The new Oregon law that restricts employers from asking job seekers about their current salary has revealed some unintended consequences in vetting candidates for executive-level jobs. However, we’ve found proactive strategies and options to offer hiring managers, so they can still gather comprehensive information about a candidate’s total compensation needs while honoring the spirit of the new legislation.
Closing the Pay Equity Gap
The Oregon Equal Pay Act of 2017 significantly extends pay equity protections, and no longer allows employers to ask for an applicant’s salary history. The law creates many positives for job seekers, as employers change their hiring practices and can no longer settle on a salary offer based on a candidate’s previous pay.
This is a significant pathway to closing lingering pay gaps for those who’ve been stuck in a below-average wage progression, especially people who the law defines as a protected class – these groups include women, people of color, people who identify as LGBTQ, and people living with disabilities.
Progress Has Unintended Consequences
The positive steps the Oregon Equal Pay Act put in motion late last year have revealed some unintended consequences for employers seeking executive-level candidates, according to our experience and the experience of hiring managers, and we can help hiring managers address those consequences.
A key concern we’re thinking about is inefficiency in the candidate search, as we know it’s important the hiring manager have a clear understanding the candidate is open to accepting the pay grade or salary range the employer has set. In essence, we recognize it’s a time waster for both the employer and the candidate if it’s unknown whether the employer can offer what the candidate wants.
Another chief concern we’re keeping in mind in following the new law is a client’s top-quality candidate pool can shrink, because candidates are unwittingly taking themselves out of the running when they present an out-of-range salary requirement. It’s been reported to us from hiring managers that when a candidate is asked about his or her salary requirement, the candidate often requests an amount or range that’s on the high end of what he or she would be willing to consider, because they want room to negotiate. So a strong candidate may unintentionally price her- or himself out of the running.
Also, as a candidate moves forward in the interview process, and perceives strong interest from the hiring organization, the candidate may build confidence and move up their original salary target. This too can take a good candidate out of the running, because the law doesn’t allow for direct conversation between candidate and employer about money versus other benefits to meet the candidate’s overall requirements.
Reframing the Compensation Conversation
To overcome barriers to a transparent conversation about salary, hiring managers can reframe the conversation from a base or base-plus-bonus salary requirement to a “Total Rewards” requirement.
What we’ve learned at 180one is that a base-plus-bonus conversation compared to a total-rewards conversation about compensation is like comparing apples to oranges. Candidates are accustomed giving hiring managers a salary requirement that is an on-paper base plus possible bonus number, but the candidates are often in fact calculating in their minds more of a financial plus quality-of-life compensation package.
A Total Rewards View of Compensation
A total-rewards view is a big-picture framing of the compensation conversation, as it opens up options to discuss a variety of quality-of-life issues that appeal to the candidate. These issues can include amount of paid time off, the employer’s health insurance plan value, long-term incentive plans, stock options, on-site amenities, and other value-added benefits.
Hiring managers seeking strategies to facilitate open conversation about compensation can look at working with third-party recruiting firms, such as 180one. Since the majority of our candidate communication is via the telephone or in person, we are able to have a dialogue with the candidate to get the full story about total-rewards compensation needs, which both speeds up and simplifies the vetting process – a recruiter can qualify a candidate before the company invests a significant amount of time with them.
We can ask candidates their current target compensation for a role, and then “unpack” that number with follow up questions that will get the recruiter and the candidate to a true total-rewards number.
For example, a company may have set a base salary at $200K but is offering a host of attractive benefits desirable in today’s market. A top candidate who’s built trust with a recruiter can discuss in detail what benefits they’d accept to balance out a base salary that’s lower than what they originally asked. And if the candidate’s salary range is still outside the client’s desired range, the recruiter can ask follow-up questions about how firm they are on that figure – such as, would they trade the benefit of a shorter commute time or less required travel for a lower target.
Trust in a 3rd Party Recruiter = Transparency
It’s been our experience at 180one that a high percentage of candidates are comfortable disclosing their current compensation and their total-rewards requirement with us, and will volunteer details that inform a compelling offer. The candidate feels safe with us, and develops trust with us as a recruiter, and that gives the business we’re working with a huge advantage in making the best hire.
A candidate also may be thinking about what they would forfeit if they left a current position for a new one by a certain date, such as an annual bonus or stock options. When a candidate is able to disclose such a circumstance early on in the recruitment process, we can research the situation and advise the hiring client on crafting a competitive offer, such as including a sign-on bonus or delaying a start date to address these timing differences.
And job candidates benefit from that trust and transparency with us too. If the opportunity they’ve discussed doesn’t pan out, we have relevant compensation data and can keep the candidate in mind for other opportunities.
For more information on how a recruiting company can help you navigate the Equal Pay Act and strategize a successful hiring process, contact 180one today.