Salary History? Don’t Ask and Don’t Tell
Last July, Illinois Governor J.B. Pritzker signed into law a bill that prohibits employers from asking a candidate for their previous job salary history. Illinois is not alone. In the U.S., there are currently 17 statewide bans and 19 local ordinances that have acted against discussing salary history. With more states adopting these practices in the next 6-12 months, the question of “why?” comes to mind. Some municipalities, like Philadelphia, are choosing not to follow this mandate, arguing that taking away this question was inhibiting an employer’s First Amendment right to free speech. The fact remains that asking a candidate for their salary history allows for discrimination and does not always provide the top-quality candidate that companies spend thousands of dollars trying to find. As business leaders, hiring managers, and recruiters, we have to ask ourselves— is knowing a candidate’s salary history all that important? After all, we have a set compensation range (low-mid-high) that we have budgeted for an open position. If a candidate meets and exceeds the requirements, qualifications, and behaviors for the role and fits within the compensation range, does it matter? After all, both the employer and candidate win. Maybe the employer doesn’t get the “deal” they wanted or lower their expenses by getting the candidate for less than the compensation range. The candidate may also get a lot more in compensation than they received in their last position. Is that an adverse outcome? Or could it have the effect of engaging and motivating the new employee to increase his or her performance? Think back to your last interview. You were probably a little nervous being the center of attention, knowing that one key answer could land you a job or send you back to the drawing board. You did your research on the role and knew the range a prototypical person in this position would make, but the company has not divulged their compensation range for the job. Then they ask the dreaded question, “How much are you currently making, or what did you previously make?” Most employers assume these guided questions are to measure compatibility between past and future positions. However, for many candidates, this question feels like a trap. If the current salary is too high, the candidate could be pushed aside for being overpriced or overqualified. Indicate a range that is too low, and the candidate might receive less than the value of the job. There are also ethical questions at work. Shift the Conversation When examining questions regarding salary history, there is an opportunity for labor compliance violations. This question allows for disparate impact, which unknowingly discriminates against a group of people, especially women when compared to men for the same position. According to Business Insider, a Hispanic woman makes 53% of what a white male makes in a given year. These statistics vary by state, as some have enacted policies to close the wage gap, but the average data shows that this gap is still very much alive. Assigning a salary based on past employment earnings continues errors of the past rather than righting a wrong and determining the adequate compensation based on the position and responsibilities it brings. By creating laws prohibiting employers from inquiring about salary history, many states feel they are taking a step toward complying with the Federal Equal Pay Act of 1963 and attempting to close the wage gap. How do we move forward and continue to find ways to make sure the candidate matches the role if salary history is now out of the equation? Carolyn Cowper, V.P. of Performance and Rewards with The Segal Group in New York City, advises, “Shift the conversation to the candidate’s salary expectations rather than salary history, then move on to focus on the candidate’s skill set and qualifications for the role.” Recruiters now feel it necessary to ask the candidate what they think they are worth — taking a net worth of all their talents, experience, and assets that they will bring to a new position. For example, one person could make twice the salary of another but only have half of the work ethic and drive. When you take a deep dive into the backend of the hiring process, we see that salary history tells us very little. In a study done by Workplace Culture, they reported that 86% of millennials would take a pay cut if it meant working at a company with a better company culture. Work-life balance, a culture of advancement, and education reimbursements are often more important than compensation to today’s candidates. As a business, it is in your best interest to find people that share similar values and goals to help grow the company into the future. The Market is Speaking Many states agree that it does not matter how much you made in your past job. You should, instead, be getting paid the market price of the current position. Candidates should take it upon themselves to research the standard salary rate before going to the interview, and employers should also monitor this as well to see if they’re competitive. There are many online sources for these statistics (Salary.com, Glassdoor, and PayScale). Company leaders, hiring managers, and recruiters should ask the question by taking a “Total Rewards” approach: What is your desired base salary? Bonus? Benefits? Vacation? Other rewards (for example, educational reimbursement) and then let the discussion progress from there. As record low unemployment continues, and there are less skilled workers available for more increasingly skilled open positions, there are already hiring and employment trends happening that would have been unthinkable just 5-years ago — retention bonuses, extraordinary counteroffers, and even limiting background checks. Even Non-Compete Agreements are on the block. They are already not enforceable in 4 states (including California), and resistance is growing with a Senate bill introduced last year looking for a nationwide ban. In such an environment, it stands to reason that asking for a candidate’s salary history and other employer-favored actions will become history. Be prepared.
Employee Engagement: “Did I Stutter?”
Poor Stanley. The lovable curmudgeon on the still popular TV Show “The Office” wants to be left alone so he can do his crossword puzzle in the middle of a company brainstorming meeting in peace. His boss, bumbling Michael Scott, tells him to put his game down and join the group. Stanley replies with a firm, “No.” Michael then says, “Stanley, we’re havin’ a little brainstorm session.” Stanley then proceeds to cut him off and says loudly and firmly enough so the whole room can hear it, “Did I stutter?” Michael becomes so embarrassed and flustered that he calls a quick end to the meeting so he can grab a glass of water. The episode continues with Michael and Stanley trying to come to an understanding and better define the boss and employee relationship. Do you think Stanley is engaged in his work? Do you think he is committed and connected to his organization? Do you think Michael may have something to do with that? According to SHRM, executives from around the world say that enhancing employee engagement is one of their top five global business goals. As a critical business driver in today’s highly competitive environment, employee engagement can have a significant impact on your company’s bottom line. According to The ISR Employee Engagement Report, “Companies with high levels of employee engagement improved 19.2% in operating income while companies with low levels of employee engagement declined 32.7% over the study period.” Is it any wonder that increasing employee engagement is a top-five global business goal? A highly engaged workforce is the key to retaining top talent within your organization, driving high levels of customer satisfaction and loyalty for sustained growth. However, how do you know if your workforce is engaged or not? Then once you identify low engagement as an issue, how can you address the problem before your bottom line starts to suffer? Is My Workforce Engaged? That is a good question because we often confuse job satisfaction and happiness with employee engagement. Therefore, the thought goes that if my people are happy, then they’re engaged. However, it is possible to have a happy and satisfied employee who is not actively involved in their work or committed to the company. According to Kevin Kruse, the author of Engagement 2.0, “Someone can be happy at work, but not ‘engaged.’ They might be happy because they are lazy and it’s a job with not much to do. They might be happy talking to all their work friends and enjoying the free cafeteria food. They might be happy to have a free company car. They might just be a happy person. But! Just because they’re happy doesn’t mean they are working hard on behalf of the company. They can be happy and unproductive.” Thus, happiness and job satisfaction are not useful indicators of employee engagement. It could be they have found a comfortable place to “hide” in your organization without the level of commitment and caring that could help propel your company to the next level. Gallup regularly conducts surveys on the topic of employee engagement, and they have found that nearly 70% of the workforce today is disengaged, causing employees and businesses to suffer dramatically due to increased turnover, low commitment, and reduced productivity. How to Address Low Engagement? Measure employee engagement each quarter to provide closer-to-real-time data about how your staff views the organization, their managers (who have a significant impact on their overall engagement), and their roles within the company. The powerful “heat map” it creates shows leaders exactly where problem areas exist as they slice and dice the data into targeted workforce segments (by the department, location, generation, tenure, and more). Scientifically based employee feedback surveys allow you to take a deeper dive into the company culture and pinpoint the root causes of disengagement. By collecting anonymous feedback regularly, it gives teams and leaders real-time insights from scientific data that can then be used to impact change quickly. If you’re looking to bring more meaning to your employees’ work experience and increase employee engagement and productivity, then start acting on a proven and predictive data format. We can help you build an action plan to drive high engagement and performance, which will impact your bottom line and your ability to compete better and win. In August 2019, close to 200 business executives met and issued a statement on “The Purpose of a Corporation,” radically stating that companies should no longer advance only the interests of shareholders but also invest in their employees. It could be a reaction to a changing economic environment and record low unemployment. It could also be that business leaders finally understand the importance of employee engagement. That’s right—Did I stutter? SOURCES: “Did I Stutter?” The Office, written by Brent Forrester & Justin Spitzer, directed by Randall Einhorn, 2008; Gallup Employee Engagement Poll, August 26, 2018; The ISR Employee Engagement Report by Towers Perrin; Engagement 2.0 by Kevin Kruse, Createspace Independent Pub, 2012.
Debunking the Compensation Myth Surrounding Retention
A driving need for obtaining talent is retention. It is a huge issue when you take into account that, according to a September 2018 article from CNBC, “workers are quitting at the highest rate since 2001.” When retention rates are low due to high undesirable attrition, many business leaders look to recruitment to fill that gap and solve the problem. However, the reasons that candidates wield so much power in today’s market is because of a growing skills gap and talent shortage. The need is high and the supply is low, so it is unreasonable to believe that workforce headcount issues can be solved by recruiting alone. Most business leaders understand the laws of supply and demand as it relates to the products and services that they produce and sell. When demand is high and supply is low, prices rise. Conversely, when supply is high and demand is low, prices fall. The challenge is finding the equilibrium where the right price stimulates movement of the product or service rather than warehousing or letting it sit idle and unproductive. People, however, are not the same as a product and that is a hard pill for many business owners to accept. In other words, retention is not exclusively about price. Recently, Forbes published an article entitled, Why American Workers Quit Their Jobs, and provided an infographic to summarize and showcase the results. Unfortunately, the article and corresponding infographic can be misleading. The results are based on a survey conducted by PayScale; whose core business revolves around compensation metrics. Thus, is it any wonder that “I want higher pay” is identified as the highest percentage motivator for quitting? While informative, the article did not provide the complete picture leading most business leaders whose time is short and consume data and information in quick, easy bites to come to a quick conclusion. “Well, according to Forbes, a very well respected and trusted source of news and business information, retention IS about paying my people more.” WRONG! With all due respect to Forbes and the article’s author, it’s just not that simple and everyone who deals with recruitment and retention as a core function of their role and responsibilities knows it. Even PayScale knows it. The very same report cited in the Forbes article reflects that compensation is not the key to retention. A deeper look into the numbers reveals the following: Top Reasons for Quitting: I want higher pay (25%) I am unhappy at my current organization (16%) I want to work at an organization more aligned with my values (14%) Top Attraction to a New Organization: The opportunity to do more meaningful work (27%) Increased responsibilities in this role (17%) Increased pay for this position (16%). If compensation was the single most important retention tool, it would be at the top of the reasons for quitting and the attraction to the new organization. What this study reflects is that what exiting employees tell us, and what their real motivations are, are two different things. Additionally, one has to look even deeper to understand that retention differs across different levels of the organization. What motivates retention for front line workers is different than what motivates top executives, which is even different from what motivates managers or directors. As in any sales interaction, price is the most common objection encountered. “That product/service is just too expensive.” Every salesperson worth their weight is prepared and knows that such objections are often just chicken poop, and this is when the real sales work begins. What the client/customer does not see is the VALUE for the price but rather they see the PRICE for the value. When it comes to employee retention, it’s the same thing. Exiting employees use the price objection all the time as an avoidance, but if the business is to really solve its problems then they have to perform true root cause analysis, dig deeper and understand the actual underlying reasons for employee attrition. Let’s not fool ourselves either. Compensation IS a legitimate factor that DOES impact and factor into why people leave. For example, when an employee perceives: discrimination in the workplace or mistreatment; being skipped over for a promotion when deserving of it; not receiving the training and development they need; a lack of recognition or reward for a job well done; or even something as severe as harassment or workplace bullying. The overriding perception in these scenarios often becomes, “I don’t get paid enough to put up with this.” Therein lies the reason pay is provided as the chief motivator for leaving. The last thing they want to do, especially once they have made up their minds and they are ready to leave, is to burn bridges, make waves, or fight their way out the door. Mentally, it is best to make a smooth and conflict free exit. As such, they often hide their real objection to remaining for fear of offending someone, getting into an argument, or painting themselves into a corner where they cannot leave an environment they no longer want and are unable to go to where they believe they will be happy and prosper. Incidentally, compensation is also the easiest excuse for a company or manager to accept. So, what are business leaders to do about this? How are they going to retain top talent? First and foremost, don’t immediately jump to the conclusion that compensation is the silver bullet, or the magic wand that will solve all problems. That’s a surefire way to price yourself right out of business. Rather, work collaboratively with your HR department and managers. Engage in the same root cause analysis with your team’s motivations that you do when solving production or operational problems. LISTEN to the employees and what truly motivates them. Conduct engagement surveys to confirm it. But most importantly when you listen, be prepared to ACT on what you hear. Demonstrate to your people that they are valued, and you are willing to invest in them through training
Expand Your Candidate Pool: Best Behaviors Lead to the Best Candidates
I don’t know about you, but it’s starting to get old hearing the “it’s a candidate’s market” comments from nearly everyone in social media, news articles and in far too many blogs to count (The BEST Blog included). It’s one thing to call it out, but it’s entirely different to address and solve the problem. While there are currently no silver bullets, there are some innovative and different ways of looking at the workforce that can give you the edge over your competition. In January 2019, I came across an article that highlighted a professional’s path to business leadership. It walked us through how she got started in the industry, her background and expertise, recounted the obstacles she faced and how she changed with the times. These last two, obstacles and changing with the times, are often missed by so many when hiring. The Obstacle With un- and even under-employment at historic lows and such a significant skill mismatch, it’s becoming harder to backfill roles when the talent pool seems to be shrinking at an alarming rate. In fact, in Bloomberg (April 4, 2019 – U.S. Jobless Claims Fall to 49-Year Low, Below All Forecasts) it was reported that employers are “holding onto workers and loath to let them go.” This makes pulling talent from competitors even more challenging than ever before! Much of the issue is based on how one defines the talent pool. Hiring managers tend to select candidates only if they have the exact pedigree, experience and knowledge required for the position. Usually, this means they want a sales candidate’s “book of business” to come with them. For technical roles, they want candidates to make a parallel shift into the same role they are leaving. However, this is not the 1980’s. Candidates today are more career savvy and they have choices both in and outside their current industries. To add another layer of complexity, many business leaders are stuck in two camps: clone the current aging employee population or hire the younger generation. In cloning the current aging employee population, hiring managers want someone who has done it before in their industry and, if possible, for their clients or clients’ competitors. This first camp leads to low or no innovation, a decreasing talent pool, and the challenge of pulling from a competitor, which is the only place to find those who have done the exact same role you are trying to fill. Hiring the younger generation appears to be a terrific alternative! Get them in early in their career and they will stay forever, just like the Baby Boomer generation or Gen Xers, right? WRONG! Specifically targeting younger candidates over older candidates equally able, capable, and willing to perform the same job at the same rate of pay is a violation of the Age Discrimination in Employment Act (ADEA). Additionally, there are challenges that must be overcome such as client perceptions that they lack the knowledge, skills, and abilities to help them. There are also the challenges of keeping these early career professionals engaged in the business when they are hungry to grow their careers. So, how do we get around these issues? Changing with the Times: It is About Behaviors The solution does not have to be an either/or situation. In fact, age never has to be a factor at all, and legally it’s safer if it isn’t. Every role has certain behavior traits and competencies that lead to success no matter who is in the role. These traits provide us insight into each candidate around what motivates them, how they act or interact, and the thought processes they engage in. Competencies that candidates bring are developed over time and can be seen through their innate and learned behaviors. Competencies might be core to the role or company, demonstrated leadership or individual contributions, and may even be very unique based on the positions they have held. In the context of a job, people must possess a particular set of competencies to be a good “fit” and achieve success. The three critical dimensions of job-related competencies are: Behavior Traits that are required to accomplish the job Experience or job-related education and training that contribute to greater productivity Chemistry or the personality that is compatible with the company and work group. We need to change our hiring thinking by realizing the importance and specific identification of the behavior traits required in a role. This will open a wider, more qualified talent pool. Experience, or hiring the exact same position from your competitor, is too often viewed as the most important dimension. However, it’s actually the LEAST critical to success. Outside of highly technical roles, we can hire a lower level of specific experience because technical, product and industry knowledge can be trained. If a professional has the right behaviors and experience but the chemistry is lacking, a person may still be successful if the company and person recognize, and choose to work through, their differences. The same is true for professionals with the right behaviors but little experience and poor chemistry. The common hiring success denominator is behaviors – not experience or chemistry. We are all looking to hire the ideal candidate with adequate levels of behaviors, experience and chemistry. Unfortunately, this is akin to looking for a purple squirrel – good luck finding that in today’s dynamic hiring market. How Do We Identify these Behaviors? There are 25 specific professional behaviors that make up behavior trait families. We define these 4 families as: MOTIVATIONS – The fundamental drive of an individual characterized by more than the simple desire to earn money. What provides the individual the personal fulfillment in their work? MODES OF ACTING – Functional behavioral traits that address the individual’s approach and skills for accomplishing work functions. These include organizational and time management skills, planning and prioritization, initiative, work focus and physical and mental stamina. MODES OF INTERACTING – Addresses an individual’s interpersonal skills in how they influence, interact and get along with others.
