Hiring managers/companies or their agents (recruiters) in California are now prohibited from asking potential candidates about compensation history or relying on salary information in hiring or determining compensation. A few other states passed similar legislation.
There’s a theory that employers take the number from the last job and just raise it some. And that it’s problematic for women in particular. The theory is that women are paid less and not for valid (i.e. skill-based reasons), perpetuating the perceived problem.
Colosi Associates’ experience DOES NOT generally support these theories. When I find that a candidate is paid less than another, most of the time I can see objectively what the hard and soft skills reasons are. The reduction in market discrepancies evolved over time. Information about comp is widely available today relative to the past and "pricing" reflects it.
The right recruiter plays an instrumental part in reducing the risk for everyone that the candidate leaves the role after only a short tenure. Inadequate comp increases this risk. With the retained executive search process, we are all aligned this way. And that goes for both genders. But today we’ll stick with how to work with the law we now have that will fix those alleged evil-doer employers.
Details about this law are here. There are many nuances and definitions. Let’s just stay high level.
My comments are from our executive search perspective but could apply more broadly. Of course if you’re talking blueberry picking, seems much easier to ensure pay offered is appropriate, since the job is very similar from one person to the next and goals can be objectively measured with great accuracy from one picker to another.
The potential practical problem is…
… that the hiring company, the candidate and an external recruiter could waste tremendous time on the hiring path if compensation is not discussed early in the hiring process to make sure both parties are at least in the same universe.
Even accomplished A-Players who are not employed may wait for exactly the right opportunity and don’t want to waste time. We’ve always asked candidates early in the process if they are comfortable sharing where they are and where they’d like to be. That will be modified to comply.
How do we gather relevant information to ensure we don’t waste time and follow the new rule?
I plan to proactively share with the prospective candidate what I would recommend he or she specifically should be paid for the particular opportunity.
Our clients' positions are not homogenous. Titles do not indicate the same responsibilities or what’s necessary for success, even in similar industries and sized companies. Businesses and roles have morphed in complexity and at a faster pace than ever before. Each A-Player brings a different depth of skills and accomplishments to the role.
Here’s a point that I haven’t seen discussed by many:
The hiring organization is making a total investment of resources to make sure the goals are achieved. The organization’s additional resource investment in a candidate who has experience in every part of the job is lower relative to total investment in a candidate who has potential but doesn’t have demonstrated prior accomplishments reaching all the goals required.
Some would argue, doesn’t the job pay $X? No. It’s that the company will be investing $X in the employee. “X” is often a combination of what a person is paid and what the boss or others inside or outside the company need to invest to get the person up to speed and learning the parts that are new.
The message I’ll proactively deliver is:
"The client relies on us to recommend a compensation package. Part of the offering is base/bonus/equity, but also the hiring manager's investment in time to help you come up the curve. The hiring manager's investment of more (or less) is based on experience.
Based on your experience and considering the investment for you to gain additional skills (if that's the case), I would recommend current comp of base plus bonus of approximately $X. As we talk further, I will recommend the equity (if there is any)." I would add, "I certainly can't say today what an offer will be exactly, should we progress." I don't want to imply that I'm actually making an offer, but just how I might recommend.
Then, I'm going to be silent and hear what the prospective candidate has to say, if anything.
Offering the candidate too wide of a range has dangers. Candidates often hear an upper end. That’s why it’s important to provide the extra context and framing around total investment. I will be conservative in the numbers I offer as my professional judgment.
If my suggestion is not in the candidate's universe of thinking on comp, I bet they will say so. Then we know if we can at least move on to further discussions beyond the first call. I will not prompt the potential candidate to answer but just move on to another topic if the discussion doesn’t go further.
Not working with an external recruiting resource?
Companies that are directly making the hire without a recruiter can modify this discussion to say that they have consulted with outside professionals who normally work with comp for that particular role. Actually do this homework before hand, of course. Call trusted specialist recruiters, consult comp studies, call your network. Many ways to be educated, and this is certainly a good outcome of the rule.
Unfolding case law will be interesting. You can probably guess that this means you may need more rigor around how comp decisions are made and how they are documented.
Reduce your risk of being the next case law for others to read!
Questions? We’re always open to a call to discuss market comp as you launch your search, even if you’re searching on your own.
Would love to hear your ideas on this as you hunt for your A-Players this year.