Should we stop asking about salary history?

“How much is your current salary?”

It’s a question we’ve all been asked. Many of us have asked it ourselves. But its impact might surprise you.

Those 6 little words can reinforce pay discrimination and widen the gender pay gap.

Is it time that we ditched asking about salary history and instead focused on what a candidate brings to the table and reward them adequately for it?

It feels like the tide is beginning to turn.

21 states in America have already banned asking about salary history and if the UK were to follow suit, it would be a major milestone for diversity and inclusion, and in particular, showing a commitment to gender equality.

Do we need to ask about salary history?

For many of us, a question around salary history is half expected somewhere in the interview process. We might grumble over it, but nonetheless we answer.

Have you ever stopped to ask why we need to give that information? Who does it serve? What’s the point?

There are normally two reasons this question is asked:

By hiring managers if they don't know the market rate salary to offer.
By recruiters trying to get a sense of a candidate’s “worth.”

Let's look at both sides of the argument.

The benefits of asking about salary history

For hiring managers and recruiters, previous salary can give an indication of where that candidate sits in the job market, and their level of skill and experience.

It’s a really quick, rough and ready filter to help hiring managers wade through the pile of CVs and applications in front of them.

They can also use that information to help benchmark where they sit in the market and that everyone’s expectations are aligned. After all, if they ask 10 applicants who all come out with approximately the same figure then they can see that’s the market rate for that role and it makes judging the offer salary easier.

Against asking about salary history

In the UK, the gender pay gap stands at14.9%. That means for any woman over the age of 30, when the pay gap starts to ramp up, whenever she goes to an interview and is asked about her salary history she’s at an automatic disadvantage.

Why? Because any new salary offer is based on her old one which is lower than her male counterparts.

Asking the question simply perpetuates historical salary bias. Whether that’s for a woman or minority groups. The result is the same. Lower pay for those already on lower pay.

The Fawcett Group found that 61% of women said being asked about their salary history had an impact on their confidence to negotiate better pay. If the questions hadn’t been asked in the first place then it’s likely they wouldn’t have needed to negotiate*, as their offer would have automatically been higher.

*always negotiate

What’s happening in America?

It’s in America where the first tentative steps are being taken to end questions around salary history. Since 2017, 21 states have passed legislation that prohibits employers from requesting previous salary information from applicants.

The law’s aim is to end pay discrimination and to allow applicants to be fairly assessed each time for what compensation they’re worth. Some legislation takes the issue a step further and stops employers from using an applicant’s salary history to decide their future compensation.

Research of the salary history bans shows that the policies are working. The gender pay gap is narrowing, women’s earnings are increasing across the board. With one study finding workers who changed jobs after the bans saw gained a 5% pay rise, with women and African Americans benefiting the most.

But America is a big place, and while it’s definitely a move in the right direction you’ve still got 29 states without a salary history ban.

That’s not to say they won’t introduce one in the near future, but without federal legislation there won’t be mass societal change towards pay history.

What we can hope is that there’s enough proof of concept and subsequent research to start influencing other nations, and the UK, to follow suit.

Why are firms so resistant?

There’s research stating that asking about salary history is a bad idea. Parts of America have prohibited asking about it. But in the UK it’s still deeply ingrained in recruitment. Why?

The immediate motivation is financial. If you can’t benchmark against existing salaries then the fear is that all salaries will increase, the power is with the candidate and firms could end up paying over the odds for a new hire.

But could the opposite then happen? That firms worry about paying too much so low-ball their new hires, bringing down the average salary so people end up being paid less than before? Stranger things have happened.

For professional services firms, removing any question around salary history from their hiring process marks a new way of doing things. One that’s probably not been questioned before.

But for firms that are serious about gender equality, fair pay and closing the gender pay gap it’s something they need to investigate, sooner rather than later.

Increasingly, a workplace’s culture and values are considered by candidates before a decision is made whether to accept or reject a job offer. 57% of women and 54% of men said being asked about their salary history made them feel less positive about their potential employer. Raising questions around their commitment to equality and their values.

With a competitive job market and the need to differentiate, maybe removing questions around salary history is an easy first step.

What can you do?

Gender pay is an issue close to our hearts and that, along with levelling the playing field for all, is ultimately what banning asking about salary history is all about.

It’s not about trying to get more money out of employers, or making life harder for hiring managers. It’s about fairness, equality and rewarding talent not biases.

Would it be more beneficial and forward thinking if we followed America's lead and stopped asking candidates about salary history in the UK?

Is it necessary to ask this question? Often, we fall into doing things and fail to question them, sometimes for years.

If there’s no obvious need to ask about salary history then it could be worth trying a few hires without asking the question and see if it makes any impact.

At Ambition, we are committed to addressing the gender pay gap and improving our own processes, yet we are still on a journey and haven't got this right yet.

Do you think this could work for your firm? Would you be willing to give this a try?Why or why not? I'd be interested to hear your thoughts.