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What Does Salary History Have to Do with Job Performance?

What Does Salary History Have to Do with Job Performance?

Start a management degree at American Public University.

By Dr. Marie Gould Harper
Program Director, Management, American Public University

In an attempt to do away with the gender wage gap, some cities and states have passed laws banning employers from asking job candidates about their salary history. In some jurisdictions, the ban affects only public employers. Other jurisdictions are banning all employers from asking “How much did you earn in your previous positions?”

According to Business Insider, jurisdictions that have banned or in the process of banning the dreaded salary history question are:

  • California
  • Delaware
  • Massachusetts
  • New Orleans
  • New York City
  • Oregon
  • Philadelphia
  • Pittsburgh
  • Puerto Rico

The Most Dreaded Interview Question: How Much Did You Earn?

To be asked about your previous salary history is the most dreaded interview question. Why? Some job applicants are afraid of low-balling themselves out of fear that employers will take advantage of the situation. Other applicants are fearful of getting caught in “little white lies” when they exaggerate what they have earned in the past.

When news of the pay question ban surfaced, I read some LinkedIn posts in which several people suggested that the millennials were the reason for the changed mindset.

But is that an accurate statement? I believe representatives from various age groups, not just millennials, started to ask themselves, “Why do we need that information?”

Many recruiters don’t even know why they ask the salary history question. They only know that managers and corporate HR types usually like to see the response. Some organizations disqualify job candidates who do not fill in this information on job applications.

Asking Candidates about Previous Salaries May Cause Them to View Your Company as Old-Fashioned

Asking a candidate about previous salaries may not be a good idea today. Modern job seekers might write you off as being outdated, intrusive and out of touch with current HR practices. Remember, candidates are interviewing you and your company as you interview them.

What is the correlation between what a person has earned over the years and how successful that individual will be if you hire him or her now? In theory, the answer is that there is no correlation.

Let’s look at the traditional hiring process. First, a manager identifies a need and submits a requisition to hire someone to fill an open position. Second, the manager assists the HR department in writing a job description of the duties to be performed and creates a salary range.

The salary range takes into consideration external market factors and internal job issues. The organization sets a value on the position by setting a salary range with a minimum, midpoint and maximum salary cap for the location.

Salary History Cannot Reveal if a Candidate Will Be Successful in New Job

Does the traditional hiring process seem like a well-designed, systematic approach to achieving a goal? Of course. Then why would anyone need to know what a candidate is currently making along with the salary history for the past 10 years? How does that information tell a recruiter or hiring executive whether that person will perform the job successfully?

For example, let’s say Ted applies for a systems analyst position at ABC Corporation. The company has advertised the job with a set salary range of $80,000 to $120,000. The starting salary range is $80,000 to $100,000.

Ted currently makes $76,000. In the past, his salary was in the $60,000 to $65,000 range. What does that information have to do with whether or not he can successfully perform the systems analyst position at ABC Corporation?

Why don’t more companies become transparent and disclose the salary range for a vacancy, rather than ask candidates what they earn? If companies disclosed the salary range in their ads, candidates would know how much money an organization was willing to pay. The candidate then has the opportunity to decide whether or not to pursue the position.

I think human resources professional Anthony Gargiulo Jr. of Oak Park, Illinois, is on to something. He wrote, “The practice of asking ‘What’s your comp?’ is a vestige of a command-and-control management system that today is a few heaps of dirt from being deep-sixed.”

Furthermore, if it is perfectly permissible to publish the benefits package online to show that the company is competitive within the industry, what need is there to know past salaries? Many people, especially high performers, look at the total package and not just salary. Therefore, an organization that focuses on salary histories is going to be looked upon warily by astute job seekers.

Some companies still operate with a 1970s mentality and wonder why they can’t find the right candidates for their positions. They need to wake up and smell the roses in 2018.

Some jurisdictions have already taken the lead. Change is coming.

Start a management degree at American Public University.

About the Author

Dr. Marie Gould Harper is the Program Director of Management at American Public University. She holds an undergraduate degree in psychology from Wellesley College, a master’s degree in instructional systems from Pennsylvania State University and a doctorate in business from Capella University. She is a progressive coach, facilitator, writer, strategist and human resources/organizational development professional with more than 30 years of leadership, project management, and administrative experience. Dr. Gould Harper has worked in both corporate and academic environments.

Dr. Gould Harper is an innovative thinker and strong leader, manifesting people skills, a methodical approach to problems, organizational vision and ability to inspire followers. She is committed to continuous improvement in organizational effectiveness and human capital development, customer service and the development of future leaders.