Salary History: To Ask or Not to Ask?
A new Glassdoor survey finds many job candidates don't want to be asked about their pay in past positions, and some cities and states have passed laws prohibiting such queries. Legality aside, what sort of value does asking questions about salary history add to the hiring process?
By Mark McGraw
For employers in some places, the decision has been made for them.
Cities such as New York and San Francisco, and states such as Delaware and Massachusetts, for example, have passed laws prohibiting interviewers from asking candidates about their salary history.
And, at least one recent study suggests that prospective hires don't particularly want to discuss the subject. In a survey of 1,329 adults who were either employed or looking for work, Glassdoor found that 53 percent of respondents believe employers should not ask applicants about their current or past compensation when negotiating a job offer.
But, legality and job-seeker sentiment aside, is it worthwhile to ask questions about salary history anyway? Will employers glean information that could help inform hiring decisions, and would not having that information actually impede the process?
All things considered, talking about past pay can offer employers some insight into a candidate, says Barry Gerhart, senior associate dean for faculty and research at the University of Wisconsin School of Business.
"You can glean useful information from knowing [an applicant's] salary history, because it does show the degree to which, or whether, a person has successfully moved through positions of increasing responsibility," says Gerhart.
"In that sense, it helps an employee assess a person's ability to learn and succeed across a variety of roles and contexts. Also, knowing someone's last salary might help start a conversation between the applicant and employer [regarding] the salary range for the prospective job and whether each side wishes to proceed."
The downside of digging into a candidate's salary history, however, is "the potential to simply perpetuate underpayment -- or overpayment -- for some people, by giving too much weight to what other employers have paid them," he says.
Angie Salmon, senior vice president at Kansas City-based CBIZ Talent and Compensation Solutions, points out that most of CBIZ's executive search clients want to know candidates' recent compensation history.
"And I don't see this desire diminishing," says Salmon, even if other states and cities were to consider or eventually pass similar regulations.
That said, many employers -- especially those with operations in multiple states -- will likely adapt pay-related application and interview questions in order to mitigate potential risks, she says. Interviewers, for example, might ask a candidate what his or her salary expectations for this position are, rather than posing direct questions about what they've earned in the past.
Ann Paulins, a professor and senior associate dean of research and graduate studies at Ohio University's Gladys W. and David H. Patton College of Education, doesn't see a need for entering salary history part into the hiring equation at all.
"Asking the question about salary history," says Paulins, "is sort of similar to [asking a candidate], 'Tell me about your family,' 'Are you a primary caregiver for any family members' or 'Do you have children? (especially for women).' We have all learned that these questions are highly inappropriate and, in fact, illegal [in some cities and states]. Refraining or using the question provides insight into the company culture."
In addition, determining the accuracy of the salary data that an applicant provides is difficult "unless prospective or new employees are also asked for W-2s or other salary confirmation documents," she says. "Using data in which the accuracy might be questionable introduces a whole other set of complications."
Looking ahead, companies -- and cities and states -- that want to attract a diverse candidate pool "are likely to introduce and enforce rules that disallow historical salary data questions," says Paulins, adding that relying on salary data in hiring decisions "exacerbates the advantages of white and male employees" who have historically been paid more. Similarly, she says, the use of past compensation data adversely affects those returning to work after a hiatus to, say, raise a child or serve as a caretaker for a relative, as well as younger applicants.
Ultimately, there are other ways to determine what to pay new hires that don't involve asking point-blank questions about what they've earned elsewhere, says Gerhart.
"Rather than focus on salary history, one can -- as many employers already do -- focus on the skills needed for the prospective job, and whether the candidate has displayed these skills in previous positions, he says, "or, how quickly and how well they would be able to acquire those skills, based on how or if they have progressed through jobs of increasing responsibility."
A potential advantage of concentrating on ability instead of past income "is that when pay is more connected to the actual contribution -- or expected contribution -- that person will make to the company, the right people will be matched to the right jobs and company effectiveness should be better," says Gerhart. "Effectiveness is always [greater when] strong applicants who would make great employees do not get screened out using criteria that are not predictive of on-the-job success."