When you base pay on salary history, a unicorn loses its horn

Hi everyone, we need to talk about salary history. Imagine you are hiring two fundraisers for your growing development team: Edna has had nine years of experience raising money, and has a record of bringing in over $10 million dollars. Joe has two years of experience fundraising and has brought in $300,000; before that, he worked for a bank. Because Edna is more skilled in fundraising, you have her supervise and mentor Joe. Things work out well for a while, until Edna found out that Joe is paid 10% more than she is. The reason: Joe had worked at a bank, so he had a stronger salary history. So now we have someone who is more qualified, with a better track record, and who is doing more work—supervising and mentoring in addition to fundraising—getting paid less than another person who is less qualified..

That is horrible, and unfortunately, it happens all the time because many organizations continue using salary history to determine pay. A few ED colleagues I know still ask for salary history. A prominent foundation a few months ago required FIVE YEARS of pay history in candidates’ cover letters. These are not terrible people or organizations. In fact, they’re people and orgs that I respect and look up to, which shows that we have some work to do, when even good folks engage in terrible practices.

We need to have a serious discussion about salary history, and stop using it entirely, for several reasons:

First of all, it is inequitable, possibly unethical. We all know that women and especially women of color make less for doing the same or higher level or work with the same or higher level of qualification. These pay gaps only get wider when we base pay on salary history. When we do that, people who were underpaid continue to get underpaid, and people who were overpaid continue to get overpaid, regardless of who is more qualified or actually doing good work.

Underpaying someone because they have been underpaid is unethical. It is using injustice to further injustice. And if that’s an accepted practice, why stop at basing pay on salary history? Why not also refuse to give candidates healthcare if they didn’t receive healthcare at their last job? Why not also give them only five days of paid holidays because that’s what their crappy last job gave them? Why not also eat their clearly-marked lunches because that’s what their last boss did?

Second of all, it’s inane and makes no sense. It’s weird that this ever became a practice. Why does the pay for a previous job have anything to do with a new job with completely different responsibilities at a completely different organization? No other part of society runs this way. Imagine contracting a plumber: “A pipe burst and my basement is flooded with sewage. Can you come by?” “I can be there today.” “Great. How much did you get paid for the last gig?” “What?” “I’m paying you based on how much the last person paid you.” “But the last person had a clogged sink. It took five minutes. I charged them $50.” “Then I’m paying you $55. You should be happy. That’s 10% more.” That’s bizarre, right?

Third of all, it’s none of anyone’s damn business. I am all for salary transparency and for people to be able to talk about their pay with colleagues. But what people made in the past is personal information, free to disclose at their discretion. Requiring them to disclose it is a violation of their privacy. If it’s not such a big deal, then would everyone on the hiring panel be comfortable disclosing their own salary history in the hiring process? Like their religion, family plans, sexual orientation, gender identity, etc., people’s finances are their own private information. If you hire them and they disclose voluntarily, that’s one thing; forcing them to reveal it should be illegal. This leads us to:

Fourth of all, the law is coming for you. Ontario passed the Pay Transparency Act this April, to go into effect in January 2019, requiring job postings to provide a range, prohibiting employers from asking about past compensation, and stopping retaliation against employees who talk about their pay with colleagues. This follows similar laws in many cities and states, including California, New York, Connecticut, Delaware, Chicago, New Orleans, Massachusetts, New Jersey, Oregon, Philadelphia, Puerto Rico, and Vermont (Here’s the full list). As more and more cities, states, and countries pass laws, basing pay on salary history will be rightfully relegated to the steaming compost heap of history.

For these and other reasons, we need to stop this practice. Instead, let’s do these things:

Do market research on new and existing positions: Find out what the average pay is for organizations of your size in your area for the positions you are hiring for. In some ways, using salary history is just a lazy excuse to not do due diligence. Or to be able to low-ball candidates. Stop doing that. Buy the local wages and benefits survey and have clear and transparent pay philosophy and process. Also examine your current positions to make sure your team is fairly compensated, because it is way too common in our sector for an awesome team member to leave because they’re underpaid, and then a newer, less experienced person arrives and gets paid more.

Base pay on skills and accomplishments: Going back to our earlier example, it is clear that Edna should be paid more than Joe, for being more skilled and experienced. Use qualifications, but be careful not to be lured by the siren songs of things like formal college degrees. Just because someone has a formal degree does not mean they are more qualified. What if Edna could not afford college and so never finished her BA, while Joe has a Master’s? She has still raised way more money in her career than he has. Stop requiring formal education unless it’s for specialized positions that require certification, like counseling, law, accounting, etc.

Be thoughtful when asking for salary expectations: This is slightly better than asking for someone’s salary history, because you’re asking what they’re hoping to get paid, not what they have been paid in the past. But I’m still not a fan of it. Women and people of color, because of impostor syndrome and other variables that have nothing to do with their qualifications or accomplishments, tend to under-ask or avoid negotiating altogether. Before you deliver the predictable and boring “Well, then that’s their fault” or “poor negotiation skills is a sign that they’re not as qualified” arguments, keep in mind that there are unconscious biases and other factors to consider.  

Disclose salary range in your job postings: This is one of the easiest and most effective ways to increase equity. Salary cloaking unfairly punishes candidates who are women or who are of color, starts the relationship between employee and employer off on a lack of trust and transparency, wastes everyone’s time, and causes acute optic nerve damage from eye-rolling. I’ve stopped helping spread the word on any job, from any organization or foundation, that does not disclose salary range, and I tell people why.

Give feedback to employers who ask for salary history: If you see anyone engaged in this practice, please take a moment to tell them why it’s not a good idea. Most people in our sector are good people, and because we’re all so busy, they may not know how harmful this practice is. If you are a job candidate and you are asked for your salary history, it is trickier. I recommend you get pointers from the awesome Ask a Manager.

Salary history is not a measure of someone’s competence or accomplishments. Let’s never ask for salary history EVER again, and let’s all advocate for ending this inequitable practice. A few years ago, I wrote “When you don’t disclose salary range on a job posting, a unicorn loses its wings.” We’ve made a lot of progress since then, but we still have a long way to go. Whenever you ask for someone’s salary history, a unicorn loses its horn. And we need our horns to stab injustice in the face. 

Hm. That might be too violent. We need our horns to dig holes in the ground, from which the seeds of justice may germinate. 

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