Create a Fair Salary Process By Ditching Salary Histories

fair salary process June 26, 2017 By: Sheila Amo

Instead of basing your salary offer on a job candidate's salary history, base it on four considerations that help to close the pay gap and avoid discrimination in the recruitment process.

Associations want to cultivate and maintain a progressive and equitable company culture. But what they might not realize is that part of their recruitment process—requesting a job applicant's salary history—could perpetuate the pay gap and adversely affect women and minorities.

It can happen innocently enough. If part of your hiring application requests a salary history, it's likely that you would use that information to form the basis of an offer. But if candidates didn't get paid well or failed to negotiate on previous offers, using salary history as the basis for your offer can keep them at an inherent disadvantage.

Why? Because it assumes that the applicant was fairly compensated. In fact, according to the 2013 report from the American Association of University Women, "Graduating to a Pay Gap: The Earnings of Women and Men One Year after College Graduation" [PDF], women got paid about 7 percent less than men in their first job, even when controlling for variables such as college major, occupation, and geographic location. Gender is the only explanation for this gap.

But that's just one example of how an offer based on salary history can introduce partiality and discrimination into the recruitment process, as well as perpetuate the wage gap. Instead of basing salary on a candidate's job history, associations should base them on these four questions:

1. How much does the organization value a certain position? When filling a position, an organization would typically conduct an initial assessment to consider position responsibilities, budget impact, and return on investment. The answers to those questions speak directly to the worth of the position, which is what should form the basis of how much you're willing to pay a job candidate.

If candidates didn't get paid well or failed to negotiate on previous offers, using salary history as the basis for your offer can keep them at an inherent disadvantage.

2. What is the candidate's knowledge and skill? This question speaks to the candidate's preparation for the job. Knowledge and skills can be tangible attributes like degrees, professional certifications, or the mastery of skill sets. They can also be intangible factors like unbridled enthusiasm, connectivity to mission and work, or commitment to innovation.

3. Does the candidate's past experience show an ability to get the job done? The main goal of the interview process is to assess whether the candidate has the talent and know-how to do the work and whether they'd be a good cultural fit. One way to do this is by asking behavioral questions to understand what the candidate has accomplished, ways they've added value, objectives they've met, and how they've engaged with colleagues to build consensus.

4. What is the position's value in the marketplace? This is achieved by understanding the purpose, responsibilities, and qualifications of the position and analyzing these factors against what similar organizations—considering mission, industry, and scope—are willing to pay for the position. Another key consideration is the compensation philosophy of the hiring organization.

Once those questions are answered, if an association is still having difficulty coming up with a competitive salary, human resources can request a candidate's desired salary or salary range.

As an employer, you must consider the tone you set by asking for a candidate's salary history. This seemingly harmless requirement sends a message to perspective candidates about your organization's willingness to promote equity and fairness in the workforce.

And it should be noted that the recruitment process is as much a tool for potential hires to assess you. These applicants are critically considering whether they can grow, thrive, and develop professionally within your organization, which is why employers should put a lot of serious thought into how a salary offer is made.

Sheila Amo

Sheila Amo is founder and CEO of the Perry Perspective, LLC, a consulting group based in Annapolis, Maryland, and Washington, DC.