How much do you rely on knowing your new potential hire’s current salary before making them an offer?
a) Quite a lot – it’s a helpful guide to what they expect and there is no point in over-paying
b) It’s a factor along with market pay comparisons and what the rest of the current team are paid
c) Not at all – in fact it’s illegal to even ask before making an offer upfront
If you work in the state of Massachusetts in the US your answer will be (c), as Governor, Charlie Baker signed a new bill on 1st August. The thinking behind the new legislation is that it is another step in the process of paying men and women equally. Women are often at a pay disadvantage and hiring them with reference to what they are currently paid just bakes in the pay difference. It forces employers to offer what they think is a reasonable offer upfront - however, in reality employers may just low-ball an offer to avoid the spirit, if not the law, of the new legislation. But then would you work for a company who deliberately tries to undervalue you from the start?
It got us thinking about what clients need when hiring and whether there is an overreliance in the decision-making process on the current salary someone is earning.
If you are about to make an offer, then:
a) What is the job worth? Researched by reference to the actual pay market through benchmarking and current pay actuals of your relevant comparison group.
b) Do these numbers stack up? Is there a gap between the market data and your current incumbents?
c) Thinking about the person you are about to hire - are they more, or less valuable than the market median? So are you bringing them in, knowing they need time and support to grow into the role, or are they bringing lots of experience you need?
Stepping back from the ‘what’s he/she currently earning?’ debate helps to clarify your thoughts about the value the new hire might add to your team, and can give you more confidence if they push back with demands for a higher package. If it’s out of your range, then maybe they aren’t the right fit.
The new law is due to come into effect in July 2018. The question is, will the UK have caught up with the legislation by then?
As always, we’re here to help you with pay benchmarking processes and ensuring your pay systems are Equal Pay compliant. Get in touch to see how we can help: 020 3457 0894.
