When hiring for a new position, many employers ask candidates about their current or previous salaries. They use this information to guide what they may offer as a starting salary. However, basing offers solely on a candidate's current pay can perpetuate pay inequities and prevent employers from hiring the best talent. Here are several reasons why current salary should not be a major factor when extending job offers:
It can lead to unfair pay gaps. Basing new salary offers on a candidate's current pay allows historical pay discrimination to continue. Women and minorities are more likely to be paid less than white male counterparts for the same work. If a new employer just matches or increments slightly above previous salary, pay gaps persist.
The current salary may not align with market value. A candidate may be earning below-market salary at their current role. This could be due to lack of experience when they started or minimal pay increases over time. Their current pay does not necessarily reflect their true value on the open market.
It penalises job-changers. Candidates who have stayed loyal to companies are often paid below market rate. Job-changers frequently earn higher salaries. If employers only offer incremental increases over current pay, they disadvantage candidates for being loyal.
The candidate's skills may have evolved. Long-term employees may have taken on more advanced responsibilities than when initially hired. Their salary often does not reflect expanded capabilities.
It can screen out great candidates. Basing offers on previous salary may eliminate candidates with strong potential but lower pay history. The best fit for the role may never make it to the offer stage.
Rather than fixating on current salary, employers should determine a salary range based on the position requirements and value. Discover what motivates candidates beyond pay and make offers based on the role needs and the candidate's full experience and potential. This helps ensure fair pay for employees and allows companies to build more diverse, equitable and competitive teams.
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