Does It Really Make Sense to Ban Salary History Discussions?

Does It Really Make Sense to Ban Salary History Discussions?

If you look through my firm’s staff over the years, one of the first things you’ll notice is a gender disparity: I’ve hired a lot more of one gender (female) than another gender (male) over the years. But it was never my intent to staff The Hennessy Group with more women than men. It just happened that in those hiring instances, the woman I hired was the very best person for the job.

That’s the goal for any company hiring — to get the best person into the role. Filling a job with the right candidate lowers costly turnover, helps ensure goals are met and exceeded, and, honestly, just makes sense.

But sometimes it can be a challenge to know if the person you’ve found is the right one. A senior director at one company may be more of a manager at another. You learn this only when you take the time to sit down and discuss, in detail, the candidate’s background. When my firm is working on a candidate list for a client company, we can make that assessment only after hours of discussion with the candidate. You’ve got to get to know someone beyond the practiced and rehearsed answers in order to know if they have what it takes to truly excel in a job.

So here’s my question: if a company is staring at 100+ applicants for a position, which is the norm these days for roles listed through online job boards, including LinkedIn, Indeed, Glassdoor and others, how does it find the time to really get to know each applicant? You need a faster way.

Will salary history help you get through a stack of resumes?

Enter salary history, which is currently on the chopping block in the U.S. Since California’s governor signed into law a ban on asking about salary history, it’s now a whole lot more difficult for HR teams to quickly assess a stack of candidates in California, as well as Delaware, Massachusetts, Oregon, New York City, Philadelphia and Puerto Rico, each of which has laws that prevent an employer from asking for an applicant’s pay history. While this law is well-intended, I wish the legislators would have invested more time and modern-day thought into its practical application, and this includes taking into account the actual availability of diverse talent in each industry at the mid-management and executive levels.

Salary history isn’t a perfect way to find the right person, but it does help hiring managers assess the skills, experience, responsibilities and value of candidates to ensure they’re in the ballpark. A candidate who is making $400k as a VP, for example, probably isn’t the right person for a VP role at another firm that can only pay $250k, for example. But without the “what did you make” discussion, the hiring manager may never know that they’re talking to someone who’s probably more of an executive VP instead.

Can salary history be a cure for today’s unique job descriptions?

There are no country-wide standards in job descriptions or titles today (although most companies have their own internal standards and related pay grades), so relying solely on a resume or the info entered into an ATS (applicant tracking system) without including salary is frequently insufficient for companies that need to assess leadership level and candidate value. Unless companies are working with “old school” executive recruiting firms that actually take the time to get to know each candidate on a personal level (something we do at The Hennessy Group), they’re either going to need a much bigger HR and recruiting team or they’re going to waste a lot of time and money talking to people who aren’t ready for the roles they’re trying to fill.

When organizations acquire and develop talent through the lens of competitive assessment, everyone benefits. In the life sciences industry, reviewing salary history can be an effective tool to assess fit and career progression.

In life sciences, who brings up the salary question?

In the life sciences industry, “Big Pharma” is the largest pool from which to attract talent. If you’ve ever tried to motivate a senior level executive from big pharma to consider another leadership role in something other than big pharma, say specialty pharma, orphan drugs, or the CDMO industry, then you would know the first person who wants to discuss salary is in fact the candidate. Neither candidates nor hiring companies want to invest weeks and months courting, only to discover at the 11th hour that there was never any opportunity to agree on an actual offer. In practice, I fear this new legislation may only help in select areas of hiring while harming candidate care and slowing down the hiring process (and, therefore, productivity) for many companies.

In other words, banning discussion of salary history is, like writer Gerald Skoning noted in a recent Wall Street Journal article, “wrongheaded, counterproductive and wasteful.”

While this law may serve some purpose at the lowest level of hiring, as a father of two daughters and a business owner, I am concerned it could hurt mid-management and higher-level women. Laws that ban salary discussions have the power to motivate employers to simply not call, write or follow up with amazing candidates whose titles may not be indicative of their skills at all.

My firm has always believed strongly in diverse work teams. We practice good candidate care — because every applicant deserves respect, and that respect pays back a thousand times over for the hiring company. While pay equity does need further improvement, I fear we may actually impede any progress we’ve made with this type of legislation.

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