Stress over money issues dominates most workers’ lives, and yet it’s a taboo subject in the office. Business Technology’s resident U.S. blogger Keil Hubert argues that it’s in the hiring manager’s best interests to discuss the applicants’ needs frankly during the interview.
In keeping with this summer’s theme on why it’s in both parties’ best interests to be transparent during interviewing and hiring, I want to talk today about talking about money during an interview. Two weeks ago, I argued that it’s in the employer’s best interests to be open about why we need a new hire – we have problems that need to be addressed that we can’t handle with existing staff. Last week, I argued that the would-be employee needs to be open with the hiring board about their life situation and how it’s likely to be affected by (and to affect, in turn) the job.
Lots of people in both the USA and the UK have been arguing recently about where a ‘minimum wage’ for low-level workers should be set. The essential thrust of the problem is that a full-time worker needs a certain amount of income to function effectively in society, with ‘function’ being defined as covering the minimum level of all required living expenses for the area they live in. In the USA, where we venerate the ‘every man for himself’ ethos, our minimum wage laws haven’t kept up with inflation over the decades, and most workers can no longer meet the minimum costs for housing, transportation, etc., working a full-time minimum wage job. It’s generally accepted that we (as a society) should make sure that all full-time workers have the ability to ‘make it’ in society, but we can’t agree at all on how best to go about that (e.g., raise the minimum wage, subsidize essential services, make it illegal to cap employee hours below the level required to receive benefits, etc.).
The people most affected by minimum wage debate are the workers trying to survive on it. I don’t mean to slight businesses that pay their entry-level workers the official minimum wage, but… I only have so much empathy for them. Just because you legally can pay your employees such that they’re kept below the poverty line doesn’t mean that you should. A worker who is unable to make ends meet is inevitably going to experience conflicts balancing their workplace’s needs with their survival needs, and that simply isn’t in the business’s best interests. Yes, a business has an academic economic incentive to pay as little as possible for labour in order to maximize profits. Business, however, is not an abstract academic theory played out in a bloodless simulation – it’s an endeavour played out with real people’s lives as the pawns. I submit that there is no moral or academic incentive to unnecessarily further human misery. 
There are a lot of people with a vested interest in this problem on both sides of the pond (and doubtless in other countries as well). I’m personally glad to see the issue get a sound public thrashing; I think our debate on the topic is long overdue; this constitutes a critical issue that affects large swathes of modern society. We need to figure out who we are and what we stand for in this issue, and then work from there on how we’ll go about fixing it.
The issue isn’t limited to workers on the bottom rung of the employment ladder. As painful as it might be to admit, every worker that isn’t independently wealthy has their own version of the minimum wage – what do I have to make in order to keep paying the bills that I already have?
The general concept of minimum financial requirements comes up every single time that a full-time worker changes jobs. It doesn’t matter if you make the Federally-mandated minimum wage, or if you get lavish stock options alongside your annual performance bonus. Everyone has their own income ‘floor’ below which they can’t accept a position without negatively impacting their quality of life. This is supposed to come up during the salary negotiation phase of a hiring action; I’ve found that it more often comes up on the front end of the process, when you’re trying to get to the bloody interview.
To be clear, I don’t want to take a stand (in this column) about where income transitions from necessary to excessive to obscene; we can debate why CEOs get paid enough to purchase a stealth fighter with cash later.  Right now, I want to focus on the idea of personal cost of living calculations, and why the current salary negotiation process doesn’t seem to work.
As an example: I’ve been asked to identify my ‘desired’ salary or hourly pay rate in about 60 per cent of the online full-time position applications that I’ve completed. Awful AMS solutionsdemand that you type a whole number into the application form with no context or explanation – those companies are asking you to self-eliminate from competition; if you put in a number that’s greater than their secret ‘ceiling’ for the role, you’re dropped from consideration with no explanation. If you put in a number that’s below what the job warrants, you can get screwed out of the rate that you’ve earned based on your experience and qualifications.
The worst systems simply ask you what you made at your last position. That’s a perfectly legitimate question to ask, but it’s not necessarily a decent way to determine what a personneeds in the new role. I have never once seem an AMS form include a radio button or check box that allows you to express that what you made at your last position was adequate to meet your family’s financial needs (then or now). So you made $25 an hour… but you needed $35 to get health insurance. Just because you worked for less than what you needed does not mean that you’re required to keep working at the inadequate rate.
The best online application systems give you a general text field to explain what you desire andwhy that is. For example:
‘I currently make $XXXX and live in the YYYY metropolitan area. This rate generally meets my current needs, so I’d like to be paid at least the same rate. If I have to move to ZZZZ where the cost of living is 37 per cent greater, then I’d need my overall pay to increase by that same 37 per cent factor to maintain my current standard of living. Also, I have a child starting university, so I’m looking for an additional XX per cent in after-tax earnings to cover her post-scholarship share of tuition.’
That’s a long block of text, and it requires the reader to understand the concept that different geographic locations have different costs for essential goods and services. It also puts pressure on the reader to consider your personal circumstances.
I appreciate being asked to explain my situation in the application, but I’d much rather be asked by a live person so that I can elaborate on the context if or when we reach a topic that could be misunderstood. I’ve had HR screeners balk at compensation discussions; most of the ones that I’ve spoken or corresponded with only want to give them an annual, monthly, or hourly pay rate and then drop it. They didn’t want to hear any details. Will you, their thinking goes, do the job for at or under what I’m prepared to offer or not? If not, I’ll deny you the interview.
I argue that the take-it-or-leave-it approach is an iherently self-defeating position because it eliminates viable candidates from consideration, and it misses the point that the basic rate of pay isn’t the best way to determine if the total compensation package will meet the candidate’s needs. By ‘total’, I mean the complete picture of how the job and the company’s pay/benefits package impacts the job seeker’s life.
I’ve hired a lot of employees over the years that had special family situations to deal with. For these folks, the basic pay rate wasn’t nearly as important as the healthcare benefits – both what the company provided in subsidized health insurance, and their proximity to certain clinical specialists when they moved to town. Good parents were willing to accept a lower take-home pay rate in order to get their special needs children or dependent parents the clinical care that they needed. Adding the option to allow the employee use their accumulated sick days to take care of family members (instead of just themselves) was a huge draw for some candidates.
Additionally, the cost of living by location plays a larger part in the decision making process than many HR people don’t seem to understand. A candidate moving from the East or West Coast of the USA to Texas benefits from a substantially reduced cost of living since our housing is astonishingly cheap compared to urban New England and California. We also don’t have a state income tax (although our property taxes are pretty high). When someone moves to Texas from San Francisco, the percentage of their take-home pay that has to go towards housing plummets – those funds can then be applied to other family needs, like tuition or savings or retirement savings. That the reverse is also true should go without saying… but, sadly, often doesn’t. I’ve had head-hunters tell me that if I make $XXX in Dallas, I should be happy to make the exact same salary in Cupertino. Eh, no.
Even within the same city, you have to factor changes in daily expenses when determining whether or not a new position is worth taking. I interviewed for a lecturer position with a local university last spring that would have more than doubled my daily commute time – thereby increasing monthly fuel expenses by 35 per cent – and also would have added nearly $200/month in toll road charges to my family’s budget. That’s not a lot, but it does impact the budget. If you have the room in your pay rate to absorb the extra cost, then there’s no issue with keeping your same pay rate. If you can’t, then the increased expenses may become a sticking point.
That’s just one example, and there are potentially hundreds to factor into the equation for each individual. Every applicant has to consider a long list of variables when they work out constitutes their ‘needed’ pay rate and their ‘desired’ rate. Hopefully, they’ve taken the time to analyse their personal finances and can make sound fiscal decisions. I know far too many people who have no idea how much money they need, how much they waste, and how much of a pay rate reduction they can safely absorb.
All of this, I argue, should be considered both before the application is submitted and during the interview. Yes, applicants need to figure out for themselves what they need to live on. In the same sense, the hiring team needs to the cost of living facts for their location readily at hand when they speak with each applicant. They need to be prepared to discuss differences in their metro area from where the applicants come from, as well as lifestyle changes (like shifting from commuting via public transportation in NYC or London to driving everywhere in Dallas) and any associated changes in recurring expenses. I’ve won over a lot of good people who didn’t initially think that they could join my team by showing how our offer was economically better for them than the base pay rate alone would suggest.
It’s great when a candidate comes into the interview room with that research in-hand, but I don’t expect them to have it. I believe strongly that it’s the hiring company’sresponsibly to assemble the necessary fiscal facts beforehand and to be prepared to initiate the conversation with the applicants. After all, the job hunter is likely nervous as hell by the process of trying to impress the hiring manager. They’re focused on making a good impression. As the senior party, it’s the new boss’s role to help facilitate the applicant’s transition from petitioner to team member. That includes helping the applicant to make an informed, rational, pragmatic decision.
Comedian Paula Poundstone once quipped: ‘The wages of sin are death, but by the time taxes are taken out, it’s just sort of a tired feeling.’ I think that she nailed the problem; the true cost of getting through life are often obfuscated, hard to calculate, and change depending on factors wholly outside out control. Figuring out what you need, from job to job and from year to year, can be exhausting. The numbers are slightly different for every single person based on their unique context. Even within the same job, changes in one’s outside life (like an unexpected pregnancy) can change a dream job into a financial nightmare.
From a hiring manager’s perspective, I submit that we’re trying to acquire talent in order to solve our business problems. That ‘talent’ isn’t a generic, expendable commodity – it’s a complicated and sometimes-irrational human being with needs, problems, debts, anxieties, and dreams. In order to secure the talent that we need, we have to get deep into the proverbial weeds and understand the factors that influence the holder of said talent – that wonderful and complicated human being – to either accept or reject our total compensation package. I contend that if we treat our candidates with the respect and talk plainly and non-judgmentally about their financial situation, we can come to a reasonable, acceptable solution the ends in a hiring action. We’re far more likely to secure happy, focused, and productive team members if we understand their needs than if we get squeamish and avoid bringing the thorny topic of financial requirements at all.
 I apologize if that came across as a rant. I have strong opinions on the subject because I worked minimum wage jobs over the summers (along with my military service) to help pay for university tuition. My oldest has been doing the same, working 25 hours or more on weeknights all through the school year to set aside for tuition costs. It’s a bloody fool’s game in the end, and you’re never allowed to forget it. If you ever work hard enough to earn so much as a penny in overtime, your salaried manager (with all of her benefits and perquisites) sends you home early so that you can never get ahead financially.
 I’ve been stewing about this topic for six years, ever since I read Shawn Tully’s and Joan Caplin’s article in the 27th October 2008 edition of Fortune magazine called ‘Look who pays for the bailout’. That was the first time I’d ever come across the acronym ‘HENRY’, standing for ‘High Earners, Not Rich Yet’. In the article, Tully and Caplin introduced several white collar workers who brought in between $250,000 and $500,000 in income and yet still complained that they were just barely getting by financially because of the impact of taxes, housing, private education, etc. At first, the article infuriated me; when I was a kid, our ‘couch’ was an old twin-sized mattress. I had no empathy. Over time, I’ve been able to put these folks into perspective: they’re increased their spending to match their income and socioeconomic status. While I disagree with their actions, I understand how they can claim that they ‘need’ to keep earning more per year than 95 per cent of the workers in the USA.
Keil Hubert is a retired U.S. Air Force ‘Cyberspace Operations’ officer, with over ten years of military command experience. He currently consults on business, security and technology issues in Texas. He’s built dot-com start-ups for KPMG Consulting, created an in-house consulting practice for Yahoo!, and helped to launch four small businesses (including his own).
Keil’s experience creating and leading IT teams in the defense, healthcare, media, government and non-profit sectors has afforded him an eclectic perspective on the integration of business needs, technical services and creative employee development… This serves him well as Business Technology’s resident U.S. blogger.