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Salary Secrecy: The Benefits Of Employer Transparency In The Hiring Process

Posted by | August 18, 2017 | Employer, Hiring

Via Forbes : Salary Secrecy: The Benefits Of Employer Transparency In The Hiring Process

In my last article on the use of W-2 forms in the recruitment process, I discussed the issues involved for employers. One of the primary factors is that it’s no longer legal for employers to ask applicants about their salary history in Massachusetts. Other jurisdictions, including New York City, Philadelphia and Oregon, have also passed similar laws. This requires employers to base the position’s salary on the candidate’s qualifications, past experience and demand for filling the position rather than on salary history.

The Forbidden Question

While many employers tend to avoid the topic of salary until the final hiring stages, in reality, they’re doing both themselves and applicants a disservice. Despite their interest in only hiring employees who are focused on making a valuable contribution through their work as opposed to those who are solely money-driven, salary is such a vital component to a job offer that choosing to ignore it until late in the hiring process only leads to a poor candidate experience and a lower interview-to-hire ratio.

Salary is the backbone of any job offer. Despite the importance of professional advancement, work/life balance, office perks or telecommuting options, the hiring process may still move forward without any of these benefits. While some employers may choose to replace higher salaries with other incentives, a salary is still critical to the position. Yet despite the importance of salary, it’s considered a taboo subject for job seekers, as well as employers in some locations, during the job application process. Why is it so important for applicants to not know what a position pays until the employer decides if they’re qualified?

Recently, Taylor Byrnes, a Winnipeg resident interviewing with food delivery service SkipTheDishes, made headlines after having her second interview canceled for inquiring about the job’s salary. In the correspondence, the company’s human resources representative told Taylor, “Your questions reveal that your priorities are not in sync with those of SkipTheDishes,” and that “Questions about compensation and benefits at such an early stage is a concern related to organizational fit.” After Taylor posted a screenshot on Twitter, the company’s response elicited such outrage that its co-founder issued a statement apologizing and stating they were rescheduling Taylor’s second interview.

Motivating Factors

It stands to reason that if an employer wants an open position’s salary known during the recruiting process, they would post it in the job ad or wherever the job vacancy was publicized. Since this is only done a small percentage of the time, what does an employer stand to gain from withholding salary information until the final hiring stages? Here are a few advantages:

  1. Employers want to know they’re hiring employees who are interested in the company and the work they will perform, not just the money. Candidates who are only interested in salary are more likely to quit as soon as they’re offered a job with higher pay. However, the candidates willing to go through several rounds of interviews before knowing the compensation are far more likely to value a position with the company and the opportunity to make an impact through their work.
  2. If an employer posts a salary range, all candidates will want the top end of the range. Even though the higher range is reserved for the most qualified employees, those who are confident in their abilities but whose qualifications fall a bit short may feel insulted or disappointed with an offer in the lower range.
  3. While an employer may be willing to increase its offer for an outstanding candidate, posting a lower salary may deter outstanding candidates from applying. Employers are often willing to go above and beyond for that perfect hire. However, posting a salary range that would normally be offered to average candidates may lead top candidates to believe the position is below them.

The Benefits Of Reprioritization

In addition to prohibiting hiring managers from inquiring about applicants’ salary history until after an offer of employment has been made, one of the stipulations of Massachusetts’ new law is that hiring managers must now state a compensation figure up front. This ensures the salary is based on the applicant’s worth to the company, as opposed to what he or she made in a previous position. In addition to giving applicants an edge with regard to salary negotiation, this also benefits employers as they will no longer miss out on hiring top candidates who are not willing to divulge their salary history and relinquish their bargaining power.

However, employers in areas where salary inquiries are forbidden still have some work ahead of them, as they must now determine what each open position is worth to the company. Because they can no longer consider an applicant’s previous salary in setting a current salary, they must assess the value of each employee and his or her work, regardless of past employers’ determinations. This will take additional effort on the part of hiring managers and HR departments, many of whom still struggle with constructing effective job descriptions. Hopefully, over time, other states and cities will pass similar legislation, and job seekers and employers alike will see the positive effects of hiring based on the value of employees’ work to the company, rather than on salary history.

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