I was really excited when I got promoted to supervisor. I really wanted the job. And, be honest, the raise: I knew supervisors made a lot more than shop-floor employees. 

And then I found out my increase didn't even bring me to the bottom of the supervisor pay scale.

And then I found out another newly-promoted supervisor was making almost $8,000 more per year than I did. Not because he had more tenure, more experience, more talent -- in fact, my crews kicked his crews' production asses -- but because he had been making more than me before he got promoted.

Pay increases were tied to previous pay; basically the company didn't want to give anyone "too big" of a raise." Like long-term shop-floor employees who moved to Customer Service but were paid less than people, some straight out of school, hired from outside the company.

Regardless of what the job was actually worth. Probably because they knew people like me would never turn down a promotion, or the pay increase that went with it. We didn't know any better.

Then.

But, eventually, we all found out. (People always find out what other people make.)

And we never forgot.

***

"What did you earn at your last job?" is a question interviewers love to ask during job interviews, sometimes even during initial screenings. 

Some job interviewers use it as a "value" sense-check. On one hand, "He was only making $40,000 at his previous job. He must not be that great," they might think. But most interviewers use the, "What did you earn at your last job?" question as a way to determine the salary they will offer a potential employee.

And that's a problem: As Bill Murphy, Jr. writes, "Asking for history pegs potential new compensation to the employee's old compensation. Off the bat, it's against the law to do that in a growing number of states and municipalities."

So Salesforce phrases the question this way: 

"What is the compensation you expect?"

Salesforce feels the question helps them move towards pay equality. Bill feels letting applicants say what they expect to make puts the power in their hands, while avoiding anchoring potential negotiations on what they made in their previous job.

All of which sounds good.

But still.

Say an applicant is currently making $50,000 a year, you're offering her a supervisory position, and she has no idea what supervisors at your company make. She's decided, for whatever reason, a 10 percent increase would be great. So when you ask, "What is the compensation you expect?" she answers, "$55,000."

And say your salary range for that job is $60,000 to $75,000. 

Suddenly, she's a steal.

Even if you had been willing to start her at $60,000. Or even $65,000.

And even if at least $60,000 is fair compensation for the role she will play, and the value she will bring to your business.

While what a prospective employee earned at a previous job should have no bearing on their value to a new employer -- maybe they took that job to gain experience, or liked the short commute, or simply didn't recognize their value -- neither does what employee expects to earn at the new job.

Ultimately, every employee's pay should reflect their value to your business. Not what they made at a previous job. Not what they expect to make, especially if that expectation is based on inexperience or inaccurate information.

You should decide what a particular job is worth to you. You should decide what you are willing to pay based on the employee's skills, attributes, qualifications, etc.

Don't ask the candidate what he or she expects to make. Ask yourself what you are willing to pay.

***

People are smart. They understand market conditions, financial constraints, revenue shortfalls, and increased competition. They understand when you can't pay top-of-market salaries.

What they don't understand is when their compensation isn't fair compared to other employees in similar positions -- especially inside your company. While it's natural to want hire every new employee for as low a wage as possible, when the employment honeymoon wears off, that employee is left feeling like you took advantage.

And that feeling never, ever goes away.

Don't be tempted to ask what an employee made at a previous job. Don't be tempted to ask what they expect to make. The long-term motivation and engagement pain will always outweigh any short-term salary-saving gains. 

Offer what you decided the job is worth. And then let the employee decide if that salary works for them -- and if it doesn't, be willing to have that conversation.

If you're trying to put the power in the candidate's hands, that's the best way.

Published on: Jun 20, 2019
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