Last week, New York City barred employers from asking potential employees about their current or previous salary. This action is yet another in the long list of things that end up getting regulated because organizations just can’t get rid of ineffectual business practices on their own. From the Washington Post article:
The thinking behind the new law is that when employers ask about an applicant’s salary history, they can end up perpetuating any discrimination that women or people of color may have faced in the past. When employers ask about current or previous salary, they can hear a number that “anchors” them, and then offer to pay some percentage more on a figure that could already be too low. “Being underpaid once should not condemn one to a lifetime of inequity,” James [the City’s Public Advocate” said in a statement.
The purported reason for asking the question in an interview is for the employer to gauge the likelihood of a candidate being a good fit for the pay structure, and to avoid wasting time in pursuit of a candidate the organization can’t afford to hire. The New York law speaks to the “moral” issue, concerned about perpetuating past discrimination. But there is an even easier business reason — someone’s pay history simply doesn’t matter.
The right offer to make to a candidate is a function of that individual’s value to the company — which is a function of the importance of the job to the organization, the labor market in which it competes for talent, and the projected performance of the individual based on their qualifications, experience and the opinions of those who interviewed the candidate. Simply put, the question is “what point in our salary range is appropriate for this individual at this time.” Sometimes this will be an increase for the candidate; sometimes it will not be enough for the organization to be attractive to the candidate. However, the most important thing is that the offer should be consistent with the organization’s compensation structure and the pay of current employees.
To determine whether a particular candidate is worth pursuing (or in fact to attract the appropriate applicants in the first place), advertisements should provide a general idea of what the organization is prepared to pay — this does not mean providing the entire wage/salary range, simply the general vicinity of which the employer is willing to go. This should weed out those who have a pay expectation that is out of line with the organization’s resources, and the number and type of responses will also provide a good gauge of how attractive the opening is in the market.
Once a candidate has made it through to the interview stage it would be appropriate to ask the question “what are your salary expectations?” Presumably the number is inside the range you have already provided, or you would not have reached this point, and presumably the candidate will mention the top of the range (another reason why the question is silly — what else would a candidate say?)
Employers often make the mistake of trying to hire the “best possible candidate.” A better way of describing the goal should be to hire “the best possible fit for us,” and that is going to include compensation. It is much better to take care of the compensation issue up front, rather than going all the way through the process and being disappointed when expectations aren’t aligned.