Paying for What You Wanted

“I’m hiring an assistant and have found a really good candidate, Jane. I had planned to pay $19 to $22 per hour but Jane was only making minimum wage at her last job so I know she’d be thrilled by $17. Do I have to offer her something within the range, even if she doesn’t know the range?”

You’re just assuming she doesn’t know the range. Current California law requires you to post the range on any ads so it’s hard to get away from paying within that range. Even if you could get away with paying below the range you created, there are several reasons why you should stick with your original range, regardless of how low Jane was paid previously.

The best plan is to pay for what the job is and then hold the person accountable for doing the job. You created that range and it should represent the level and quality of work you expect. Offering a lower amount just lowers those expectations.

In addition, no matter how confidential we like to believe wages to be, employees talk… and those conversations are protected by California law stating you cannot stop them from discussing wages. Even if there are no other employees, it seems confidential information is rarely totally secure within the company. What happens when Jane learns you had planned on paying more or discovers other employees with fewer responsibilities are earning more?

Starting a position at too low of pay often means, that to retain Jane, you’ll need to provide an “equity increase” to bring her up to the level in the marketplace. The conversation about an equity increase is very hard because you are admitting you originally lowballed her. If you don’t eventually pay in the range of other companies, you take the risk of losing her to another company.

This mindset of paying only a little above what you must pay, instead of what the position is worth, has been the reason certain laws are currently in place. Even if you’re only focused on the money, keep in mind the cost of replacing Jane will be far greater than paying her a fair wage from the start.

We like knowing we can hold the employee accountable for the work itself because she’s receiving a fair wage for the level of her skills and responsibilities. What do you like knowing?

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