Asking about salary history is something employers and HR teams have been doing for decades. But why? It can lead to unfair pay practices, inequality, and negatively impacts our diversity and inclusion efforts.
In fact, there are four main issues organisations will face if they choose to continue with this outdated practice.
1. The cycle of inequality
Asking about a candidate’s salary history perpetuates salary disparities. Ethnic minority groups, women, and people with disabilities are the most likely to be underpaid due to discrimination. If we decide to use their salary history to make decisions about their future pay, all we’re doing is transferring that inequity from their previous organisation to ours.
This could be the reason why they are looking to leave their old job in the first place. But instead of closing the gap, it makes it more difficult for these groups to overcome these inequalities.
2. Fairness and transparency
New LinkedIn research has found that salary is the number one factor when it comes to employee satisfaction. However, people are not looking for the highest salary. Instead, they want the assurance that they are being treated fairly when it comes to pay.
This is why candidates increasingly look for a track record of fairness and transparency when they join new organisation.
We’ve seen research in the past demonstrate how the number of applications significantly increases when we publish pay ranges and are transparent about the process. So, if we prioritise this and assess starting salaries based on the candidates’ skills, there should be no need to ask about salary history.
As something many organisations have always done, it can feel natural to ask. However, it is only by eliminating this question that we will be able to get rid of unconscious bias. The answer is usually something that can easily influence us or other people to make decisions that they wouldn’t have otherwise made.
3. Diversity and inclusion
Again, research shows that women are more likely to negotiate lower salaries or be less capable of negotiating higher salaries than men.
This is just one of the factors contributing to the wage gap. It is also a common reason women look to move from their current roles. When groups of people that have been previously discriminated against see that there is no salary range advertised, or that they’re being asked about current salary, the worry sets in that they’re going to continue being undervalued and treated unfairly. As a result, they’re less likely to apply for the job.
If you have an initiative where you are trying to encourage diversity and inclusion, you are harming that by having a lack of transparency and asking about salary history. Immediately, people with negative pay experiences are going to assume they won’t be treated equally.
4. Salary expectations over salary history
Some people may be inclined to think that asking about salary expectations is better than asking about salary history. And while it might be marginally better, it still leads to some of the same outcomes of inequality and hindering diversity.
Imagine that you go to a car dealership and ask them how much your dream car is. Then, the salesperson asks what were you expecting to pay when you came in. Being presented with this question before being given a price would likely lead you to assume that this person is not being honest or transparent, right?
So why do we feel that we can do this in an interview?
Our expectations are based on our experiences and our history so we will see a correlation here when presenting the question. Let’s say one person is underpaid in their current job on £30,000. Somebody else in the same role is on £50,000. If both decide to leave their jobs and apply somewhere else, the person on £30,000 is going to have a salary expectation that is much lower than the person on £50,000 because they’re already underpaid.
This would then revert us back to issue number one— the cycle of inequality. We’re simply transferring the discrimination from one organisation to another instead of paying people based on their skills and capabilities.
Conclusion
Does your organisation still ask about salary history during the recruitment process? Or do you feel there is a genuine benefit to asking these questions? We’d love to know.
Eliminating discrimination and unconscious bias is one of the major benefits when it comes to changing our hiring habits. It allows us to focus on diversity and equity—reaching common goals that many organisations are now striving for.
If you’re looking for more insights relating to this blog, check out the links below:
Why diversity of thought should be a top priority for hiring managers