Posted March 05, 2018 by

Salary disclosure and the new climate: Tips for recruiters to make informed hiring decisions

 

Wages for women and minorities still lag behind their White male counterparts. Consequently, equal pay regulations have gained traction quickly in the last few years. The intent of the legislation, focused around salary disclosure, is to close the stubborn pay gap. Recruiters may be losing one tool in their toolbox but they can still perform their jobs well. 

Last year, eight states, cities, or localities made it illegal for employers to ask for salary history. At the end of 2017, more than a dozen pay equity laws were under review. Many HR experts anticipate this trend will continue. To get ahead of the curve, your HR team should review your strategy.

If you are like most recruiters or HR professionals, you ask candidates to submit their salary history. However, in today’s climate, that could place your company at risk for legal and financial penalties. Here we offer tips for how to communicate with candidates, and evaluate them effectively, while being mindful of new equal pay regulations.  

Recruiters don’t need a candidate’s salary history to negotiate

The ban on salary history changes the conversation between you and a candidate. HR thought leader Janine Truitt explains, “Transparency is key. At the time that the recruiter expresses serious interest in the candidate, salary ranges should be disclosed as well as any other perk or benefit that can serve to convince the candidate (beyond the opportunity) that the company would be a good fit for them.”

You can stay compliant through the following guidelines for salary negotiation:  

  • Instead of using salary history as a benchmark, determine an offer through evaluating the candidate’s work history. Don’t zero in on job titles — look at past responsibilities and how they’ve grown in past positions. Evaluating a candidate’s resume and LinkedIn profile help you assess a candidate’s market value.    
  • Ask candidates for their target salary, rather than their previous salary. Having this information will help you accurately match candidates with your open positions. When you understand their salary goals and how they justify this range, it will help you make the right placements.
  • Use the established salary range to negotiate a fair offer. Be open with the candidate to ensure both parties are in the same salary ballpark.

At this point, you’ll have a clear understanding of a candidate’s goals, qualifications, and salary needs. Use the information you gain to negotiate a fair salary that falls within the range you can provide.

Related: Tips for recruiters to negotiate salary

What happens if a candidate discloses their salaryWhat if a candidate discloses salary history without being asked?

It’s possible that candidates may voluntarily disclose their salary history. If this happens, you need to respond appropriately.

To comply with many equal pay laws, you may not use that information to:

  •      Offer less compensation than your pay scale dictates for their qualifications.
  •      Offer less than your current employees with similar education, experience, and responsibilities are earning.

Creating equal pay opportunities is a good investment

Equal pay laws require a different recruiting approach. Even if these laws aren’t in your state, it’s likely only a matter of time until they are. According to the National Women’s Law Center, nearly half the states have considered legislation to ban salary history questions.

Aside from compliance, equal pay impacts the success of your company. In a study of almost a thousand companies, companies committed to fair pay generated a higher return to investors. Additionally, fair compensation creates a healthier work environment and more productive employees.

“Supporting pay equity in the workforce creates a stronger relationship with employees,” said Zach Townsend, HR Manager at Verified First. “When you create a level playing field, it fosters loyalty, strengthens the social contract with the employer, and improves productivity. When employees know they’re fairly compensated, they focus on their tasks instead of comparing salary with coworkers.”

Understand your whole pay structureA fair pay structure and salary range impacts your job as a recruiter

The context behind your new recruiting approach matters. The most important point to know is how your organization justifies differential pay between employees. If a pay gap exists, the EEOC mandates it must be based on “seniority, merit, quantity or quality of production, or a factor other than sex.” The burden of proof rests upon the employer.

Also read: How your diversity activities can increase retention

Knowing how your organization’s pay structure aligns with equal pay laws allows you to have open, transparent, and fair negotiations with candidates. This is especially important when recruiting for entry-level roles, because Gen Z candidates will be braver than previous generations in asking about your efforts to ensure a fair pay structure, and about diversity and inclusion in general.

It’s also important for you to have a fair salary range for each position. To determine fair compensation, HR leaders create a range based off many factors. The available talent pool, competition for skilled workers, and the availability of jobs are strong factors that impact a salary range.

Hiring managers must confirm what issues affect how a candidate is placed on this range. They must determine what factors influence a lower or higher compensation package. This could include specific skills, management experience, or industry knowledge. Make sure to request this information ahead of time, which will empower you to have these conversations with candidates. 

Malcolm Hong, writer at Verified FirstAbout the author: Malcolm Hong is a writer, communications strategist, and marketing professional with a passion for excellence. He has honed his skills through positions at a wide variety of companies, ranging from public relations firms to nonprofits. He enjoys using his talents to communicate Verified First’s unique value proposition and loves the camaraderie shared among his teammates.

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