Why do Human Resources professionals, recruiters and headhunters routinely ask candidates for their salary histories or most recent compensation? There is a degree of sense behind the question—after all, it's in neither party's best interest to waste time interviewing for positions that fall outside the candidate's acceptable salary range or the employer's budget.
But—and this is a big "but"—there are much better ways to align compensation than to ask what, in any other context, would be considered a rude question. For one, be transparent about the parameters of your salary range when posting the job, and next, simply ask each candidate what they would need in order to be interested in the opportunity. Many candidates will respond with, "I'm pretty open," and that should be respected because it means that if the opportunity meets certain criteria—opportunities to learn and advance, compatible corporate culture, a mission the candidate can get behind—salary is not the primary consideration. And isn't that what we all want in an employee?
HR professionals tend to get defensive when justifying their need to learn candidates' salaries. And let's be honest about the source of our defensiveness: we want to know about salaries because we intend to base our offer on the candidate's most recent compensation—enough to make the candidate willing to make the move, but not so substantial that we're paying more than necessary to "close the deal."
I've been guilty of this myself—more than a few times. If the base salary I could offer topped out considerably above what the chosen candidate was earning, I happily reported back to the hiring manager that I was able to "get" this candidate under budget. Kudos to me, right? Not really. I squirm as I recount this—because it was wrong.
Imagine this: Your company is based in a major metropolitan market, but the candidate is relocating from a smaller market where average salaries are well below those in New York City or San Francisco. Or the candidate had been working at a company where the compensation was below market value; should HR be complicit in continuing people's sub par salaries? And what about candidates who have achieved experience or added credentials—such as an MBA—that qualify them for increased responsibilities? The plain truth is that there are too many variables that make it grossly unfair to base an offer on prior compensation.
Make an offer based on qualifications, value-add and your true budget—not on a previous salary. And if a candidate wants more than what your budget allows, go to the powers that be and ask if there's any wiggle room, citing specifics as to why this candidate is worth it. Assuming that you can't extract a penny more, try to figure out if there are other incentives you can offer—and if nothing works, move on. Eventually, there will be another candidate, just as there will eventually be a job for the candidates you didn't hire.
The logic is pretty simple: How much is this candidate worth to your organization overall, and how much is your organization worth to them? If a candidate is worth $X to your organization, $X is within budget and $X is within their budget, then that's what your offer should be.
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