Legal and Compliance Executive Search Blog

COMPENSATION CONUNDRUM:  TO DISCLOSE OR NOT DISCLOSE

Posted by Momentum Search Partners on Tue, May 14, 2019

 salary-negotiation (1)So far, fifteen states have enacted legislation that precludes employers from asking about current compensation from job applicants.   See https://www.hrdive.com/news/salary-history-ban-states-list/516662/.   Texas being a pro-business state, this type of legislation has not been enacted in Texas and was not a topic of discussion in the current legislative session, nor will it likely be in two years when the session meets again.   So, the question for Texas job applicants continues: “Should I disclose my current compensation in a job interview or application”?    

Employers understandably want this information, and not for the reasons that candidates think.   In our experience, employers (and primarily Firm Administrators or Recruiting Managers) want this information as a screening mechanism – to figure out whether the person is within their compensation range.  They don’t want to waste anyone’s time – their own, the firm’s, or the candidate’s - with a lengthy interview process, only to learn at the offer stage that the two sides’ expectations are too far apart to bridge.     Nevertheless, firms receive a lot of hesitation, push-back and sometimes a refusal when asking a job seeker about their salary.  We often hear “it shouldn’t matter what I’m currently making, only what I want to make”.  Also, career counselors (on LinkedIn and other sites) almost unanimously advise job seekers not to disclose compensation.  

Also driving this withholding of compensation information is the broad salary ranges amongst law firms.  Salaries can vary greatly for similar jobs with similar firms.  Discussing salaries between co-workers is taboo, even grounds for termination with some law firms.  Management’s nightmare is for employees to know what co-workers are being paid and begin dissecting the formula wondering why their neighbor is making more.  Some firms have a mathematic formula: X years’ experience + Y education + law firm secret sauce number equals starting salary.   Speculating about what a colleague is paid can lead to a competitiveness that fuels poor morale.  Actually knowing what a colleague makes may cause a mutiny.  A no-win situation.

Secrecy and non-disclosure are a couple of reasons accurate salary data is hard to find.  Services and companies like Robert Half and Glassdoor tabulate statistics, but those numbers can be outdated or, at best, a guesstimate of what an employee might expect to earn.  There is often poor participation in many of these surveys, which skews the results even more. 

The services of an experienced recruiter who works in your geographical area may be your best source of real-time, market compensation.  Since recruiters talk to candidates all day, every day, they have a wealth of information about current salaries and bonuses.   Although our ethical guidelines and placement agreements likely prevent us from disclosing specific compensation details about any particular firm, we can provide guidance and insight into what we’re seeing and hearing about different types of firms and jobs.

In any event, despite the increasing reluctance of candidates to not disclose their current compensation, in our experience, firms do not offer less to a candidate simply because they’re currently earning less.  The firm desires the new employee to remain at the firm for as long as possible and to prevent turnover, which is very costly, in terms of the direct and indirect costs associated with hiring and training new personnel. Turnover also reflects poorly on a firm and can hurt morale within the remaining ranks.   So regardless of what a candidate is currently earning, a firm is typically motivated to offer that person fair market compensation in order to prevent that candidate from being lured away for a higher-paying position.

But the debate will likely continue.  More transparency would be welcomed on both sides, but job seekers and employers will continue to keep their cards close to their vest.  Hopefully we can all meet in the middle, with employers being more transparent about their pay ranges and the criteria that affect where someone lies within their scale, and employees being more open about what they’re currently earning and what they need to make a move.

 

Topics: legal salary