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Sharing your last salary – re-enforcing the gender pay gap…

Sharing your last salary – re-enforcing the gender pay gap…

The interview process is never easy.  Whether you are actively searching for a new position or being head hunted, selling yourself effectively can go against ingrained social habits.
As a potential employer, there is significant risk in hiring the wrong people, too.
So both sides have a lot to lose if the interview process is ineffective.
While we frequently hear that people do not leave jobs because of money, very few candidates are looking to drop their salaries …
Interviewers have a number of tools at their disposal enabling them to align the right candidate with the role on offer:
·       Psychometric testing
·       References
·       The face to face interview process
·       The CV / Resumé
·       Social media profiles
However, the previous salary is a time tested way for the interviewer to measure against the skills and experience claimed in the CV.
Why is there a risk that this re-enforces the gender gap?
Well, let’s look at the following scenario.
·       Company ABC has vacancies in two of their divisions for Financial Managers.
·       They decide on two candidates, Joe and Sarah, both in their late 30s with the same undergrad degree and both with around 10 years of experience.  They are each asking for 55k.
·       The 55k is around the budgeted amount although management had been hoping to offer around 53k each.
·       HR asks both candidates for a copy of their previous payslip.   Joe was on 50k and Sarah on 45k.   The reason Sarah is leaving her current company is that she has realised that her male counterparts that she studied with are all earning between 10 and 20% more than she is, and she is hoping to close that gap.
·       As the 50k is slightly over the 10%, she accepts.  Joe also accepts a 10% increase and gets the 55k.  The company are now 1k below their budget, too.   Sounds like a win for everybody!
·       However, this affects the rest of their careers at ABC.  His salary level means that bonuses and incentives are based on a higher number for him.  He is seen as senior if execs are looking at financial statistics and so he has the advantage when promotions are available and so it goes on.
The factors around your salary are much more complex and have a higher impact than you can imagine.  So the negotiations at the beginning are crucial.

How should Sarah handle this admittedly hypothetical situation?
If she knows there are two positions available, she could ask if the same salary is on offer for both, because she had benchmarked salaries and believes that the R55k is more market related.
She could also query whether they are basing the offer on her previous salary and ask whether they would have offered the 55 if she was on 50.
She could share that the opportunity is exciting and she is really keen to join ABC but express concerns and explain that one of her main reasons for moving is to close the gender pay gap and it seems that somebody with her experience and qualifications should be closer to 55k than 50.
The management now have the choice to even the playing field or stick to the original offer.
Companies do need to benchmark and they can ask pertinent questions so as to establish whether it is a pay gap or delivery issue.   Sarah can respond that she believes she was delivering at the same level as the men earning 10% more - not more, not less, but the same and that the only reason for the salary differential was her gender. 
What happens next will tell Sarah a lot about the company and whether she wants to work there or not.
But without the conversation, there is no chance of achieving her financial goals.
Employers aim to hire the right people for the right job at market related salaries.   The tools they have available create a picture of whether each candidate fits the profile.   The previous salary forms part of this picture.
Employers will continue to ask as long as it legal to do so (although there are places where it is not, Puerto Rico and certain American states, among them).  
As a candidate it is difficult to refuse to answer but responding that you would prefer to wait for an offer and then negotiate around that offer, is not unreasonable, or requesting a guide line as to budget for the role and confirming whether your salary requirements are within in that band is another way to handle the question.
The closing of the gender pay gap is a complex issue and there are many factors contributing to it.  Taking that into account, the previous salary may act as a guideline, but both companies and candidates should be aware that it could contribute to extending the gap.

Links, References and Notes

Accsys provides people management solutions ie Payroll, Human Resources (HR), Time and Attendance as well as Access Control/Visitor Management.
The company develops, implements, trains and services our solutions.  We provide readers, turnstiles, booms and CCTV.
We run both on premise and in the cloud, as well as mobile options for ESS.  Recruitment, online education and Business Process Outsourcing (BPO) are part of our offering, too.
twitter:   @TerylSchroenn

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