Daily Archives: September 5, 2010

What are You Currently Paid?

I can defend the question, “What is your salary requirement?” but I’m not really able to offer reassuring advice on how to answer a question about your current pay.  Personally, I don’t believe it’s relevant to anything at all, and for those of you with a little bit of HR background, you know that the question has a potential problem associated with it.  If you use current salary to establish a starting salary for a new employee, you may be perpetuating illegal pay discrimination.  So I would never ever ever ask it.  But I digress.  Let’s say it is asked of you.

Here are your choices: answer truthfully or don’t answer. Both come with risks.

The risk of answering truthfully:

The information is confidential, and it won’t be for long if you tell it to anyone. Applications, interviews, all that HR stuff that is supposed to be confidential?  It isn’t always so.  There are no guarantees; people talk, and phrases and numbers are flung about in lunch conversations in the cafeteria and all over town.

Your compensation cannot be reduced to one number. If you are asked for the number you want, that’s one thing.  But reducing the value of your entire compensation package to one quick response is not only risky but  inaccurate on most days.  Don’t forget your 401K, your upcoming bonus, your disability and life package, your car allowance, your cell phone, and so on and so forth.  The inability to answer accurately is a reason not to answer quickly.

It doesn’t have anything to do with the job you want, and therefore it can’t help you. Pay is usually a function of both the value of the work of the job to the company and the value of the incumbent’s experience to the organization. The longer someone has been in a job, the more he or she is likely to be paid. Your tenure at your last job will not be taken into account by a prospective employer who is establishing your new salary, unless it is to tell you that you seem to be a bit overpaid.  Nor will your last employer’s values, workload, complexity, or other variable.  Companies mostly care about their own work.  And the third leg of the pay stool–market value of a particular skill or profession–isn’t a matter of what you have been paid, necessarily.  The company does its own studies and makes its own decisions about leading or lagging the market.

The risk of not answering:

It’s awkward. Usually the person you are talking to or the anonymous staffer who sees the incomplete materials is not in a position to evaluate a nonresponse accurately.  A refusal to answer will be interpreted as either poor corporate citizenry, a critical lack of agility, or worst case, hostility.

It’s situation-dependent. If the question is on an application, and the screen won’t budge without your numerical answer, you’re done.  If you are in an interview or phone screening, you might be able to nonanswer, and still be accurate (“I’d have to check with my accountant, to be completely accurate.  XYZ Company, like you guys, has a lot of different kinds of comp.”)

It takes you out of the running. Once again, if you have thrown your resume over this transom, it’s a first line staffer who has to have all the dots and lines on the form who is establishing your fate in this process.  So you aren’t in a good place to begin with; there are candidates in there with advocates.  Everyone at ABC Co. has forgotten why this question is important, but the first line staffer’s boss doesn’t want to see incomplete reports.  Kind of like the Office Space TPS reports; more dialogue about compliance than substance.  But there you are with an empty space where your current salary would otherwise be.  In the Incomplete or the No pile.

Here’s what you can’t do:

  • Lie or fudge or fake the number in any way.
  • Become indignant about the very question.
  • Give a speech.

But try this, if you are in interview or phone screen situation.  Ask a question, to clarify what is needed and imply that this is not that simple.  For example:  “Do you mean average annual compensation?”  “Do you mean total compensation? In estimating that, I usually include the value of the 401K match, incentives, the value of other plans.  That is what you mean, right?” “Do you mean year to date?”  “Do you include the value of stock options in that?”  And then, “That’s not something I keep on hand, as it varies, and everyone calculates it differently.  If it becomes critical I can look into it and discuss it then.”

Of course, this whole matter hits sales representatives and sales managers the hardest.  In that case, you are more likely to be tested up and down on compensation, because it is assumed that your compensation is a direct function of your sales performance, and therefore your anticipated value.  You are also more likely to be asked to produce a w-2 showing your recent year’s earnings.  I really hate that practice, but I know it is done.   And I know you are done if it turns out you fibbed.

Once you are really in the running for something, your current pay is more likely to be used to negotiate against you, which is the main reason you want to be careful from the very beginning.  If you aren’t earning much, a lowball offer is assumed to be better than your current pay.  but this is where things get tricky, if:

  • You got a large sign on bonus in the past, to make up for some lost previous perq, or the fact that you could not be brought up to a higher level because of internal equity issues.  Meaning, no one there was paid anywhere near what they would have had to offer you.
  • Your last company paid for a move you wanted, that had exceptional value to you.  You pay tax on some of these things, on other things you don’t.
  • You own equity in your present company.  You regularly get stock options, stock, or the equivalent.
  • You previously received substantial bonuses and your pay was higher five years ago. And are therefore looking for new worlds to conquer.

This is why the question of pay cannot be reduced to a box on the form.  Be careful to present a professional front in all matters of compensation; do not give in  easily to the notion that the employer holds all the cards.  Keep your info clear and accessible, but don’t negotiate against yourself by failing to define terms, set boundaries, and manage yourself at all times.

What is your Salary Requirement?

There it is on the online application—the question no one can figure out how to answer.  It is usually accompanied by: Do Not Leave Blank, and if you are online, this is a required field that will not allow the screen to progress unless you fill something in.  You are stuck.  And in your mind, screwed.

Why do they need to know this?  For many reasons, most of them not helpful to your end of the negotiations that you  imagine have begun.  You think you have opened what will become a negotiation process:  “You give me this job and I will give you something of value,” is the message I assume you want to convey.  Answer this question wrong, in your mind, and the negotiation is over before you get to really offer the value.

It is not a trick question.  At this stage, the employer is not in negotiations.  The employer isn’t looking for a few words that suggest you are willing to take whatever the job pays because it is your only goal in life to get this amazing opportunity.  The employer just wants to know the part of the value equation that is not on your resume.

Time, money, information, humans are all scarce resources in organizations, and spending time, money, information or humans on you has to be justified.  If your salary requirement is out of the ballpark, it’s over.  But “out of the ballpark” is an interesting issue.  Recruiters are paid to spot value, and if your requirement is high, and your offering is exceptional, you might get a call asking you how firm that requirement is, and seeking at least a phone screening.  Employers know that pay is not one number.  They have the means to work with you, if you are chosen and if you choose them.

On the other hand, if you price yourself so far below the market that you look strangely out of sync, you will be assumed to be puffing up your resume, or desperate, or uninformed, or not worthy.  In this case, you are less likely to get a confirming call.  Applicants who undervalue the job by reporting that they have low expectations are not as desirable as those who overestimate the needs of the company.

The reasons for asking the question are:

  • The employer (or recruiting firm) wants to validate that you are in the labor market that was targeted for this job, and the pay point is a good clue.
  • Your expectations are material to the question of whether or not you are worth the time it will take to court you, meet you, evaluate you, present you, keep you interested, and get you hired.  The farther above the employer’s highest number your own number resides, the less worth the effort you appear to be.  If you turn down the job after a long process, it affects the morale of all involved, and that really is important to the organization.
  • The employer wants to validate that you and your resume are legit.  Organizations study compensation and they know what jobs pay and what industries are leaders or laggers.  If you are off in a corner doing everyone else’s work for nowhere near what the job you say you have should pay, it’s going to look like something is wrong.  Wrong looking things aren’t appealing to someone who is seeking to mitigate as much risk as possible (i.e., a first line recruiter).
  • The employer wants to manage turnover.  Sure you know you were overpaid.  Sure you would be willing to accept less.  Sure you know that job is three levels below where you last sat in the org chart.  And you also know that your decision to pursue a lesser job is part of a deliberate decision to do things differently, right?  Take less responsibility, work fewer hours, don’t bring the problems home, enjoy life more, give your spouse a turn at the wheel, live each day to its fullest.  To some employers, that represents probably turnover.

How to handle the question:

  • Research the industry, job, geography, the company, and any other special circumstances.  Know how pay works, and target the number that makes sense to you based on all the things you know.  Stay focused on the company, not on the cost of your commute, the pay you got on your last job, or what your roommate or spouse is making.
  • Provide a real number, not an excuse for a number.  Don’t insert the word “negotiable,” it just takes points off, and could get you relegated to a maybe pile instead of a follow up file.  It only takes a few competitive apps to get you knocked out of the running for something silly.
  • Pick a round number, one with zeroes in it.  It looks more negotiable than the word negotiable.
  • Do not establish a low-ball number because you think it will make you look competitive.  It makes you look ineligible.
  • Do not report that you are only working for benefits, whether you are young, older, or the member of your family that isn’t self-employed.  This is not a good idea.  I will do a whole blog on this subject, but not today.
  • Tell the truth.  You do not have a leg to stand on if your answer isn’t somewhere close to the actual truth.  Eventually you won’t remember what you wrote down, and then you will be in an interview, and the issue will come up, and you will say something that isn’t what you wrote.  On this subject, the truth probably is that most of us don’t really care about the hair splitting number, but we do have a big rounded-off number in mind.  Use that one.

My last words of advice on this are what I usually say.  You should not be blindly completing online applications unless someone who already has your resume and your back has directed you to, at which point you’ve been given the answer to the question already.  When you see a posting or learn of a job, think of whom you might know in that organization.  Your real challenge is to get into a conversation with a decision-maker who can and who wants to help you elevate your candidacy before you have to answer the questions in the boxes on the application.