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Andy Milner

Hiring managers asking existing salary

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Andy Milner

Amazon and Bank of America have joined Google, Facebook, Amex, Wells Fargo and Cisco is banning asking for previous salaries even where it's not (yet) forbidden by state law.

 

It doesn't seem that any of these organisations are currently extending this outside of the US as far as I can tell - that would be an interesting step as it would likely indicate that they are seeing benefits (or at least a lack of impact) from the change, rather than just reducing administrative overhead in managing different policies across US states.

 

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WWW.BNA.COM

<p>Job applicants at Amazon’s second headquarters won’t be asked to divulge their salary history during the application process, as the Seattle-based tech giant recently decided to ban the inquiries.</p>

 

Here's a good summary of what Amazon are doing:

 

Quote

 

  • Amazon has forbidden hiring managers from asking job applicants about their pay history, Buzzfeed reports.
  • The policy took effect Jan. 1 and is in direct response to the 13 salary history bans adopted at the state and local level. "Amazon is taking a proactive stance to be consistent for all candidates residing in, or applying to jobs in, the United States," it told hiring managers in a memo.
  • The company is banning direct and indirect questions about current or previous base pay, equity compensation, bonuses, benefits and variable pay. Hiring managers also may not consider salary history, even if an applicant volunteers the information. Likewise, they may not use LinkedIn Recruiter or similar tools to estimate or obtain someone's salary history, Buzzfeed says.

 

 

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WWW.HRDIVE.COM

As more state and local governments ban pay history questions, some employers are opting to preemptively prohibit such inquiries internally.

 

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Andy Milner

@Eva Keogan that brings to mind another discussion on the Community around pay transparency and the rather radical way that they do it in Finland!!

 

 

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Eva Keogan

Great to hear @Jonathanmax your friend had a salary increase - but in reality she's been underpaid by 40% for her whole career!

It seems regulation is not really working at the pace it should. I think the industry should consider some kind of pay grading system and even go as far as reimbursement. 

 

So on that basis, when it comes to asking about pay levels, it would be more appropriate for candidates to be proactive as well. 

 

We have been reading more news about the widening Gender Pay Gap in the City, as well as the bonus gap. Blackrock has reduced their gap by 5% down to 23% and says this is largely due to a “gender distribution imbalance” - perhaps a bit of plain English could be put to use here, and some clear steps as to what the next steps are which will be taken because it's still way off target. 

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WWW.FNLONDON.COM

Progress puts BlackRock ahead of some of the City’s largest firms, which have failed to improve disparity in the past year

 

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Andy Milner

@Jonathan Max - that’s a great result for her!

 

Something we haven’t touched on directly here (and probably hasn’t been discussed enough) is the racial pay gap.

 

Although this article is from the US and not industry specific, it quotes that Latina women are paid 46% less than white men (vs 20% for women generally).

 

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WWW.CNBC.COM

In a growing number of places, it's illegal to ask about salary history.

 

The question is also likely to disadvantage people moving into the industry or rejoining after career breaks.

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Jonathan Max

I was speaking with a female professional with Asset Management the other day; who was enjoying a well earned period of gardening leave and looking forward to joining a large asset manager.

She received ~40% increase on base salary......the company confirmed the level was set due to the requirements of the role and not what her salary was at her previous firm; the latter (strangely enough) was well under the size required for GPG!

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Andy Milner

I've been trying to track down details on that statement from the CBI, but I'm not sure they elaborated on what the "unintended consequences" could be - I assume one could be wage inflation due to reduction in the negotiation advantage of the employer.

 

Whether this is a bad thing is debatable when (by some measures) wage growth has been stagnant in the UK for longer than any time since the Napoleonic wars..

 

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WWW.BBC.CO.UK

Reality Check examines the claim that real-wage growth is at its worst since the 18th Century.

 

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Eva Keogan

There are multiple points to consider and this article covers it well - including exacerbating GPG - not sure I agreed with this part though - 'CBI warned that silencing discussions on pay at recruitment stage could have “unintended consequences”.'

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WWW.PERSONNELTODAY.COM

Employers that ask candidates their current salary are partly to blame for the gender pay gap, according to the Young Women’s Trust. Gender pay gap Widen gender pay gap reporting to firms with over 50 staff, say MPs Gender pay gap: PWC bans male-only candidate shortlists In a YouGov survey of employers, the charity found …
Read more  

 

 

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Luuk Jacobs

I am a bit at odds here as I believe if the candidate has proven through the interview that (s)he can do the job and has all the relevant skills and experience, that should be the main reason for offering the job. The current salary should, as Jonathan mentioned,  only be checked to ensure that it is not the only motivating factor for wanting a job.  Equally it should be considered that the change in position should be a step up for the candidate (and not just the same job and another company in which a significant salary increase would just create “inflation”) and the associated salary a recognition of that

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Jonathan Max

Thanks @Andy Milner

I still think it is important to ask about current salary to understand push and pull factors for an candidate's interest in a role. When the balance of motivations is weighed too heavily around compensation then, in my experience, this is more likely to end badly!

What is extremely important however, is that organisation's pay what the role is worth rather than the minimum amount they get get away with paying! In the recruitment process it is vital to look at compensation in the round and in the context of an individuals' skills and experience. I have advocated significant increases in salary when it the right thing to do; similarly, for a range of reasons sometimes flat / marginal uptick is the right decision.

 

 

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Andy Milner

I have always struggled to see a fair reason why employers should be allowed to ask about a potential hire’s current remuneration, other than to give them an advantage in pay negotiations.

It’s something which can only exacerbate existing pay inequalities and  it’s abolishment can surely only be a positive thing.

Here the Guardian argues specifically about its impact with regards to the gender pay gap:

https://www.theguardian.com/commentisfree/2018/aug/23/gender-pay-gap-current-salary-question

I believe this has already been outlawed in some US states?

@Jonathan Max - would be interesting to hear the view from HR. 

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