There’s a common question during recruitment conversations that all job candidates dread: “What is your current salary?” So many recruiters ask this question that job candidates have grown accustomed to blithely supplying their salary history, believing that it’s a requirement to move forward in the interview process. The issue is that salary history is a very personal, and often misleading, data point for recruiters to gather. Your team shouldn’t be using a candidate’s past pay to assess their qualifications or value.
Job recruiters often ask for salary information under the pretext that the company doesn’t want to insult job candidates with a low offer, or that it needs to verify that compensation requirements fit within the organization’s ability to pay. However in many cases, recruiters don’t want to make an offer first in case the applicant would be okay with less. For example, if a candidate is earning $50,000 in their current role, and the department’s budget for the opening is $70,000, the recruiter can attract the candidate with a $60,000 offer and save the company $10,000. Hiring managers may be happy, but the first step to employee engagement does not begin with underpaying your employees.
Compensation for new roles should be determined according to what the person’s knowledge, skills, and years of experience are worth in relationship to the job requirements. Salary bands need to be based on what the job and the candidate’s skills are worth in context to the internal compensation policy and the desired level of market competitiveness based on a benchmark, often determined through administration of a salary survey. Does your company want to pay below market, at market, or over market based on a valid job evaluation methodology?
The right methodology for salary offers considers factors like job requirements, candidate experience, education requirements, size of the talent pool, competition with other companies, and other elements. The job market has undergone significant shifts in the last decade, and many of today’s jobs defy historical practices. Some people, like talented software developers without formal training and little job experience, are offered remarkably high starting salaries. The business recognizes the actual value of the role and the value of the person’s skills and competencies, and both values have little to do with a person’s prior salary history.
The relative worth of a position should be based on its value to the organization and the value in the labor market where recruiting is taking place. A job candidate may currently be underpaid or overpaid, and numerous factors unrelated to their true value may have influenced the current salary rate. If you don’t have an internal employee who can determine proper salary levels for each new role, consider hiring outside consultants that specialize in the science of compensation. If employee engagement and retention are your goals, a candidate’s recruitment experience and compensation package are some of the first touch points that will influence their experience of your organization.