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.