The "No Salary History" Law Won't Make Recruiting Better—Getting Rid of Box-Checking Will

by | Jan 23, 2018 | Current Articles

While some people are concerned about how the “No Salary History” law will affect hiring, the truth is that asking or not asking about salary really shouldn’t make a difference. It’s not going to make or break your recruiting process. In my opinion, there should be a law preventing companies from box-checking skills, experience, academics and salary history, too.

The reason: Asking these questions prevents companies from hiring diverse talent, top tier talent, highly motivated people and high potential people. None of these “must-have” factors matter. What matters is if the person is competent and motivated to do the work required and, if so, will do it for the salary being offered.

As a general recruiting rule, it’s always better to discover if the person is competent and motivated before discussing salary. This way you find out how talented the person is and if the open job matches before discussing his/her compensation needs. If the compensation doesn’t match but the person is talented, you’ll find another job for the person. Since you’ve done some relationship building with the person, you’ll also be able to connect on LinkedIn and proactively ask for referrals.

From a negotiating standpoint, if the job represents a true career opportunity, the salary range will become less important. For example, I just spoke with a “C-level” officer who was more than willing to take a 25% cut to get a job that didn’t require her to be on the road 60% of the time. She also gave me referrals for two director-level positions we were filling. These discussions would never have been possible if I asked about salary history first. When I was a full-time recruiter (for over 25 years), these types of discussions were daily occurrences.

So while filtering on salary is both naïve and unnecessary, so is filtering on the “must-haves” criteria, either before meeting the person or in the first phone call. It doesn’t take a lot of logic or persuasion to convince all but the naïve that if you can prove a candidate can do the work and is motivated to do it, he/she has exactly the amount of skills, experiences, competencies and education required. And if the person sees the job as a career move, the salary being offered is exactly what it needs to be.

This table provides the factors we’ve seen best predict on-the-job success:

You’ll be able to assess most of them by digging deep into the person’s accomplishments related to the performance requirements of the position. This short video lesson describes how to score the candidate on these factors. This post describes the two questions you need to ask to prove the candidate is both competent and motivated to do the work.

Sometimes candidates ask about the salary before they even know if the job represents a significant career opportunity. This also makes no sense. Even if the job initially being discussed is not a fit on salary and opportunity, there might be something else available that is.

So when candidates ask me this question, I say the compensation doesn’t matter if the job doesn’t represent a true career move. Then I suggest we first determine if it does and then we’ll see if the compensation is a fit. The recruiting principle underlying this approach is to shift compensation from a filter to a negotiating factor by first determining if the person is performance qualified – meaning he/she can do the work – and, if so, if the job represents a career move.

When I find candidates who meet this dual criteria, I just ask about their salary needs. If they see the job offering as a better career move than their current position or others they’re considering, their requirements are typically pretty reasonable. If they’re too high, I ask if they’d be open to consider it with a much more modest increase if it was offset by a more significant job with more growth and more satisfaction. Few people opt-out at this point.

No one needs to filter candidates on salary history or by a laundry list of skills and experiences. Prohibiting all of these factors would be a better law since it would open up the talent pool to the truly qualified. You won’t even need to filter out the unqualified since they’ll self-select out by simply asking interested candidates to write up a few paragraphs about what they’ve accomplished that best fits the performance requirements of the job.

While this is a different approach, I asked a top labor attorney from Littler (one of the top labor law firms in the U.S.) to validate it as part of my book, The Essential Guide for Hiring & Getting Hired. Here’s a copy of his whitepaper, but his summary comments pretty much say it all:

By creating compelling job descriptions that are focused on key performance objectives, using advanced marketing and networking concepts to find top people, by adopting evidence-based interviewing techniques, and by integrating recruiting into the interviewing process, companies can attract better candidates and make better hiring decisions.

Because the Performance-based Hiring system does differ from traditional recruiting and hiring processes, questions arise as to whether employers can adopt Performance-based Hiring and still comply with the complex array of statutes, regulations, and common law principals that regulate the workplace. The answer is yes.

How to Handle Candidates' Salary Questions at Every Hiring Stage

by | Sep 20, 2016 | Current Articles

 

Talking about compensation can be awkward. As a recruiter, you have limited budget and can't always offer the candidate everything they envision, salary level included.

For you, the trick to negotiating salary is timing – you have to put the salary conversation on hold and get the candidate to focus on the career opportunity in order to make compensation a non-issue. Here's how to do that throughout the hiring process:

How to steer the conversation away from salary

When a candidate asks me what the compensation is right off the bat, I say something like, “It doesn’t matter if the job doesn’t represent a career move. So let’s first see if the job is a career move and then we’ll see if the compensation fits. Worst case, we can network for future opportunities.”

When the candidate pushes and says he or she doesn’t want to waste my time and demands to know the compensation range, I say, “I don’t want to use compensation as a tactical filter to have a strategic career discussion.” Pause and let this sink in. Then say, “Since I’m handling multiple roles from senior staff to executive level, if your compensation is out of the range of one of our current openings, I suspect there will be other opportunities in the future that will be a better match. That’s what networking is all about anyway. Isn’t it?”

Of course, I’ve minimized the chance to have to resort to these rebuttals by telling the person upfront that I’m handling a number of different positions and only asking if the person would be open to an exploratory career discussion if one of them made career sense. The idea behind this is that I want to understand the candidate’s background before I describe the job.

This gives me, as the recruiter, the opportunity to determine if the candidate is strong and, if so, I can then describe the job in terms of my classic 30% career move scenario. Too often candidates opt out before this happens or recruiters oversell the job before they know if the job is appropriate.

If a candidate still pushes and asks, “Okay. What’s your definition of a career move?” I then say, “A career move needs to represent a non-monetary increase of at least 30% consisting of some combination of a bigger job, more rapid growth, an improved mix of more satisfying work and more impact.” At this point, most candidates agree to move forward.

What to do when the candidate wants a higher salary at the offer stage

Putting compensation in the parking lot is only a temporary measure. It will come back full steam once you and the candidate jointly decide to get serious about the open opportunity.

When I sense compensation is going to be a problem, I start the negotiating process early.

One way is to use the “push away” technique. In this case I say something like, “While you’re strong in the areas of ____ and ____, we’re a bit concerned you’re light in the areas of ___ and ___. While we’d like to invite you back for another round of interviews your compensation is quite high given this gap. Regardless, we’d like to still move forward if you’re in agreement knowing that any compensation increase will be modest.”

Even if the candidate agrees to this step, when it comes time to accepting an offer candidates typically want more than the budget allows. This is when I resort to my “here’s why it’s better to be underpaid” pitch. It goes like this:

  • If you're overpaid, everyone will expect more of you. Consistent great performance will be anticipated, every mistake will be magnified, and raises will be minimal to get you back within the range.
  • There won't be a honeymoon period. In your new job, you'll be under a lot of unnecessary pressure during the learning and ramp-up period. It will be impossible to deliver since everyone assumes you already know everything.
  • Growth will be slow. Since it will be very difficult to achieve the unfair and inflated performance objectives, promotions are less likely, and your salary will put you out of the range of other internal opportunities. They’ll also be fewer future opportunities on the outside since recruiters will filter you out as a result of your over-market compensation.
  • Don’t make long-term career decisions using short-term factors. Slower long-term growth is what happens when candidates unknowingly pursue a short-term compensation maximization strategy. It’s always better to select jobs that offer the most upside potential rather than those that offer the most money.

If you’ve gotten this far without losing too many candidates for monetary reasons, don’t make the offer just yet. Instead, ask your candidates to forget the compensation for a moment and ask them if they really want the open job. If the answer is no, don’t make the offer.

However, if they say yes, have them tell you why. If your recruiting and interviewing process has been thorough they’ll be able to describe the 30% solution in their own words. If their answers are vague, don’t make the offer until they actually understand why the job represents a true career move.

As far as I’m concerned, compensation growth must follow performance. It must never lead it. Whenever it leads it, or dominates the negotiating process, you can be assured trouble will soon follow.