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Talking about Salary during the Interview Process
The question of when and how to set salary expectations can trip up even experienced employers and interviewers. Should you advertise salary outright? Should you wait until you’ve chosen the candidate? Are ranges better than a specific amount? Do you need a salary history from your candidates?
As with any employment issue, there are both pros and cons of advertising job salaries and salary ranges.
Pros of Advertising Salary
Many companies choose to advertise salary in their job postings to accomplish certain screening objectives early on. The following are several examples:
- Avoid interviewing candidates who won’t be satisfied. Advertising salary or ranges lets candidates self-select, saving you time and effort. If they wouldn’t accept the salary posted, they probably won’t apply. What might have been a wasted interview leaves another open slot instead.
- Avoid early inquiries about salary. Many companies prefer to avoid discussing salary in early interviews. Posting the salary range can help you avoid this. It gives candidates a general idea so that they will avoid questions until second-round interviews.
- Appear forthright and professional. This helps clarify expectations over a somewhat contentious issue before you even meet the candidate. For many employers, this is easier than introducing salary in person or at the end of the interview process.
Cons of Advertising Salary
Some companies avoid advertising salary outright for the following reasons:
- Good candidates may be discouraged by low amounts. A good candidate may be discouraged if the posted salary range is low. If no salary is listed, a candidate may apply, come in for an interview, and feel that the job is such a good fit that they’d be willing to take less than they thought.
- Fear of candidate expectations. Some leaders feel that advertising even a wide salary range can make candidates expect too much. Once they have a number in their mind – usually at the high end of the scale — anything less can be a disappointment.
- Don’t advertise willingness to pay more. A really great candidate may be able to negotiate a higher salary than what the company originally hoped to offer. However, advertising a high amount, even at the end of the scale, increases every candidate’s expectations.
A Brief Rant on Salary History?
It’s time to totally rethink conversations about salary. We hear hiring managers and business owners miss the mark on this topic all day long and it makes us sad because everyone loses by not getting this conversation right.
There are several schools of thought on this subject and just about none of them are correct.
The Liberal ACLU Perspective:
Employers seek out salary information in order to lowball candidates when making offers. Since underprivileged groups are typically paid less, it prevents them from ever getting to a level playing field.
This observation is 100% correct and it happens, but it is mostly irrelevant if you follow the prescribed techniques below.
Employer Neglects to Investigate:
Just the other day I asked a fellow business owner, “What was your candidate’s standard of living based on before you hired them for $17 per hour?” My friend said, “I don’t know, I never asked, but I am pretty sure they were making more because of their role in the non-profit organization they worked. But it’s okay, because that environment is terrible and those people are so mistreated. My company is great to work for, so she is going to be super happy here!”
The Standard of Living Dilemma:
Here’s another scenario: You post a job and are willing to pay a certain amount for your new position. A candidate comes around, shows interest, interviews, and accepts the job. Sounds totally normal right? Sure, but is the compensation you had set out to pay truly aligned with what the candidate needs?
You will never know if you don’t bother to investigate.
Stop being naive.
The worst case of this last scenario is that you ask your candidate, point-blank, about salary requirements and they agreed that your compensation would be sufficient, only to later find out they truly need more money to maintain the standard of living they’re used to.
This person might be desperate and need a job so they will say or doing anything to get a paycheck for the time being, then once they get back on their feet, they’re gone. This person still has bills to pay, gas to put in their car, food to put on the table, vacations to go on, children to put through college, and by the way, they live in the most expensive metropolitan area in the world in terms of overall cost of living…
If you hire this person and they can’t afford to maintain a standard of living that they’ve become accustomed to previously, what do you think will be going through their head every day, and especially once they’re “back on their feet” if that’s their situation?
“How do I get back to that place?” or “Will this position and company ever get me to the standard of living I desire?”
It’s not even what they desire sometimes as much as it is simply what they need to get by.
If you had someone coming to work every day thinking about this question and they’re failing to see how they can create a path for themselves that allows them to achieve the financial stability they’re looking for, then you have a MAJOR problem on your hands. This is why it is so important to discuss salary history and expectations in a way that is not intrusive or obnoxious, but carefully planned so it works to the benefit of both parties.
What is the Solution?
To the chagrin of many experts, we always ask, and recommend, two questions in the very first interaction with a candidate:
- What have you been earning in your last several roles?
- What would you liked to be paid in your next role?
We don’t want this information so we can lowball our candidates. We ask so we can identify what standard of living they have been at and if we have an opportunity that will create a step-up from what they’re used to. It’s important to dig into more than just their base salary. The goal is understanding overall compensation, which can include cash incentives, other benefits that are monetary or not, like 401K matching, company car, phone, PTO, expense accounts, and anything else that can be viewed as a benefit or item of compensation.
We believe strongly in being fair. No matter what position we are dealing with. The goal is to always ask questions about salary history until we believe we have a clear and concise understanding of the other person’s needs and desires for compensation.
If what they are asking for matches with their skills, experience and, in general, with what they bring to the table AND your company can afford to pay them this amount, then you know what you can reasonably offer your candidates. These questions allow you to truly evaluate whether your candidate is likely to be a long-term fit with your company or not.
SUMming it Up
So, in addition to advertising salary in a job ad, you must strongly consider salary history as heavily as you would previous experience.
Requiring a salary history makes little sense for lower-level positions though, and is most typical for higher-level roles. It can also be a good way to understand what competitors are really offering to their candidates. With this knowledge, you can pick a starting point for negotiations or understand what a candidate is likely to expect in your industry for your position.
Remember to fairly assess what the candidate will bring to the company. Don’t just match or offer a rate slightly above their previous salary, even if it was a similar position. Employees who feel underpaid and undervalued will be less productive and look elsewhere more quickly.
Consider setting a target range based on the role and what you’ve learned about the candidate. Once you’ve done this, take a look at their salary history and check for extreme deviations.
The decision to post or not to post a salary range is up to you. Once you’ve posted a few job descriptions, assess what effect you think posting or not posting a range has had on candidate’s expectations and behavior. You can then see how altering your practices for advertising salary affects your overall process.
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