KNOWING THE PRICE OF EVERYTHING, AND THE VALUE OF NOTHING

Debate has raged online this week amongst recruiters about the efficacy (and moral right) of employers demanding to know a candidate’s salary history as part of the hiring process. Not only do they want the question answered, but they want undeniable proof, in case a sneaky applicant tries to pull a fast one.

There are two reasons for doing this. The first is due to ignorance; they have always asked for this information, but cannot really justify why. The second reason is much more alarming. It’s that they cannot trust their own judgement when assessing a candidate’s worth, but seek instead to rely on the judgement of other employers, and hiring decisions made months, or sometimes years ago.

This admission of ineptitude is of course wrapped up in the perceived inalienable rights of employers to know every detail of the goddamn truth, and then use it to negotiate the best deal possible for their organisation. The thinking here is that if IBM were willing to pay you £100k per annum, then you must be worth £100k per annum, or at least be in that vicinity. At no point is anyone suggesting we should call IBM and ask if this individual represented good value for money, or even stunk the place out. The mere fact that he or she has a pay slip with that figure is seen as the equivalent as a certificate from a surveyor valuing a property.

If I was buying a house, priced at £300k, and discovered that it had been previously bought for £100k, would I begrudge the profit of the current seller, or consider the value of the property on its merits, and compared with similar homes in the area? The sensible answer of course, is the latter.

So should an employer seriously use the current salary of a candidate as a benchmark for a new job offer? Or instead, should they consider their own valuation of the candidate for this role against whatever salary the applicant says they want or need?

As we already know, remaining with an employer can mean your income stagnates, when compared to those who switch employers regularly. New staff may join your firm on higher rates of pay, but with less experience and ability of current staff. They held out for more money, and your employer felt compelled to pay it, without extending the same to existing employees.

However, I say that it’s bullshit to refer to the increased salary with a new company as a raise. It’s a fresh start, not a continuation of employment, and the worth of the candidate should be considered on its merits, and what the company know the job to be worth.

Please also bear in mind that higher paid individuals who are willing to accept a lower salary for the right job, are very often excluded on that grounds that the job is (perceived as) obviously beneath them, and they will leave as soon as a better offer appears. Employers, whilst always looking for a bargain, can be extremely suspicious when one appears, and hiring managers fear for their own job if they hire someone who previously earned more than them. Yes, it is stupid, but yes, it does happen.

So should an employer still fish for that information on current and previous salary history (whether legal or not)? On balance, I’d say yes, but on these conditions.

  1. The current salary of an individual is not the sale price sticker or accurate valuation of their worth
  2. What this individual negotiated in the past, is not necessarily what they want or need today.
  3. The headline salary of an individual rarely gives the full picture. Other tangible benefits are a crucial part of the equation.
  4. There are a great many intangible benefits or to working for a company, such as prestige, training, mentorship etc
  5. There are often huge costs associated with working in most jobs, including the costs of commuting, time away from home on business, reputational damage in working for a small player (even for a larger salary).
  6. At different points in a person’s career, they will place more (or less) importance on cash salary, and their work / life balance. This should be considered seriously.

 

Let’s face it, employers always want a bargain. Recruiting a £70k employee for only £60k is terrific, but could be storing up problems for the future, just as much as paying over the odds would. The answer is not to avoid or disregard information on salary, but to be much more open and candid about it. Employers are scared that this will cost them more money, but I disagree. In fact, I would urge as many workplaces as possible to be transparent about salaries within their company too.

If a hiring manager really wants to know your current salary, ask him to show you his first – and his payslip.