Nov 5, 2009

uss_img_capitolFind the right candidate and close the deal. When asked about their value-add to an organization, most recruiters will respond with the previous statement. However, the recent passing of the Lilly Ledbetter Fair Pay Act of 2009 has fundamentally changed the way the recruiting profession must view compensation. Now, not only must recruiters focus on finding candidates and closing deals, but we must more closely partner with compensation professionals to put the right deal together that will protect our clients from future litigation.

In late January, despite opposition from the Society of Human Resource Management, President Obama & Congress eliminated the 180-day statute of limitations for filing an equal pay lawsuit regarding pay discrimination. “This is a game-changer,” said Gerry Crispin, recruiting industry icon, at a recent conference, referring to this new legislation. “Companies need to pay attention to this.”

Crispin is right. Just last week the Wall Street Journal reported that a former Anheuser-Busch executive sued the beer giant for discrimination, saying she was paid less than male executives. Francine Katz, a former Anheuser-Busch vice president of communications and consumer affairs, filed a lawsuit last in a state court in St. Louis, “accusing the brewer of maintaining a corporate culture that ‘adversely impacts women,’ resulting in lower salaries and bonuses and fewer opportunities.”

This well-publicized lawsuit is the first of many more such suits to come. As a result of this legislation, companies are now required to meticulously document pay decisions and retain detailed employment records to ward off lawsuits like Anheuser-Busch is facing. This legislation is forcing you as a recruiter to more closely consider factors beyond what it takes a candidate to accept an offer. In light of this legislation, as a recruiting professional you need to advise your client on compensation best practices beyond closing the deal. Before constructing any offer for a candidate you should:

  • Analyze comparables. Run the numbers on all your employees’ compensation packages, including starting pay, merit raises, cost of living increases, and benefits. Individuals who perform the same jobs and have the same qualifications should be paid similar rates. If your candidate requires a significantly larger package, you must ask whether this one deal is worth the risk. If you do not have access to this type of data — you probably should.
  • Analyze market data. There are many tools available to research what professionals are earning in any given area. Consult Towers Watson & Co or other leading compensation market research data. Any offer you prepare should be close to what market data suggests is appropriate.
  • What is your candidate earning now? Any significant pay increase beyond their existing package often triggers additional scrutiny. Be ready to defend this type of decision with detailed documentation.
  • Ensure there are demonstrable business reasons for any disparities in compensation with an offer you are preparing.
  • Keep everything. Because there is no longer a statute of limitations, you need to indefinitely retain records relating to compensation. Remember, there is no longer a 180-day statute of limitations, an employee can go back years. This type of data gathering is protecting your organization in the future.
  • Most important: have your compensation director on speed dial. When’s the last time you paid him/her a visit? Schedule an appointment and partner with that organization to ensure best business practices.

Now go find that perfect candidate and close the deal.

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