NOTE: My comments below are to remind you of fair, equitable hiring and compensation practices, not to get political. I feel this discussion is important and hope it does not offend anyone. It is frustrating when government employees and politicians who get paid huge pensions and retirement benefits that are underfunded (debt), and operate under deficit spending, feel they know more than business people about how to run a business profitably.
As leaders, we have to implement systems, define policies, and build a culture that is more than good intentions. We have to do things that are efficient, effective, and create opportunities for our company, employees, partners, and community to prosper.
Good intentions are not enough. Here is an example of good intentions, but terrible implementation.
Are there areas in your business where you are making a similar mistake based on good intentions?
Have you heard the news?
The State of Massachusetts' politicians and government bureaucrats want to remind you that they are smarter than business people.
I am talking about the fact that this week the State of Massachusetts passed the Equal Pay Act, an effort by politicians to remove "perceived pay inequity" in any way. Men versus women... People of one heritage versus another... Homosexuals versus heterosexuals... or maybe you are currently underpaid in your current job. (According to whom?)
Please do not misunderstand me. I agree with the intent of the law. Nevertheless, it has a minimum of two major flaws that will cost Massachusetts businesses millions of dollars:
#1 - The law is impossible to enforce fairly. How are they going to track what is actually discussed in job interviews or between managers and employees?
#2 - This law is a financial "pot of gold" for contingency lawyers looking to make a quick buck. Just consider the potential "he said, she said" lawsuits that are going to hit Massachusetts companies based on attributes of the Equal Pay Act that goes into effect in 2018. Here are just three of them:
- You may ask a job candidate for confirmation of their current or prior compensation, "...including benefits or other compensation or salary history only after any offer of employment with compensation has been made to the prospective employee." (What happens if you accidentally ask during your final interview? Apparently, you are toast.)
- Companies cannot prohibit workers from telling other people how much they are paid. (Why would you do this anyway?)
- The law requires equal pay not just for workers whose jobs are alike, but also for those whose work is of "comparable character" or who work in "comparable operations." (Who is going to define what is comparable?)
Reminder: The law gives workers the right to sue companies directly for violations.
Again, I agree with the intent. Everyone deserves to be paid a fair wage/salary. I just hate laws that are unenforceable and throw fuel on the fire of antagonistic contingency law firms. There is nothing in this law that creates jobs. There's plenty in this law that may eliminate jobs or motivate businesses to move out of the state.
THE BOTTOM LINE: What should you do?
#1 - Become informed. You can start by reading the text of the law and/or this NY Times article, which is biased in support of the law, and/or other information about the law. Discuss the impact of the law on your organization with your HR attorney.
#2 - Adjust your approach. One of the three most important questions I recommend be asked of job candidates in the initial phone screen is, "What are your compensation requirements?" I do NOT give legal advice, but it appears my question does not violate the Massachusetts Pay Equity Act...
NOTE: The NY Times believes the law requires "...hiring managers to state a compensation figure upfront..." when interviewing. I do not see that in the law, but maybe I missed it. Bureaucratic legalese is not a language I speak fluently.
As an alternative, you could just state the salary range and ask if that matches their objective.
If you currently ask a job candidate specifically what they are being paid in their current job, then change your wording to my question or something legally appropriate.
The reason you need to know what they want to earn is because you must protect your time during the interview process. If their compensation requirements or desires are outside of the range you are planning to pay, then you need to not proceed with the interview.
#3 - Confirm later. My understanding is this law allows an employer to request confirmation of the person's current and/or compensation after giving them a job offer. I suspect this means if they accept, then the candidate agrees to release the information or confirm it in some way.
However, do you really care? If you structure your compensation so people are paid based on performance then who cares what they made before? If they perform for you, then you are getting a good value - it is a WIN-WIN relationship. (We do not ask people to confirm prior compensation at MANAGEtoWIN.)
Maybe we need to help leaders become better leaders rather than be burdened by ineffective laws...?
#4 - MOST IMPORTANT - Pay people fairly. Wherever your business is located, always pay people fairly and be ethical in your hiring practices.
Please forgive me for discussing something that involves politics.
I just have a short fuse with governmental micromanagement through unenforceable laws that are catalyst for unnecessary legal fees. These types of laws waste time, money, and distract us from generating new jobs and fulfilling careers for others in our communities.
My primary concern is your approach to hiring and compensation consistently demonstrates integrity and is effective in growing your organization.
I hope you're having a record setting 2016.