Recently there has been a renewed call for pay transparency, particularly regarding Equal Pay for Work of Equal Value as required by the Employment Equity Act. In addition, several calls have been made to enforce bans on calls by employers for pay slips during the recruitment process, as is becoming the norm abroad.
As a recruiter who regularly discusses salary with clients (employers) and candidates, the issue of pay affordability and market value has a bearing. Whilst the current earnings of a candidate are essential to know, and I have personally experienced situations where individuals have acquired significant experience but, due to having joined the company (and been paid) as an entry-level employee, their current salary is below market-value for someone of similar qualification and experience. And when pay slips are used as the foundation for making an offer, they are inevitably disadvantaged.
For this reason, pay slips shouldn’t have a bearing on the offer made to a prospective employee. Instead, the organisation should be clear about the value of the role and what the pay range corresponds to, i.e. qualification, experience, and specialist skill. Then, the prospective candidate should be considered in line with this range, and an offer made accordingly, even if it turns out to be a 30% increase on their current pay.
To assist this process, it would make sense to run job adverts that include the pay range for the role. However, many organisations prefer to avoid this because they come up against candidates who peg themselves at the upper end of this range, not necessarily realising that they need to work on what the organisation would see as value for this higher salary.
Unless we shift our thinking, including getting over the idea that a job move should only mean a 10 – 15% increase in current salary, we’re not likely to close the pay gaps that exist due to previous discrimination or penalties for candidates who may have had long service in their existing companies, or who are making their first natural career move beyond an entry-level role.
Recruiters have a role to play in changing the conversation. By being transparent upfront with clients and candidates, the recruiter can assist in managing the uncomfortable salary negotiation process.
Candidates must take responsibility for their salary negotiation too. I can count just as many candidates with unrealistically high salary expectations as those clients who undervalue the skills they’re seeking. First and foremost, candidates must be clear about their earnings. So many candidates need to fully understand their payslips and discount the value of benefits afforded to them or the way the package is structured from a tax efficiency perspective. As more companies move towards a Total Cost to Company (TCTC), this enables companies to manage their costs and allows individuals to structure the package to align with their personal needs.
Individuals should research market value but, more importantly, take an objective look at how they can add value to an organisation. Again, this is an area where working with a specialist recruiter can assist. Great recruiters understand the markets they serve and can give a candidate a fair appraisal of their “value” relative to what is being sought by employers – qualifications, experience, skill sets, and of course, equity considerations in the South African transformation context.