How to Handle Tricky Salary Questions from Employees or Candidates
Many questions can throw candidates off during the interview process if they aren’t prepared, but it is just as important for recruiters and managers to be ready for tricky salary questions if they want to retain top talent.
Joel Myers, a senior management consultant with F&H Solutions Group, provides some tips to recruiters and managers about how to respond to tricky salary questions from candidates and direct reports.
Below are some complicated questions that managers/recruiters might expect to hear and how they can explain their salary decisions.
An administrative assistant approaches her manager and says, “My good friend has a job just like mine and her boss pays her a salary. She doesn’t have to clock in and out. I want to be paid that way too, don’t you value my work?”
Whether a job is paid a salary, not paid overtime, or hourly, paid overtime, is not a reflection of the importance of your work or your value as an employee. Federal law, the Fair Labor Standards Act (FLSA), dictates whether a job is paid hourly and eligible for overtime or salaried and exempt from overtime. There are several guidelines that apply, but in the case of administrative jobs, it is mostly a matter job duties. A salaried, exempt job requires an employee to exercise a significant degree of independent judgment and decision-making on matters of significance to the organization. Conversely, hourly, non-exempt jobs require limited independent judgment and decision-making. A job may be highly complex and still be non-exempt if the policies and procedures for carrying out the work are well defined and cover most work situations. This law was enacted for employees’ benefit so an employer could not demand long hours without compensating the employee for the additional time at a premium rate, namely 1.5 times the normal hourly rate.
So, a manager can’t just decide to make a job salaried exempt or hourly nonexempt without complying with FLSA guidelines. To do so puts the company at risk of investigation and possible fines. The job must be studied and properly classified by a human resource professional.
An employee comments to his manager, “In the orientation information, it says that the company wants to pay a market-competitive rate of pay, yet I have six friends who are doing the same job as me for other companies, all making more than I am. Is the company trying to snow us?”
The information that our company studies to determine market pay rates includes pay from many companies in the same industry, general geography and size. If you multiply your sample size of six companies, by ten, it will be similar in size to the company’s pay data sources. The range of pay will be broader, even within the same industry, geography and company size. Pay is set at the market median.
Other companies have different pay philosophies. Some pay wages and salaries above market and limit the amount they will put into retirement benefits or medical benefit cost sharing. Others pay lower wages and put money into year-end bonuses – if earned. It is important to consider the total package.
Jobs are matched based on the job duties, not just the title. For example, the job duties and qualifying skills and experience for a job like “Laboratory Technician” can vary widely. Without knowing the nature of the work, the industry and the company’s size, it is hard to determine the appropriate market pay range.
An employee enters his manager’s office obviously irritated. He asks, “I have eight years and you just hired Dan, a new guy into our group, with less experience and paid him $6,000 more than me. How is that fair?”
I appreciate your asking the question.
To explain, not defend, the decision to hire Dan at the level we did, he has state-of-the art knowledge of applications that we will be introducing to our work. He will be able to transfer his knowledge to you and others, lifting the capabilities of our whole department. It was less expensive and quicker to “buy” that knowledge by hiring Dan than to develop it internally.
I understand how that may be perceived as “unfair”. The company’s pay rates are reviewed annually. Even so, sometimes the market advances pay for specific skills more quickly than our internal pay practices can adapt.
What we need to discuss is what you can do to increase your compensation to equal and perhaps exceed Dan’s. The first step would be to embrace the opportunity to learn all that you can from Dan. Second, is to align your performance and work practices with the core competencies that are covered in the performance review process. Third, become engaged in conversations and initiatives that will contribute to the future of the company.
For my part, I will commit to helping you learn through training and experience. As you grow, I will do all I can to see that your level of pay goes up and that you have opportunities to advance your career.
Joel Myers is a senior management consultant in the Memphis office of F&H Solutions Group, a national consulting firm specializing in employee engagement, human resources and labor relations matters.