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Modern Hiring Trends: Salary Negotiations and Pay Transparency

It's a challenge to find someone you want to hire, but once you find them, you still need to close the deal. Salary will be a major factor in your negotiations.

Finding IT or analytics staff with specialized skills is a challenge. Hiring managers need to think about how a candidate will fit into a prospective team, but finding a great person for an open position is only the beginning. Any smart prospective employee is evaluating your enterprise in return and trying to determine whether he or she will be satisfied and successful in the position.

For Further Reading:

AI's Role in Pay Equity

Five Roles for Your Data Science Team

The Gender Pay Gap Remains

For most employees, salary is still the bottom line, and a new survey shows that more job seekers are eager to negotiate and demand salary transparency in today's economy.

Expect More Negotiation

According to a survey conducted by human resource consultancy Robert Half in the third quarter of 2018, "today's job seekers are confident in their bargaining power." More than half of survey respondents (55 percent) tried to negotiate for higher salary when they last received a job offer. This is a significant bump over a similar survey conducted in 2017, in which only 39 percent of respondents had negotiated. (The survey includes responses from over 2,800 workers (at least 18 years old) employed in office environments and more than 2,800 senior managers at companies with 20 or more employees in 28 major U.S. cities.)

The company's announcement of survey results noted that employers are increasingly willing to make deals with prospective employees. According to the survey of senior managers, "70 percent of senior managers said they expect some back-and-forth on salary. About six in 10 are more open to negotiating compensation (62 percent) and nonmonetary perks and benefits (59 percent) than they were a year ago."

Clearly, if you're hiring but unwilling to consider a counter-offer, you're in the minority.

Who's Asking and How

Not all salary conversations are equal. In the Robert Half survey, 68 percent of male employees tried to negotiate pay, but only 45 percent of women did the same. This may be due to the real or perceived possibility of backlash.

For example, a study cited in a recent article from Harvard Law School found that "both male and female study participants were less interested in working with women who attempted to negotiate a better salary than they were with men who tried to negotiate a higher salary."

Salary negotiations are further complicated by the presence of companies that base decisions on an individual employee's salary history. There is a growing recognition that requiring salary history can amplify bias against women and minorities who may be unwilling or unable to negotiate higher wages early in their careers. In an attempt to mitigate this, an increasing number of U.S. states and cities now prohibit employers from asking about salary history and protect employees' rights to discuss compensation openly.

The Robert Half survey also found:

  • More professionals ages 18 to 34 (65 percent) asked for higher compensation compared to those ages 35 to 54 (55 percent) and 55 and older (38 percent)
  • Boston (80 percent), Denver, and Washington, D.C. (78 percent each) have the most managers who said they expect job seekers to negotiate salary
  • Houston (73 percent), Los Angeles (72 percent) and Miami (71 percent) have the largest number of executives who are more willing to discuss pay than they were a year ago

If you're a job seeker in Washington, D.C., Houston, or Los Angeles, you're in luck. Managers in these cities are most open to negotiating nonmonetary perks and benefits (such as vacation days, flexible schedules, and professional development) compared to last year.

Publicizing Salary Data

As more employees demand transparency in salary decisions, more employers should be conscious of how pay disparity makes them appear. Shareholder advocate Arjuna Capital recently identified 12 top banks and tech firms that it is challenging to release median gender pay gap statistics.

Identifying a gap in median pay between men and women can highlight where women are not being hired or promoted into positions that command greater salaries. Arjuna Capital managing partner Natasha Lamb explained, "For three years, Arjuna Capital has led the charge on 'equal pay for equal work' shareholder activism. But 'equal pay' is only half the story. ... Women are dramatically underrepresented in high-paying positions at nearly all major corporations. So, when more U.S. companies begin disclosing their 'median pay' gaps, the numbers are going to be shocking."

According to Arjuna Capital, the continuing pay gap is "not only bad for women, it's bad for the economy, and it's bad for the companies that can benefit now from their leadership and talent."

Closing the Deal

Given the talent shortage in tech, how can you improve your hiring process? To keep pace with your competitors, you need to be willing to negotiate with new hires. Paul McDonald, senior executive director for Robert Half, points out that "Job seekers with specialized skills are in high demand and may even be entertaining multiple offers. ... Smart companies realize that winning over top candidates often comes down to moving quickly on hiring decisions and presenting a compensation and perks package that's at least on par with the competition."

Be up front with prospective employees about your salary and hiring processes and watch for sources of potential bias. That way, you can truly build a workforce that will be resilient and committed to your enterprise.

About the Author

Lindsay Stares is a production editor at TDWI. You can contact her here.

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