Prejudice Perpetuated by Prior Pay Pattern

Legislative initiatives to ban questions about past salary during the employment application screening process keep popping up. I've been deluged recently with interview requests from writers seeking pungent quotes for articles on the topic, so it must be time for us to step back into that fray where others are already tussling.

Here are some salient summary points we should kick around before the politicians determine our practices for us.

For Management: Why ask for prior pay history in the recruiting process? For the most effective/efficient screening, of course, to weed out "the obviously unqualified" candidates. Strong prejudice emerges against anyone paid outside the income band acceptable to the hiring manager.

Recruiters suspect that those who earned much less than the expected amount have not risen to an adequate level of proficiency to earn the minimum of this open position's value. At least, that is the quick assumption. Since recruiters are usually under time pressures and expense limits, deluged with piles of applications while totally unqualified to make deep examinations of applicant credentials, they instinctively press the “easy” button. They presume facts not in evidence. Candidates who earned much more than the employer's normal offer rate are expected to become dissatisfied if hired within the appropriate job pay range, whether overqualified or not. Plus, they create pressure to make hiring offers above the normal entry rate, closer to the central position value, thus potentially creating pay compression with senior peers and inviting other invidious internal equity comparisons when word gets out. Lazy logic argues: why ask for trouble you can easily avoid?

For Applicants, a prohibition against demanding salary history would level the competitive playing field. Unfortunately, their equity would come at the cost of inconvenience to those who process the applications. Recruiters and hiring managers would have to work harder, sifting through more candidates to focus on potential deliverables from the performers, rather than seize upon proxy elements like their prior pay level that have no real relationship to their value to this hiring organization. The only thing that would be worse for recruiters would be a requirement to exclude race, gender and age in resumes submitted for screening protocols short of personal interviews.

Society could benefit by the enhanced opportunities for nondiscriminatory hiring and pay equity that would open up if irrelevant factors were prohibited from scrutiny by prospective employers. Then "diamonds in the rough" would be discovered at an unprecedented pace. Job seekers who would have been passed over could rise through the screening process as their knowledge, skills and abilities justify.  For the first time, candidates would be permitted to compete on their merits alone, without regard for the size of their prior paychecks. Compensation professionals could supply more flexibility in job pay classification and entry rates, too, as employers learn the true full range of talent qualified for their work. Hiring offers will become more variable and creative, rather than rigid. It would mean more work but better results for employment reps whose hiring managers who could improve their talent acquisitions.

Historical pay discrimination is perpetuated when past pay sets future pay. Systemic discrimination will continue forever until the apparently neutral practices that have disparate negative impact on protected classes are ended. If applicants were not required to reveal prior salaries, they would be less likely to be unfairly eliminated as candidates.

Prospective employers currently demand past income history from job-seekers while frequently withholding any details about the relevant pay range they offer. Why waste their time and yours? Don't ask what they used to make.  Just tell them the entry rate. Applicants could then freely decide whether to pursue the opportunity or not.

If human resource professionals can't come up with a valid reason for keeping prior pay as a sorting tool, it should be banned as inappropriately prejudicial ... and probably will be.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience, specializing in job evaluation, market pricing and pay budget distribution. After corporate HR jobs in chemical and pharmaceutical manufacturing, he consulted to virtually every industry throughout North America before becoming Senior Associate of pay survey software publisher ERI until returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook) and speaker, Jim gave expert witness testimony in many reasonable executive compensation cases both for and against the Internal Revenue Service and also serves on the Advisory Board of the Compensation and Benefits Review.

"Imbalanced Justice" image courtesy of Chris Dobyns

Comments

[Chris Dobyns]

First, thanks for the anchor graphic attribution. There's nothing I like more than to have my name associated with a graphic entitled, Imbalanced Justice". Just the risks of yielding to the desire to let my right brain "out" occasionally.

Otherwise, I quite liked the rest of this (content). I recall that even 30 years ago, I was nearly a victim of that management/recruiter bias - when as a still fledgling HR/Compensation person, I was transitioning from a position with a notoriously low-paying retail organization to higher-paying technology organization - and they questioned my credentials (competence) based solely (mainly?) on my salary at the time. Somehow I managed to squeak through that time - and the rest is history, but that bias (Easy Button) was and is still out there.

[E. James (Jim) Brennan]

Always pleased to give credit to justice originating from the area around our nation's capital, Chris. Also glad you survived the gauntlet run though the ubiquitous skepticism pilloried here to end up where your talents can be applied in such a vital area.

[Karen Kervick]

I squirm every time someone asks me to validate a hiring offer and starts with, they are making X now.... I don't care what they are making now. Even with internal candidates, I don't care how much they made last year in their current role. Although I understand that it gets a little tricky if you want someone to take another role in the organization, you don't want them to lose money, even a lateral move feels better if there is a bit of an increase at least. I will then take at least the last two to three years for an average so we don't base it solely on the prior year.

Certainly in these times of senior workers needing to earn some money and willing to take a lower paying job in exchange for less stress...why wouldn't you be willing to take a look at them? It should be about someone's motivation for a particular role, not what they want to earn. Offer what the role is worth in your organization and they can take it or leave it. Think of the added value for your dollar if they do take it! And if not, chances are there is someone else ready and willing. If not, well then economics would tell you maybe you do need to pay more for the job.

[E. James (Jim) Brennan]

The solid compensation principles Karen expresses hopefully reflect the attitudes of human resources professionals; but many managers feel otherwise. Predatory pay pricing forces "rotten equity" reactions. Any short term budgetary savings claimed by opportunistic exploiters end up costing the entire organization a lot more in the end.