Talking about Comp! The Rules have Changed
In October 2017 NYC employers will change the way they talk about compensation with their candidates. This month, Mayor Bill DeBlasio signed into law the bill that bans employers from asking candidates about their salary history. This means that employers can no longer ask about base salary, benefits or other forms of compensation in the hiring process - a standard first round interview question for many companies! Interviewers can continue to discuss objective measures of the applicant’s productivity, such as revenue, sales, or other production reports.
How do I know what to pay people without knowing what they currently make?
At Gray Scalable, we recommend focusing on the requirements and scope of the role, and backing up your pay decisions with research and market data. One you've determined the salary range for the role, previous pay becomes much less important, and you can focus on assessing their fit for the job requirements. If they're qualified and can do the job, you can pay them within the predetermined range.
But what about that compensation conversation?
We really believe this new legislation is a good thing on a lot of levels - and in terms of the conversation, it will free you up from that "who shoots first" awkwardness of asking what someone makes versus disclosing the salary range. So what do you do?
First of all, if you have a recruiter or HR pro on staff, they should be the only ones on the hiring team who broach the conversation. If not, decide as a hiring team who will be the designated lead for this conversation, and make sure that person has reviewed the law and understands the dos and don'ts.
So...what can I say?
- Put the candidate at ease. Tell her that you're interested in knowing her thoughts about compensation. Ask questions like, "As you think about your next move, how do you think about compensation?" "Are you targeting a certain number?" or "What elements of compensation are important to you?" (thinking about base, bonus, options, etc).
Be prepared to share pay information and set expectations. If the candidate doesn't want to share her thoughts about pay and turns the question around to ask about how you'll pay, that's totally fine and within her rights! You can either get specific and provide a range, or simply reassure the candidate that you'll be paying fair to market, and that there is a range for the position that she will be evaluated against relative to other peers in similar jobs.
Guide the conversation. If the candidate voluntarily shares her current comp package, acknowledge the information but redirect the conversation back to, “What are you targeting for this position?” That information should be shared with the recruiter/hr/comp lead person on the team but otherwise kept confidential.
What about Sales People?
A big measure of how successful a seller has been in the past is how they've performed against their targets. There are business-related exceptions of course, but it's a good rule of thumb is that good sellers consistently meet or exceed their targets.
The good news here is that it's actually OK to ask about this, as performance against targets qualifies as an objective measure of their productivity. It's a fine line to walk, though, so when you do talk about it, we suggest the following:
Set expectations. Tell the candidate the base/commission split of the role, and anticipated on-target, total earnings. Tell them how targets are set and how performance is evaluated.
Ask them the same at their current org. Ask about the candidate's commission while talking about their personal performance and successes - and don't ask about their base or draw. Questions to ask include, "how did you perform over the last 3 quarters versus your goal?"; "what was your quarterly goal and was was your percent-attainment to goal?" "How is your performance measured, and how does your commission follow that?"
Why this really is a good thing.
While this is an adjustment for NYC companies, we think it's a great positive step toward solving the systemic issue of gender pay disparity and we are excited to see the impact.
Ensure your team is informed about this legislation, and consult with your attorney for any legal questions.