Judging a Candidate on Salary History is an outdated idea…

Loyalty is an overrated corporate virtue. To vindicate this fact, check with your friends who are continuing in the same organization for more than a decade. I am certain most of them would be highly underpaid than many of the lesser experienced team members. Even if they muster the courage to shift jobs, to bridge these compensation gaps it will require multiple hops. Why? Because your next package is not purely dependent on your core competency but sadly on your current package

This trend favors & benefits a few; I know a salesperson who has tripled his package in the span of 5 years. His modus operandi is simple, joining an organization, he promises heaven to the customer and blindly agrees to all the unreasonable demands. In the first year, he easily surpasses his sales targets get huge bonuses. Before the unrealistic commitment develops fissures and fizzles in the relationship, he hops onto the next company with a much higher package. Less of his competency and more of the current package guarantees his elevation in consecutive organizations.

In both scenarios, underpaid continues to remain underpaid, whereas overpaid thrives exploring & exploiting the loopholes within the system. The recruitment strategy is built on a flawed outdated premise of equating capabilities with your last drawn pay. This oversimplification of a complex talent acquisition process is akin to driving off a cliff with your seat belt off, a sure recipe for disaster.

The HR side of the argument is the need for a baseline, it’s a reasonable ask, and we can find the middle ground in two straight paths. A simple approach is to seek the candidate’s expectation and compare it with the approved budget (against his salary history), to arrive at a hiring decision. The second one is for scenarios where 60 minutes interview is insufficient to arrive at a decisive conclusion. Offer a tiered package with well-defined outcomes boxed within a realistic timeframe. For example, x% bottom-line saving within three quarters or pulling a challenging program from Red to Amber within an agreed timeline. These are only a few examples, with the Golden Triangle (Scope, Time, and Quality) there are multiple permutations/combinations that can be easily framed by a willing mind. Such approaches are not new but have been in practice in the CxO circles. Such transparent options, besides motivating a candidate to outperform also establishes a win-win strategy for all the stakeholders.

This change is a first step in the exodus of establishing a transparent compensation policy. Still pay parity dominated by various discriminating factors such as gender, race, etc. exists and we have a significant ground to cover before we arrive at a fair and square Remuneration strategy, but let’s reserve that story for a different day. If we don’t have the audacity to steer away from these conventional compensation techniques, our talent strategy will continue to hemorrhage and will be subjected to endless aneurisms.

Growing up, we were taught it’s not a good mannerism to inquire about the age or salary of an individual, it was strictly considered an item of privacy. When we got schooled in this concept, appears corporates have conveniently bunked this session, hope they catch up now and start respecting the financial privacy of the candidates

Originally published at https://www.linkedin.com.