In the USA it is now illegal to ask what an applicant’s previous salary was in a number of states and cities, including the state of California and the city of New York. At present they are in the minority but it does appear to be a growing trend.
Today our guest blogger Pete Fellows, Managing Director of Fellows and Associates and its new subsidiary Fellows Finance, considers the pros and cons of asking for salary history and what it might mean for the IP professions.
A potential issue with revealing your current salary to a possible future employer is that if you answer honestly you could find yourself with a lower offer than you might have otherwise received, and if you lie you could be discovered which may well be grounds for not getting an offer at all (or being dismissed at a later date for being dishonest). Asking about previous salary arguably reinforces the gender and ethnic minority pay gap. If candidates already on a lower salary are given the same percentage increase as others on a higher salary then the differences will continue.
It is entirely reasonable to ask what a candidate is looking to earn and yes this could still create differences if, for example, women’s expectations of their earning potential are lower than their male counterparts. However it should reduce the issue, particularly if women are aware of what they should be earning in a role. Recruiters are able to advise on this but then firms could also be much more specific about salary ranges in advertising earlier on in the process.
An unintended consequence of not asking for salary history may be salary inflation as decisions would be made on expectations and not precedents, but given that there is a reasonable volume of data in respect to salaries in the public domain (via salary surveys, etc.) this should be mitigated.
A key benefit may be that what candidates are currently earning will no longer impact on hiring decisions. Sometimes a view is formed of a candidate based on their current salary. Too low and a potential employer is concerned as to why this is the case. Too high and firms may be discouraged from seeing them or perhaps, if the salary has been advertised, worry as to why a candidate would wish to take a pay cut to move roles. Personally I don’t think an existing salary is a very good indicator of either a candidate’s competence or their motivation, and just because someone is earning less in their existing role it doesn’t mean they should expect to earn a similar lower salary in their new one.
As a recruiter we do ask candidates what they earn at present (except in jurisdictions where it’s illegal to do so) but we then advise on what we believe they should be earning and what it is reasonable to expect. We tend to focus on this latter figure when approaching firms but I do wonder if we should leave current salary off applications entirely? While our clients ask for this information we will continue to provide it but it may be useful to firms to demonstrate their commitment to not having a gender or ethnic minority bias by not asking us to provide existing salary information at all.
Pete Fellows is the Managing Director of Fellows and Associates, a specialist recruitment firm focused on the intellectual property sector. They have just launched a new subsidiary Fellows Finance.