What happens when you don't pay attention to statistics?

It's not exactly big news to say that we're living in a new world that has been formed by a few people who thought they knew their statistical probabilities, but really didn't.

So, I get very upset when I see yet more of this in the business world. And it probably ends up being bad advice. Which is why you should be paying very close attention to this.

Note the word, "probably".

Back on March 4th, Nick of Ask the Headhunter fame, put up a thought-provoking post, How to make more money: Withhold your salary history.

Now, I'm with him, and you: I always want more money. So, hey, let's follow Nick's advice!

One slight problem with his argument: It's fallacious.

Read the article carefully, and you'll see the following:

• "I regularly receive e-mails from readers who take this bold position when applying for a job. They are almost always astonished..."
• "They send me stories about how they walk out of interviews when the employer threatens to terminate their candidacy unless they divulge the magic number."

Now, I don't doubt that these statements are factually correct. Problem is, they aren't statistically rigorous.He's taking individual experiences and drawing a larger-scale inference. Oops.

If Nick wanted to prove his case, he'd run a controlled study and see what the results were. It should be easy enough to round up 500 - 1000 people willing to be part of this test as they go through their process to secure a new job. I'd probably put a few criteria around this study, like the candidates have to be in the running for a job at a firm or organization that has an HR function controlling the recruiting process. Or, maybe he'd be game to do several studies, one for firms/orgs with an HR function controlling the recruiting process, and those without. Now that would be an interesting study!

Here's my guess about all this: Nick is right in that fighting against stupid processes is smart. And, Nick is right in going after smart HR thinking that is implemented poorly. Many people doing recruiting use salary history as an easy thumbnail method to qualify a candidate for a given role when it should be but one of the criteria used in evaluating a candidate. In other words, they think that by using salary history, they don't have to do any or as much of the hard work necessary in evaluating a given candidate. Saves time, especially when your boss is on your ass to evaluate more candidates per hour, or fill more open roles every month (hmm, a couple more statistical measures that should be diced up).

So, be cautious about which advice you decide to use in your job hunt. It's one thing to read a though-provoking blog post, and quite another to say it should be canon. Weigh it out, and see if it makes sense before going headlong into your future with it!   

Comments

[Ryan]

Dave,

Respectfully, I believe that in attempting to refute Nick's argument, you've created a logical fallacy yourself; specifically, the Straw Man Fallacy. You're refuting an argument that Nick didn't make. Nick didn't say, "My experience and the reports of others have are statistically valid evidence that withholding your salary history is usually beneficial." He said (paraphrasing), "My experience and the reports of others have convinced me that withholding your salary history is usually beneficial."

I think we all realize that a controlled, peer-reviewed study would be more robust evidence than Nick's expert opinion. It would be nice if we could have such a study any time we had to make a judgment call in life. But, those studies are time consuming and expensive, so we have to rely on the judgments of experts or think the issue through ourselves. But the fact that we don’t have as much evidence as we'd like doesn't mean Nick's assertion is false. The absence of evidence isn’t evidence.

[rick]

I've never liked the idea that I should tell a prospective employer what salary I'm looking for at the start the process. It gives away negotiating power on my side and given the number of salary sites out there... do they really think any intelligent person won't have a good idea of the salary range for the position?

What does it matter what my salary history has been? If I'm qualified to do the job you're interviewing me for I expect competitive salary for that position and I certainly hope that my salary history wouldn't really be a determining factor in whether I AM qualified... not after multiple interviews with different people. We can certainly chat about salary vs total compensation, but I don't expect to get $150k for a $100k position... nor will I accept $50k for that position.

[Nick Corcodilos]

Dave,

Your point about statistics and proof-of-concept is correct, of course. But I don't claim that statistics back up my advice. I think you're reading more into my advice than is there.

What I suggested is that it's foolish to disclose salary history and that HR has no business asking for it. I offered anecdotal evidence that supports my opinion that you can control negotiations more effectively and get a better deal if you withhold your salary history.

We could do a survey which reveals that companies don't pay more money when candidates withhold salary history. I would still advise withholding it and I would still suggest you can do better if you withhold it.

Such a survey would be interesting and useful. But in the end, a fearless job hunter is still going to say no because there's a principle involved here: Some of us believe salary history is no one's business and we back that up with NO.

If such a survey were done, my prediction is that weak-kneed candidates who say NO would get lower salaries anyway. Then we'd have to do an analysis of variance, and things would start getting more interesting. I have no stats to back that up :-)

Most people will go on "telling all" to personnel jockeys. I'm not interested in those people. I'm interested in those who manage negotiations from start to finish. Those are the outliers on the curve, the "out of the box" thinkers that companies say they want to hire. (Unfortunately, HR tends to hire people on the fat part of the salary curve, and therein lies the problem.)

Thanks for stimulating more discussion on this topic - it's an important one. Stating an hypothesis scientifically and adding some rigorous testing would expand the debate. My advice is just that, advice. Ditto my opinion. But I think it's interesting that most people who post on the topic here and elsewhere tell stories that support my contention (unscientific as our samples are) that salary history is no one's business and that it's foolish to disclose it.

Now if only a dozen other bloggers would contribute to this discussion as thoughtfully as you have, we might start a movement! I'll be covering the topic again on my blog shortly... Thanks again!

[Apolinaras "Apollo" Sinkevicius]

I will go on the the record that I have walked away from at least 3 companies that insisted on me divulging my salary history.

Two things I do not compromise on: my ethics and principles.

I provide certain value to the organization and we will negotiate on objective measures. Salary history has no place in the negotiations.
I know how much value I can bring to the employer and if one wants to invade my privacy (and make me break several NDAs I had to sign) than I am going to take my talent somewhere else. Period.

On the other side, when I do interviewing and hiring, I never ask for salary history. You know what salary range you have in your budget and it is your job to figure out if candidate can provide the value to justify the salary and benefits.

Last thought, if you are going from startups to larger companies or the other way, moving from lower cost region to high-priced one, and etc. etc. etc. is the HR person going to spend the time to add coefficients in the salary history to compare apples to apples... hell will freeze over before one will spend time to do that.

So how about we, as company leaders, spend more time on training our HR folks in proper negotiations, comp setting, and other topics important to running a superior human capital office.

[JD]

Statistics are the crutch of those who deny logic.

[HanktheHRDrone]

There are a lot of people who don't WANT to share salary information as part of the interview process. There are a lot of people who don't WANT to ask about salary in an interview process. Altruistically, I WANT employers to look at the relative worth of a role and pay their candidates what they deserve (teachers, cops and janitors would get BIG-TIME raises in my perfect world). What we WANT and what is real and actual are not, unfortunately, synonymous. Reveal your salary information. Explain why you're open to negotiation or why you feel your contributions warrant more bucks -- you are, after all, interviewing for a job OTHER than the one you have. Money is likey one of several motives you have for upgrading/changing. Don't be cocky. Don't be rude. Get the job.

Don't compromise your principles, but pick your battles wisely.