantage of.

I’m sure the owner of the company thinks he saved a bunch of money getting them at a discount, but they are not at all happy, their drive is sapped, and now they come in, do their work, and go home. One engineer we hired three years ago would call me or one of the other engineers off hours any time he had a new idea and wanted one of us to bounce it off of. Those calls stopped after about a year. And creativity across the entire department has declined noticeably (to us at any rate).

So I wonder how much the company is saving now by the lowball salary offers?

By scotthekyhrguy
March 22, 2009 at 12:53 pm

Edward — you are only including part of my statement, which doesn’t offer full context. I said: “AIG did have a solid earning history. You shouldn’t have bought AIG based on that. You should have used it as a consideration and then tried to make an informed decision on what you thought it would do in the future.”

The third sentence was really the important one.

Karsten, I agree with you 100%. If you’re undercompensated based on what you contribute to your employer, you should go work for someone who will pay you what you’re worth. When unemployment is very, very low, companies hire people for more than they’re worth. When it’s high, employees take jobs to get a paycheck that might not be in line with what their worth is. It IS cyclicle and that much I will state as “tautology.”

I can conduct salary surveys. I can benchmark internal data. I can (and do) do all kinds of things to ensure that we’re in the meaty part of the curve — right where my unit president says he wants us to be. But external surveys are always a lagging indicator. The “freshest” data I get, whether you agree with it or not, tends to be from candidates.

Another consideration that I should have thrown out earlier that might help you understand my context — I work for an engineering services company. We bill our time based on a multiplier over base comp, so there is a level of transparency in salary in our industry that is unlike anything I’ve seen in working for operating companies or companies that make “stuff.” Any project manager, with enough deductive logic, can look at his project costs per person and get a prett darn good idea of what each person earns. What we pay each person is a direct reflection of what our clients will be paying us, so the post referencing price match guarantees actually has some unfortunate but direct application in my industry.

This is a PETA presentation at an NRA convention (or an NRA presentation at a PETA convention depending on your perspective). I don’t expect I’ve changed any minds. You haven’t changed mine either. But it’s been an interesting conversation. Neither side in this discussion is “right.” We have opinions that are based on the roles we fill in our organizations.

By Karsten
March 25, 2009 at 8:03 am

Scott,

It’s Ok for me as well to quit the debate now. Kudos to you for stepping up!

I think it boils down to different roles: Your company may have several reasons for wanting salary history. However, because that salary history can be abused by the company tho lower salary, from a candidate’s viewpoint the only good reason to tell, is if one desperately need a job and the company abuses its power to deny candidates that do not provide such history.

Ok, nuff said :)

By Bryan
April 6, 2009 at 10:40 am

Coming late but summing everything up, it’s a two way street. I’m avoiding applying for a job that I am well qualified for because their online application requires me to post a salary history. I think Nick is saying if you demand history, post range first then be prepared to explain if a candidate asks why their offer lies where it does in that range. The argument that people taking a pay cut in this economy will leave as soon as it recovers is bogus. This is a chance for companies to bring in highly qualified workers and taste test them at a lower salary then they would have to pay in better times. If they do a good job for you then it is up to the company to retain those workers.

I’ve turned down 10% increases in pay to stay at an organization I loved vs one I had heard bad things about. In better times, you would never have had the chance to recruit these people at these salaries. A company that demands salary history with a willingness to divulge the range speaks volumes about the organization and its distrustful nature.

Bottom-line is I’m an expert in my discipline. If I were caught up in a reduction in force, I would be prepared to take a pay cut, not just to keep a paycheck, but to keep my skillset sharp. If an organization had a great culture and other intangible benefits beyond big paychecks, another company would have to work very hard to recruit me away even at a higher pay. Organizations that won’t either put up or shut up are probably not the organizations that will recruit and retain top talent anyway because that alone speaks volumes about the company. They are known as stepping stone companies where people go to grow or hone their skills and leave for better opportunities elsewhere.

By Mary
June 29, 2009 at 7:16 am

Interesting discussion. It reflects a nearly 200 year history of traditional linear career thinking whereby principally male professionals, perhaps starting in the mailroom of a company, worked their way up through the “ranks”, in the same company, with ever-increasing “responsibilities” and perhaps ever-increasing salary. At the point an individual moves to another company, presumably in a similar industry (reflecting “career”), he or she would expect a salary “comensurate” with the experience and knowledge gained.

The reason that salary histories are, and probably always should have been, irrelevant, is that they do not at all reflect talent, skill, experience, common sense, knowledge, or ability. And there is seldom a better time than during economic downturns caused by inept managers earning 6-digit (US-based) salaries, or better.

I’d love to see this discussion turn to new and better ways of valuing individual performance–both in and outside of an organisation. My own salaries have run from less than 700 USD per month to as much as 8000 USD per month. My CHOICE has been to take time to develop myself in multiple disciplines that I feel create a better-qualified professional. Sadly, I’ve met few HR professionals who seem to see the value of multiple and diverse experiences–despite all of the talk today about innovation, creativity, entrepreneurship, and lifelong experiences. From the halls of academia to the boardroom, employers continue to prefer the individual who has spent 20-30 years in a single specialization.

How will those following “boundaryless careers” be valued?

Cheers.

By Bruce
September 21, 2009 at 4:18 pm

Disclosing salary or even salary expectations to a potential employer gives too much power to the employer. If the candidate gives a number lower than what the employer is willing to pay, the employer has ample room to make a lowball offer. If the candidate gives a number higher than what the employer is willing to pay, the employer might not consider the candidate further because they think the candidate will not accept something significantly lower – which is not necessarily true at all.

I don’t think a candidate should disclose anything regarding salary history or expectations until the employer at least gives a reasonably tight range of what they consider to be a fair salary for the position.

By Paul
December 8, 2009 at 3:25 pm

I am an HR guy and in my 25 years of interviewing and hiring I NEVER needed the candidate “data point” – salary history. Instead we determined the market value of the job, established a range that reflected the skill set required and then assessed SKILLS against our needs. Our policy was to share the range with the candidate. Did this ever hurt in recruiting? No. We were always able to find the skill set. That’s what “competitive wages” means when listed. As for the data point it may give the HR department, that data is collected in wage and benefit surveys – not from candidates. Any company that starts recruiting without knowing the value of the position, and a willingness to pay the market rate is unscrupulusly seeking to low ball the candidate. And we know what that yields.

By Nick Corcodilos
December 9, 2009 at 6:01 pm

@Paul: **I am an HR guy and in my 25 years of interviewing and hiring I NEVER needed the candidate “data point” – salary history.**

You just made my day. Maybe my week. Thanks for posting this. Kudos to all HR folks with integrity.

By Salary Discussions – Career Sherpa
February 25, 2014 at 4:40 pm

[…] So why do they (employers) want to know? The easy answer might be that they want to know whether you are in their price range or not.  Could there be other reasons too?  (For a truly interesting discussion on this and the topic of salary history requests by HR, you have to read Nick's post and comments on Ask the Headhunter) […]

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