It's often said that you don't realize most of the monumental life decisions until after they have happened. The bar you decided to go to on a whim where you met your best friend. The chance encounter on a train that led to a new job. Even the haircut that led you future spouse to "accidentally bump" into you one day.
Sometimes you never see them coming.
Thankfully, salary negotiations are not one of those types of moments although, for many people, they often feel that way. Why? Because HR folks go out of their way to make them feel that way.
Of course, it all sounds so innocent:
HR: So this brings us to the end of the interview process. Feedback has been very positive but usually have a meeting to discuss before moving to the next steps. Just out curiosity, what is your current compensation?
Bam! That's the sound a signpost on the crossroads of life makes when it's thrown right at you.
How have you reacted in the past to this question?
Most people out of a combination of slight shock at the question being slipped in and a general sense of wanting to be helpful just hand over their current compensation numbers. What they don't realize is that they just lowered their lifetime earnings by potentially hundreds of thousands of dollars.
"What??" you might be asking, "How is that possible?"
Good questions. Let's step inside the mind of a HR person who does a lot of hiring.
Their mental model looks something like this:
- Find out what the candidate currently makes
- Most of the time that's WAY less than we would be willing to pay them
- Generally, people won't leave for less than they currently make
- Given the above, if they are sitting here interviewing, they are most likely not happy where they are
- Therefore, if we offer them slightly (5% or so) more than they currently make and they take it, we're golden!
"I get that, but it's still 5% more than I make now!". Very true. Let's say you make $100,000. That's an extra $5,000 more for you per year.
If you had said something like:
You: I'm sorry I don't give out my current compensation numbers. However, I can say that I'm looking for $200,000.
Odds are you are going to end up at a number much closer to $200,000 than $105,000. If that number turned out to be $160,000 over the next five years you would have made an extra $300,000 (5 years x $60K) vs $25,000 (5 years x $5K).
"Wow! I never thought of it that way!" should be what you're thinking now which is good.
Your next thought might be "But wait. These conversations are never that easy. Plus, I'm not a fast talker and these HR folks do this all day long! How can I compete with their years of experience?"
Excellent questions!
We have several tools at Negotiate With Us to help you get more experience and feel more comfortable with negotiating. Before we get to those, let's start with some general questions about negotiating.
Do I have to give my current compensation?
The short answer to this question is: no.
You are not required legally or otherwise in the
If I don't give my current compensation, can the company decide not to give me an offer?
The answer to this is very clear: yes. This is certainly a possibility. Some companies refuse to make any offer without current compensation numbers. This is their right so it's best to be prepared to run into them from time to time.
That being said, our general advice is do not work for these types of companies. Why? By taking this stance the company is signaling to you that they don't value you based on your contributions to the company. In fact, their policy communicates that they care more about keeping payroll low than they do about attracting top quality candidates.
Again, there are always exceptions but in both our personal and career coaching experience these are not firms you want to deal with.
I've heard that even if I don't have to give my current compensation, I also shouldn't give my expectations?
This answer is more complicated. From a pure negotiation strategy point of view, yes, you should never give the first number. This is based on the idea that if you give a number first, you are both anchoring yourself to that number and potentially giving a number substantially lower than what the other party was willing to offer. Further, it assumes that you have no knowledge of what the other party is willing to pay and no way of determining that information.
We can address these points one at a time.
First, with regards to anchoring, it is a perfectly rational game theory approach to lead off with a first number that is highly advantageous to you. This way, you are at least controlling the initial anchor point.
"But what if they were willing to pay me more??" you ask.
Good question. If you start off with a number already in your favor you have eliminated the prospect of getting a "bad" deal for yourself. While you could have potentially gotten a better deal, you have drastically increased the odds of getting a good deal.
"But doesn't that cap the maximum I can get from them?"
No and here is why: it is perfectly ok to give your number, find out more about the role and then say the following: "I see. Well given what you've told me about the position, that's a bigger role than I was expecting when I gave you my initial number. Given that, I am going to raise my expectations with regards to compensation".
Second, this is the age of the Internet. With LinkedIn, Facebook, Glassdoor, emailing your friends who know friends etc it is incredibly easy to get a handle on what a firm pays its employees. Work your personal network and you'll be surprised to find at least one friend/ex-coworker who knows what everyone makes. Some people make it their hobby to find out this kind of information and these friends can be a gold mine when it comes to salary negotiations. Barring that, headhunters and career coaches are also excellent sources of general compensation numbers.
These are great points but how do I that?
Excellent question! Here at Negotiate With Us we offer several plans to help everyone improve their negotiation skills.
If you want to get some quick practice on bracketing negotiations you can try out our FREE Negotiation Trainer.
We also have more advanced plans that can help you learn how to handle more advanced negotiation scenarios.
You can learn more about all of them at our Plans page.
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Added on 2017-05-12