Money - it's not everything... or is it?
It's no secret - the labor market has been tight for a while now - and not just for tech professionals. More competition for talent means that a recruiter has to dig deep into their bag of tools to attract AND hire. While there is a myriad of topics I could cover as part of talent selection, when it comes to making the hire, let's get down to brass tacks - let's focus on the M-O-N-E-Y!!!
I think it's safe to say that, at some point or another, we have all sought some kind of advice and/or counsel on "salary negotiations" when interviewing or being interviewed. Opinions on this topic are as varied as hipster mustaches, and can fall to any number of extremes. In fact, in a recent conversations with my S.O. (for full disclosure, he's an attorney), he is adamant that everything is a negotiation and salary conversations are almost always an adversarial process. He also believes that that the first person to name a number loses. While I don't agree with him (see more below), I do believe that several people feel this way. As a recruiter, I have seen the compensation dance (below) more often than I'd like to admit.
Recruiter: "So, what is your desired salary?"
Candidate: "Money isn't everything, so I'm pretty open. What is your salary range?"
Recruiter: "Our comp philosophy is to pay based on qualifications...but it would help me to determine if this is a fit if you let me know what you're looking for..."
Candidate: "Well, at my current position I'm making $X, and I certainly don't want to take a step back..."
While people who aren't engaging in these conversations (with frequency) may not notice anything odd about the above conversation. In fact, it seems so "reasonable". However, what catches my eye (or, more aptly, my ear) are two things:
- The fact that the candidate's current compensation was volunteered (frequently) unsolicited. I don't think that information is completely irrelevant, yet it has the potential to mis-frame the whole compensation discussion on a go-forward basis.
- The other observation I have about these conversations is an apparent reluctance to just share a specific range or number. It would support that more than my S.O. believe that the first person to name a number "loses". However, I think with a little more preparation and knowledge, we could elevate this conversation to a more transparent and meaningful piece to the talent selection puzzle.
Why do candidates often volunteer their current/ past compensation?
I think there are a lot of factors here, but mostly it's a mix of habit and lack of knowledge/preparedness.
Pavlov Syndrome: I believe that, when pressured to talk about something that is unfamiliar or uncomfortable, candidates will often default to spilling the beans about their current salary because it may be what they've always done, or been told to do. It's like Pavlov's dog - it becomes an ingrained practice that becomes instinct when exposed to specific conditions.
Lack of Knowledge: Another frequent reason is that previous salary can act as a form of validation. In other words, "Someone else already values me at this" - almost like an endorsement. Why not focus on a figure that is more relevant to your current skill market value versus what the current/last company is paying?
We've heard it a million times: "...knowledge is power". Talk to friends, talk to network connections, do some google searches. What does your gut tell you you're worth? Can you find anything out there that can corroborate your "gut feeling"? And be pragmatic - when you see a range from $X - $Y, don't always assume that you're closer to $Y than you are to $X. Be honest with yourself. If you've got 2 years of experience and the position you're considering is looking for someone with 2 - 5 years of experience, you're likely closer to $X than you are to $Y.
Also, important to note, when you do your own "market research", make sure you're factoring in different variables, including company/job location, size of company, industry of company, etc. Try to understand how each of these factors could impact a companies compensation structure. For example, if you have a friend who works at a multi-billion dollar company who makes $XX, and you're considering a position at a company that is a multi-million dollar firm, remember that compensation strategies will likely differ between the two organizations.
Lack of Practice/ Preparation: After your research, make sure to prepare for this conversation by practicing it. Be able to speak persuasively about what you bring to the table, and be prepared to have a non-emotional, objective conversation about compensation.
It Doesn't Have to be Adversarial
I firmly believe that salary conversations don't have to be an adversarial conversation. I see it as discovery or fact finding process. In an ideal world, a candidate will have a firm grasp on what they want to make, and a company will either meet (or exceed) that figure or they won't. If they don't, it's time to wrap up the conversation, thank the recruiter for the time, and move on to the next opportunity. And vice-versa for the recruiter.
One thing I want to be clear of, and I can only speak to my own experiences, but as a corporate recruiter, I want to make sure everyone knows that I do not take home any additional salary or bonus on convincing a candidate to take a position at the lowest salary possible. That's worth repeating again: I do not get to take home the difference between what you want and what we offer. My motivation is to not only fill the role with a well matched candidate, but I want a HAPPY new hire. Nothing is more deflating to a recruiter to have someone start a role begrudgingly, only to have them exit the company after a brief tenure because they could never shake the feeling they were "low-balled".
Similar to what I noted above, I also understand that Recruiters will often inquire about a candidate's current salary. I think this is a flawed practice as that information has very limited value to a different organization. All company's will value skills and experience differently... why would someone's current compensation at a different company affect how a new company would establish that value? Quite frankly, I think this is often a "lazy" tactic by recruiters. It can be perceived as a tactic to avoid the responsibility of assessing a candidate's value relative to market conditions AND the company's compensation philosophy; some recruiters simply find it easier to calculate some arbitrary percentage (commonly 10 - 15%) in order to inform the "how" to value a candidate. Flex your Recruiting SME muscles, do you research internal and external to the organization. If you have a compensation team, leverage their expertise to understand how to price a candidate based on skill and experience.
Sometimes, earlier can be better
Recruiters seldom make budgeting decisions, and most are working within a compensation framework designed and built by a partner HR group. Most companies invest time, money and resources to create a compensation framework that is as competitive AND balances many other needs. And every company will have a different strategy and a different employer value proposition (EVP). There are so many factors to consider when discussing compensation for a potential opportunity, and quite frankly, there's probably a significant amount of "gray" area. This is why it can be even more important to speak frankly about expectations on both side of the fence earlier in the process versus later.
These early conversations are a a good time for everyone to do a gut check. In my experience, especially in Minnesota, talking about money is uncomfortable, and much like anything that makes us uncomfortable, we typically use broad strokes and try to expedite that part of the conversation to get back to a comfort zone. As a result, I have noticed that when there is an overlap (no matter how small) in the two parties compensation "ranges", people tend to mentally check a box to keep the conversation moving. Often it's assumed that an overlap means that "we're close enough and we can worry about the details later". While this may be true on many occasions, I would advise to use more scrutiny. After all, if a company's target is communicated such that their top of the range is near the low range of the candidate's expectations, there could be a significant gap and therefore a chance that things will fall apart in the offer stage. Instead, it might be more beneficial to stop and ask more questions. What factors will influence (for both candidate and company) the final offer? How often, after the initial conversation, are candidates and recruiters touching base on how/if salary expectations have evolved with additional information?
Conversations around compensation do not have to be "Recruiter/Company v. Candidate". With the right amount of preparation & research on both sides, both parties can dispassionately discuss their expected ranges to make informed decisions about next steps.
NOTE: views are my own. They do not represent any organization or company with whom I am associated.
GTM | English/Spanish Bilingual, B2B |
7yThank you for sharing your thoughts. The part that stood out with me the most was the "prepare and practice". Before interviewing at several orgs, I made sure to use online sources to see what similar roles at those companies paid (Glassdoor, PayScale, etc.) and then I practiced my "rebuttal question". I would say something like "I want my next role to be an increase in responsibility in compensation...that being said, I saw online (cite sources) that this range should pay between X & Y....is that the range you have in mind?" This puts the ball in the recruiter/hiring manager's court and you are able to hear what they have to say and determine if it's worth your time to continue the conversation.
Driven and Passionate People and Program Leader - with industry expertise in eCommerce, Account Management, Sales, Operations, Travel, Aerospace and Defense, and Manufacturing
7yWell written, and thought provoking article. I think the part about "in Minnesota" is especially perceptive. The legacy view is to avoid discussing topics that seem taboo, or potentially awkward/embarrassing. The issue is, as you point out, that if a candidate isn't happy with the new package, their anxiety will increase, and their production will decrease. Happy, well adjusted employees make for successful, well run companies.
Full compensation should be looked at, not just salary. If you get an increase but have to pay out a lot for your benefits that should weigh in. Just as other compensation such as bonuses and stock options.
SAP HR & PY & FI & FI-AA & ABAP
7yWhen a company is looking for a specialist, it must understand what kind of budget they have, how much a given specialist costs in the market and how much they needs to offer. The company can not offer a specialist more than this specialist will bring direct and indirect profits to the company. The company wants to get a good specialist for a small salary? This can happen, but this does not mean that the specialist will work for you for a long time. The salary of a specialist can not be subject of trade. The salary of a specialist must be economically justified. It's my opinion.
Meeting expectations by exceeding them. Just good enough just isn't good enough for me.
7yI like to know car prices before I look at them. Once a salesman wouldn't let me look at a car because he wanted to ask me my personal information to decide what I could buy. Problem is if I could not afford what I wanted I was happy to keep what I had rather than go into debt for a car I don't want. I walked out on that salesman and bought at their competitor. I don't like divulging personal information so early with a prospective employer either, especially when they use this information to keep my offer as low as possible. If them knowing what other employers pay me is important then my knowing what they are paying others to do my job is equally important to me. If we are to share information then it should be a 2-way street. Pay me what my skills are worth not just what you want to get by with.