Why banning the salary question misses a major point

November 16, 2017

In a remarkably progressive move, not without resistance from the business community, various jurisdictions in the USA are banning interviewers from asking candidates about their salary history.

Few jobseekers will lament this move.  It’s the no win question – either tell the truth and the advantage is with the employer when an offer is made, or risk being found out later for exaggerating when the tax information is passed on, for example.  While there are ways to sidestep the question it’s difficult to do so, and carries the other risk that an unwillingness to share will put the candidate at a disadvantage.

The reason for the ban is right and proper.

Women in the US earn approximately 80% of the salary of men for the equivalent job. By asking for salary history information this discrepancy is perpetuated. Now, it is suggested that by asking instead for salary expectations the problem will persist, and that may be partially true, at least until women gain the confidence to ask for the right amount, nevertheless this ban can only be a good move.

salary

This is the best image I could find when searching on the term “women’s relative salary”

Certainly, many women and men will be relieved not to have to answer the last / current salary question, although most people don’t know how best to deal with the question about salary expectations.

Why? Because they don’t know what number is most likely to secure them the job, and they therefore shoot low.  The mistake is to think that they are required to answer with a number. While the interviewer is almost certainly looking for a number,  if the candidate does not know what they can legitimately expect they can’t answer the question with a figure.

And here’s the thing.  The question is framed in such a way that it assumes the candidate knows how much they should be paid for a job, when they know very little about the role. They don’t know what demands and responsibilities it holds (the job description and person spec are unlikely to be sufficiently accurate sources of data to allow one make such a judgement) and crucially, they don’t know how much other people (read: men) at that level in the organisation are paid.

It’s an inappropriate question to ask a candidate because the employer knows what the correct pay level should be, and the reason they ask the question is because it might provide an opportunity to offer a lower salary than they need to, and all the better if that lower salary is still greater than the candidate quoted as their expectation.

In an ideal world there would be no discussion of salary at the interview stage.  If a person is deemed to be the best candidate they should be offered the job at a fair salary that takes into account the level of difficulty, targets, scarcity of skills and what other colleagues earn. It doesn’t work like that because there’s a zero-sum game that is played out in recruitment that sets up an antagonistic rather than collaborative relationship between employer and employee from the very start.

Of course it’s completely unacceptable that women are offered less than men for the same position, but what is missed is that employers want to play games that might lead to resentment from any employee when they could, if they were honest and fair, increase loyalty through their salary system.

 

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The bell-curve shaped career ladder

January 4, 2016

We tend think of careers as a process of climbing, and at the end of it we are at our highest point on the ladder.

In fact that’s never been the case and according to HM Revenue and Customs data average wages now peak at around 40 – 45 years old. In other words salaries are now highest for the average worker at around the half way point of their career. For some, salaries decline gradually after then, while for the average they fall away significantly so that someone still in work over the age of seventy will be taking home much the same as someone in their early twenties.

Our career trajectory is not a line that goes up from bottom left to top right, but more of a bell-curve.

Career Ladder

Career ladders look more like this…

ladder

…than this

This data is based on all levels.  I couldn’t find specific information for management roles, but my guess is that the pattern is similar.

If we lose our job or decide to leave, the likelihood is that at best we will find a job at a similar salary once we reach this age group and beyond.  Mostly however, we will need to make compromises and accept a lower salary.  In other words, after our mid-forties we are climbing down the ladder.

The prospect of climbing down the ladder for over twenty-five years of working life is demoralising. So what can be done?

First, accept the situation.  This is the new reality and not everyone can keep progressing in a world where people are working for longer and company structures are getting flatter. There are simply not the positions to be promoted into, and so progress stops earlier than in the past.

Next consider these options:

1 Go self-employed. Become a consultant and sell your expertise.  The likelihood for many is that earnings will still go down but fulfilment will go up. For some, working in a lower level job is humiliating, while being one’s own boss, even if that means less money, is preferable.

2 Learn new skills in order to broaden your appeal and make you more employable.  This may help to keep the salary higher than otherwise. Besides, learning is is good for the brain.  As we age, brain-training becomes more an more important.

3 Change your values.  Instead of thinking within the framework of money and status, look for fulfilment and meaning in your work. Doing something new and different makes for a more interesting life.  Work is not just about money and status, it’s a way to stay healthy in our twilight years.  It means getting out, interacting with people and thinking. Physical, social and intellectual activities are the key to a healthy balanced life.

There it is. We work for longer than ever before and our earnings decline from about half way through, but surely that’s better than years of watching daytime tv?


It’s not about the money, money, money.

May 16, 2015

At a panel discussion on the banking industry I attended a few months ago, someone asked if it was possible to attract talent to senior positions without the promise of high, guaranteed bonuses.  A senior HR executive from one of the major corporate banks and an academic both answered, quite confidently,  that they thought it was.  Bonuses, they agreed, could be much less than they currently are and banks would still attract top talent.  The academic even said that talented people are not particularly motivated by money, but by the cut and thrust of deal-making.  They want to be in the thick of big M&A activity.  It’s a myth that the banks need to pay big bucks in order to stop top talent from joining other industries.

I asked why the banks didn’t bring their bonuses to a level that the rest of society would find reasonable. The answer was that none of the big players had the guts to try it.  In other words, they were frightened of losing talent not to other sectors but to each other.  If one bank blinks the talent will not be interested in joining and eventually what talent they have will disappear.  If so, then there’s no question that the only way to deal with the matter is at the industry, if not, governmental level.

It has been proved many times that a strategy based around providing the best possible work experience is a more effective way to retain talent than paying the most.  Indeed it was proved just last week by my friends at Goodman Masson, the finance industry recruiters.  Their staff turnover level is well below 20% in an industry where average turnover exceeds 30%. A four point approach won Goodman Masson the coveted Great Place to Work award for Best Workplace in the medium size business category, and those four points are 1) Giving employees the tools and infrastructure to do their job well, 2) Giving them opportunities to develop professionally, 3) Paying them well and correctly, and 4) Giving them an environment they won’t want to leave. (Click here for the full report).

Note that the third point does not talk about excessively high pay, but it does suggest that Goodman Masson aim to be competitive with pay. They recognise that while remuneration is an important factor in staff retention, it’s not sustainable as the only tool in the box, because all it takes is for a competitor to offer more for the strategy to fall flat on its face. It’s the rest of the package that’s really important because that’s what creates the culture required that stops people wanting to leave.  You will never build engagement by throwing money at your staff.  In fact the more you throw at them the more they understand that you don’t care about them, but that you are simply buying them.  People like to feel loved.

Retention comes from engagement and commitment to the company.  It’s about creating an environment with shared values and where people appreciate that the company cares about them.

Now it may well be the case that bankers are somehow different to everyone else and are only interested in money, but that’s not my experience.  In my experience some bankers are perfectly decent and lovely people, and some are something that rhymes with “bankers”.  In other words, they’re pretty much like anyone else.

Can banks change? That’s not looking likely given that they are still a very long way from understanding that a business can stand for something more in the world than profit.  Goodman Masson stands for caring about its people.  Their priority is not about constantly demanding improved results from their staff. As a result of this employee engagement is high and guess what – performance is constantly on the up.


How salary inflation happens

February 10, 2010

Ever wondered how salary inflation happens?

It’s simple really.  The way it works is is that specialist salary consulting businesses trot along to big corporations and they say “We’ll tell you if the salaries you pay your staff are average, or if not, if they are in the lowest, highest, second or third quartile.”

It turns out that about half of them will be around the average, with the rest either above or below.  Strange but true.

The consultant then asks: “Would you like your company to pay above average, about average or below average?  Remember, that’s your salary we’re talking about as well, Mr Senior Board Member.”

“We want to attract the best so we shall pay above average.  Tell us what we should be paying at each grade in order to make sure that we are paying well within the second quartile”

“Very good, we will. That will be several thousand pounds please.”  A few weeks later they come back with their report and, yes, you guessed it, everyone is awarded a nice healthy pay rise.

Next year the same thing happens, only this time the message is slightly different from the consultant.

“The market has caught up with you.  All the other companies are now paying what you were paying, in fact many of them are now paying more.  You’re down in the third quartile.  Amazingly, when we asked other large corporate firms the same question that we asked you, not a single one of them told us they wanted to pay below average so the average is now higher than it was last year.”

“That won’t do, ” says the CEO, “our people (including me and my fellow board members) deserve to be paid top dollar and we want to attract the best.  Tell us what we should do to get back into the top half of the pay league.”

“OK, we will.  That will be several thousand pounds please.”

And so on.