We are well into the New Year, the economy is strong and this confidence in the market creates fluidity. This, alongside the ever growing need for regulation means it is a busy time for financial services recruitment.
As the recruitment needs increase, those hiring are truly starting to feel the impact of the compensation history ban. Nearly three months in, we look at the effect it has had so far.
Addressing the gap
The philosophy behind the legislation closing the gender pay gap is, in the main, universally supported. Women were reported to be earning 20% less than men in the same job and disturbingly, women from ethnic minorities even less. Something quite rightly needed to be done to address it.
It in itself is being exploited
While we hope the new law proves to solve the imbalance, it can also be exploited for the purpose of heightened salary inflation and we have had to manage this carefully. At the more junior end of the spectrum in particular, some candidates are using the compensation ‘veil’ as an opportunity to go for larger (and previously unjustified) salary jumps.
With penalties of up to $250,000 there has been a reluctance for companies to go near discussion around salary. Add the loss of previous compensation as a guide into the equation and recruiters are finding that without proper advice, the process has been taking much longer as salary negotiations draw out. Some find out much too late in the process the extent of the gap between expectation and budget and others find themselves taking a leap of faith that they are not paying much more than they should.
Adding value for our clients
This is where we, as a recruitment specialist have found we can add even more value to our clients. While we too cannot ask about candidates’ compensation history we do have a broader knowledge of the market. With visibility of what people are being paid, going into roles across the industry, we can offer sound advice on what the right salary bracket should be. This gives our clients reassurance they are not unintentionally excessively overpaying or indeed restricting themselves from attracting the top talent by underpaying.
With this knowledge we can also have frank conversations with our candidates so they know what is fair to expect at the outset. By truly getting to know the needs, motivations and expectations of both our candidates and clients we can match the right people to the right organization.
Some are choosing to disclose
Happily, we are finding particularly with the mid to senior end of the market, candidates trust us to freely offer their previous salary information. At their level they find it beneficial to be upfront with the client, saving time if a compromise is out of reach. They feel it shows transparency and seriousness about a role. They also recognize that a company can request salary information after an offer has been made and being found to have been unfair is not the best way to start a new job.
They know being overpaid can leave them vulnerable if lay-offs are made and that it can be more difficult to move around so there is no point in trying to take advantage to push for an above market offer. Interestingly, giving their historic information can often act as a justification point to negotiate a new higher salary or show that if they are at the top end of their bracket it is because they are worth it!
The clients we work with are not trying to pay less than they should, they just want to know what is fair and appropriate. It is still early days and playing out but in time we are hopeful that with the help of specialist expertise, candidates who try and take advantage find balance and recruiters reach a process that works more efficiently. We all want to avoid firms feeling forced to be rigid with their bandings, not being able to offer flexibility for the most talented people.
While the eyes of the rest of the country and indeed the world are on this as a solution to a fairer working environment, we are committed to doing everything we can to help it thrive.
If you would like our support in finding the right candidates for your roles with the expertise that helps navigate the new law please do get in touch.