Why HR Professionals Ask About Current Pay: The Dos and Don'ts

HR professionals frequently inquire about a candidate's current salary for a variety of reasons. This article explores the common motivations behind these questions, the benefits and drawbacks, and best practices for both HR professionals and candidates.

Common Reasons for Asking About Current Pay

Understanding a candidate's current salary is a critical aspect of the recruitment process. Here are some of the key reasons why HR professionals ask about current pay:

Benchmarking Salaries

Knowing a candidate's current salary helps HR assess whether their compensation offer aligns with industry standards and internal pay structures. This ensures that the company remains competitive in attracting talent. Benchmarking salaries can also help HR identify any pay gaps or disparities within the organization, especially for underrepresented groups.

Budget Constraints

Organizations often have strict salary bands or budget limits for specific roles. Understanding a candidate's current pay can help HR determine if they can afford to hire this candidate without exceeding budgetary constraints. This prevents the company from overextending its financial resources for a single hire.

Negotiation Leverage

HR may use current pay information as a reference point during salary negotiations. It provides a baseline for discussions, which can influence the final compensation offer. By understanding the candidate's salary expectations, HR can negotiate more effectively and ensure that the compensation package is mutually beneficial.

Market Rate Assessment

Collecting data on a candidate's current salaries helps HR better understand market trends and adjust their compensation strategies accordingly. This knowledge can be crucial in remaining competitive and attractive to top talent in the industry.

The Legal and Ethical Considerations

It is important to note that some jurisdictions have enacted laws that restrict or prohibit employers from asking about a candidate's salary history. These laws aim to promote pay equity and reduce discrimination. In such cases, HR professionals should be aware of and comply with local regulations. Candidates should also be informed of their rights and what questions are permissible in their location.

Best Practices for HR Professionals

To ensure a fair and transparent hiring process, HR professionals should consider the following best practices:

Transparency in Salaries

The institution should publish the salary range for the position in the job advertisement. This transparency helps set realistic expectations for candidates and avoids misunderstandings during the hiring process. Providing the compensation range upfront can eliminate the need for last-minute salary negotiations, making the hiring process more efficient and effective.

Adhering to Legal Guidelines

HR professionals should familiarize themselves with local laws and employment practices to avoid legal issues and promote a fair hiring process. This includes understanding which questions are permissible and which are not, and ensuring that all HR practices comply with relevant regulations.

What Candidates Should Do

Candidates should be prepared to answer questions about their current salary if relevant to the hiring process. However, if an HR professional requests evidence of current pay, candidates may request to refer the matter to their employment agency or a legal advisor to ensure their rights are protected.

Ultimately, the goal of these inquiries should be to create a fair and transparent hiring process that benefits both the organization and the candidate. By understanding the motivations behind these questions and adhering to best practices, HR professionals and candidates can work together effectively to achieve this goal.