Today’s blog article has kindly been provided by Phillipa Holland, Principal Consultant at Fellows and Associates, and is about whether disclosing salary information during recruitment impacts diversity.  Fellows and Associates is one of our Charter signatories.

Phillipa writes: “Would it help equality in the workplace if previous salary information was not discussed during the recruitment process?

The traditional and most common way of determining salary for an individual applying for a role in the UK is to have a budget, then find out what an applicant is earning, then ideally pay them a bit more (or at least the same) as what their income was previously. But is this fair? Is this sensible?

Well it can be a delicate subject for some. Discussing the details of your salary with a somewhat stranger on the understanding it will help secure your position and determine what you will earn in the future can be difficult. In some cases, being open about what you earn can aid negotiation (if, for example you earn more than the suggested budget it provides useful evidence of your market worth beyond the future employer’s current understanding of market conditions). But should this be so? Does it actually benefit the candidate, or the employer, in the long run?

There is a body of opinion that revealing candidate salary history has helped reinforce the gender pay gap. If the strategy is to set a budget and then within that budget pay candidates more than their current salary, then the strategy perpetuates the gender pay gap as men are, research indicates, typically paid more than women. (Thus, the same percentage increase on salary would mean that a woman would continue to be paid less for the same role). Statistically speaking, women tend to negotiate less and, when they do, it can be viewed negatively by employers. If organisations are not given access to salary information then the issues surrounding negotiation are significantly reduced, helping positively reinforce a woman’s earning power. There is a potential positive impact with respect to ethnic minorities as well; whilst the research in terms of pay disparity is more complicated (it’s a question of both availability of equitable opportunities as well as equal pay for equal roles), disregarding salary history may help prevent salary or hiring decisions being impacted by conscious or unconscious bias.

A number of businesses have made the choice not to request salary information when recruiting and in the USA some cities, territories and even states in fact, have now made it a legal requirement. Massachusetts set the precedent last year, with New York, California, Oregon, Delaware, Puerto Rico, San Francisco, New Orleans and Pittsburgh all following suit. The argument is that emphasis should be placed on market data, performance on interview and, perhaps most importantly, the candidate’s career history, skillset and education when setting salary. The previous salary is not relevant as it is statistically arbitrary and instead decisions should be made on a compendium of available data. These factors can help open employers’ minds to a work force that is varied in terms of experience and background because basing a decision on current salary may limit one’s perception of a candidate’s suitability. Instead of considering their relevant skills and abilities a hiring manager may instead wonder why they are not paid more and this impacts the decision on that candidate negatively, which could lead to unintentional bias as white men, statistically would earn more than women and/or ethnic minorities.

This would of course require some open mindedness on the employers’ part and a change of thinking.  Placing a higher value on a candidate’s worth to the company they intend to join instead of basing a decision on how they were previously remunerated. Those who have used salary history to set pay, and ultimately manage their budget, could end up paying more in some cases as being ignorant of previous salary they would pay within the budget agreed (which may be a significant increase for the applicant). Within the IP sector this is more likely to be an issue when recruiting for positions that a firm is less familiar with as opposed to those that they recruit often where they will have a sense of market conditions. For example, a private practice recruiting a finance director replacing an incumbent who has been there several years or a corporation recruiting their first patent attorney into their broader legal department. From a recruitment perspective in these instances this is where salary history has been useful, albeit not necessarily on an individual basis but based on a number of applicants forming a body of evidence that the salary offered is out of touch with market conditions (either too much or too little).

Ignoring salary history would require more reliance on finding data elsewhere such as independent sources like Payscale to conduct a survey, but this would only be feasible to firms of a certain size and accompanying budget (or you could encourage all of your attorneys to play an active role in promoting independent salary surveys such as our own, published annually).

If employers are unable to glean salary information by asking applicants then they may be forced to set clear salary ranges prior to the recruitment process in order to realistically manage their budget. This may result in them struggling to attract talent and put some candidates off if they think they are worth more (or less) than what is on offer. But it may also lead to more transparency. Currently, very few advertised attorney positions carry salary information.  However, a need to be specific in the recruitment process may mean that more information is revealed earlier on which would hopefully lead to fairer circumstances. More attorneys would have a sense of their own earning potential with more frequent advertised data being available. This could have a positive impact for firms as well – there are lot of myths in respect to what attorneys may or may not be able to earn in another firm.  When those attorneys come to realise that they may not earn as much by moving as they had anticipated it is often too late for their current firm to act as the floodgates have already been opened to new ideas irrespective of initial motivations. If attorneys are aware that they are not being (financially at least) undervalued then one motivating factor for considering a move may not be there. Obviously if a firm massively underpays it would have an issue which would need to be addressed quickly to stem the tide of an exodus, but with more transparency at least it would potentially be more aware that this may be an issue.

One further possible downside is that there could be the unintended consequence that if no-one is discussing their current salary any longer with future employers or recruiters then issues of gender inequality may not come to light, thereby compounding the issue the idea is trying to prevent.

It is still early days, so any evidence of what effect the law changes will have in the USA is minimal, however it is hoped by encouraging employers to recruit based on what they think the job is worth and not by placing pressure on the candidate to reveal their current earnings, and potentially settle for less pay, it will create a fairer process which will allow a greater number of candidates to have access to the same opportunities”.

Thank you Phillipa for writing this article.  We’re interested in hearing from the IP community on this point – would not disclosing previous salary information during recruitment be beneficial to employers and candidates alike? Please submit your thoughts via the comments box below.

If you would like to write a blog article for IP Inclusive, on anything diversity related, please email Emily Teesdale of Abel & Imray. Guest bloggers are always very welcome!   

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