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Knowing How and When to Discuss Compensation

Posted by Jeff Pelliccio on Oct 24, 2012 9:02:00 AM

In Interview Tips

The interview process is brimming with tricky moments and the most precarious ones revolve around salary. Handling it well could secure a job offer that meets or even surpasses your expectations. Blundering the matter, however, will eliminate your chances of being hired entirely. Knowing how and when to discuss compensation requires forethought and familiarity with business etiquette.

Before tackling how to broach salary, you need to understand when it is appropriate. Generally speaking, the subject of salary arises at two distinct points: during your initial interview and when an offer is extended. No matter how well things are going, a candidate should never introduce the topic first. If you jump the gun, you will most likely be removed from consideration and, unless an offer is on the table, the discussion is premature. The interviewer, on the other hand, can inquire about salary history or requirements at any time. Being prepared with answers will allow you to field those questions with ease.

While poor timing is one of the most common mistakes, it is also one of the easiest to avoid. How you approach the topic is far more complicated and involves a bit more finesse. If you are working with a staffing agency, you should provide a straightforward and honest answer. Armed with that information, your recruiter can accurately assess whether a position is within your range. Keep in mind that compensation includes more than your annual salary; bonuses, profit sharing, and benefits are all factors. A detailed answer is a smart one and do not forget to underscore you are open to negotiation for the right opportunity. On the other hand, talking with a prospective employer requires an entirely different tack depending on when it is mentioned.

When a potential employer asks you about your salary requirements, you should deflect as much as possible. Always start by replying that you are open to negotiation. Sometimes you can leave it at that, but you need to read the room and judge whether a more substantive response is required. If so, explain you are not comfortable pinpointing a figure without more information and acknowledge that compensation encompasses more than salary. Emphasize that your primary interests are the career opportunity and a good fit, not the money. If you are pressed for a specific number, there are a couple of different ways to handle it.

Politely asking what they typically pay someone in this type of position with similar experience and education is one way of gently pushing back. Another is to express confidence you can reach a mutually agreeable figure when the time comes. Depending on the person, responses like these could backfire, however, especially if you are perceived as being too coy. A safer approach is to reply based on your research. Prior to the interview, look up salary ranges for similar positions in your area on a few different website such as Glassdoor, Salary.com, and PayScale. Then spend sometime preparing an answer along the lines of, “Based on my research, a typical salary for similar positions falls in the $60,000-70,000. Does that sound accurate to you?” For an answer like this, the most important thing is to do your homework so your figures are accurate and in line with that position. No matter how you answer, close the topic by reiterating that compensation includes a host of factors and that your paramount concern is finding the right job at the best company for you.

Inquiries about your salary history can be handled similarly. The key is to strike a balance between being vague but not overly evasive. Most candidates can honestly answer that it would be impossible to compare your most recent position with this one. Not only will the roles differ in some ways, but also companies have different pay structures, evaluation procedures, and benefits. Certain perks simply cannot be converted into a dollar amount. If the interviewer insists on a figure, you may be forced into specifying a number. Unlike a future salary being negotiated, it is already an established figure. Thankfully, most people cannot tell you their exact total compensation, which includes any bonuses and employer paid benefits, off the top of their head. Simply explain, “My base salary was X but that does not account for bonuses and some wonderful benefits.” In this instance, the key phrase is “base salary.” That will provide the wiggle room you need when negotiating an offer. If the possibility of taking a pay cut is introduced, you want to appear flexible without undervaluing yourself. Pause thoughtfully for a moment, then let your prospective employer know that while you expect to be fairly compensated for your contributions, you also consider the bigger picture and realize certain trade-offs can balance out some disparities. Hopefully, this will never come up but you want to be ready if it does.

The goal is to answer these questions as graciously and concisely as possible without committing to anything. These are screening question and interviewers know this is not the time for negotiations. Take the time beforehand to do your research, carefully compose your answers, and practice them until they come naturally. If you do, you will be able to maintain a professional and collected demeanor regardless of what is asked and without saying something you will regret. This preparation will also serve you well when you are presented with an offer.

When an employer actually extends a job offer, the stakes are much higher but tackling the issue of salary is much simpler. You do not need to dance around what happened in the past or your hopes for the future. The hard work has been done and you finally have confirmation that a prospective employer wants you as an employee. Some companies will present a comprehensive package immediately and others begin by asking what you want. If that happens, make them introduce a starting figure by asking what they have in mind and enter negotiations from a position of strength.

At this point, those working with recruiters can hand off the haggling to them. The biggest advantage to having a recruiter mediate is that you can make your desires known without engaging in a messy back and forth with your new boss. Also, on the off chance you overreach, your recruiter will let you know and help you avert any potential disaster. Those dealing directly with their prospective employers need to work a little harder, but can be similarly successful. Regardless of who is representing you, there are a few things everyone needs to do to secure an attractive offer.

First, you must research comparable salaries and benefits. While this should have been done to prepare for your interview, it is still worth doing if you did not. Also, if an extended period of time has passed, it is worth checking again to make sure nothing has changed significantly. Next, examine the initial proposal carefully and make sure all aspects of your compensation are addressed. If you have any questions ask them, then take some time to digest the answers. While you do not want to draw out the process unnecessarily, you want to make educated decisions. While the starting offer could be a fair one, usually there is something up for negotiation. Typically, this is salary but your counter offer could also include items such as bonuses, parking, time off, flex hours, or working from home to name a few. It is possible that you may need to exchange counteroffers more than once, but keep in mind that the amount of leeway you have directly correlates with the level of the position. If the proposed number is low, then you will need to construct a compelling argument for a much better package that factors in competing job offers and your current work situation including specific benefits, upcoming promotions, pending bonuses, or salary increases. As long as your requests are reasonable and you provide a well thought-out justification for them, at the very least, they will be considered and, best case scenario, all of them will be met.

Interviewing is complicated enough on its own and navigating salary issues presents a unique set of challenges. Fortunately, knowing how and when to discuss compensation makes all the difference in the world. With the proper preparation and practice, your answers will illustrate what a professional, thoughtful, and composed person you are and what an exceptional employee you will be.