This article was updated on July 30, 2018.
Hiring the right person isn't easy. According to Inc.com, corporate job postings attract 250 candidates on average; however, only a handful will ever make it to the interview process. Once you've weeded out prospective employees that don't have the necessary qualifications and aren't the ideal fit, it's still often challenging to separate the front-runners from the rest of the pack. One tactic used by many hiring teams is asking for a potential hire's previous salary history. But does knowing that number really benefit your bottom line?
Here's a rundown of the pros and cons of digging into payment details.
Pro: Time Saved
According to the Society for Human Resource Management (SHRM), asking salary history helps manage candidate expectations. More importantly, it saves time in the long run. If both an employer and prospective employee keep salary details hidden until the very end of the interview process, it's possible that an applicant's salary requirements — informed by previous compensation — is out of line with what you're prepared to offer, and the process was all for naught.
Sharing salary details up front provides a solid foundation for negotiation that can evolve as the interview process continues. Ideally, both candidate and organization will feel that the final number is transparent, fair and leaves room for growth.
Con: Balancing Act Backfire
In theory, the act of asking for salary history helps ensure that you're not offering candidates too little for their work or overpaying when job seekers are accustomed to lower wages. But therein lies the problem. As noted by the Huffington Post, pay gaps — between people of different sexes, backgrounds and even personalities — still exist.
Consider this scenario: You have two identical positions to fill. The salary history of your top candidate is in line with what you're prepared to offer. But the second applicant has worked for far less — and is still willing to do so. Win-win, right? Hire them both and save on the second contract. Wrong.
Pro: A History of Success
Interviews and exams only tell you so much about a prospective hire; of course they'll claim a history of hard work, dedication and attention to detail. Salary, however, doesn't lie or exaggerate. With salary history in hand you can see for yourself if other employers were impressed enough with a candidate's work ethic to bump up their pay on a regular basis.
Asking for that data is a useful experiment in honesty, as well. You can follow up on any salary claims with previous employers to double check that you're not getting the wool pulled over your eyes.
Con: Lost Loyalty
The employer-employee relationship is built on trust. Asking for salary information can negatively impact that trust, even before a new worker is officially hired. While your intentions may be pure and your methods transparent, the mandatory disclosure of salary history may lead employees to worry that data was used to inform the lowest possible salary range they would accept. The result? They feel like a cost center rather than a collaborator, and long-term loyalty suffers as a result.
Asking for salary history may help save time and set wage expectations, but it can also backfire, causing lost loyalty and disengagement. Ultimately, it may be more effective to determine a broad pay range, advertise your position with that information and then evaluate prospective candidates without the specter of salary history.