Why do recruiters ask for your salary?
Let's face it most of us wouldn't work for anyone else if we didn't need the money. So money is an important part of the employment relationship. If your current salary is far below the salary range of the job that you are interviewing for, the hiring manager will want to understand why. Perhaps your current employer pays below market rate? Or, it could mean that your skill set isn't as developed as the job requires. If you are selected for a job that pays significantly more than you are currently making an employer may make you a salary offer that falls near the bottom of the salary range. The reason that some employers do this is so that they have more latitude to reward you for good performance with merit increases and promotions than if they had paid you at the top of the salary range. If your current salary is higher than the range for the job you are interviewing for, you may not want to interview for a job that pays so much less. On the other hand, maybe you are willing to take a pay cut to join a really elite team. If that is the case this topic needs to be discussed in an interview.
I have been involved in all sides of salary negotiations: as a headhunter, as an in-house recruiter, as a hiring manager, and in salary negotiations for myself. While I don't necessarily consider myself to be a great negotiator I do have a pretty good understanding of what is going on behind the scenes in salary negotiations and I hope to offer some suggestions for candidates.
Salary negotiation depends on several things:
Your level of experience and the level of the job you are interviewing for
- the less experience you have and the less unique your skill set the less room you have to negotiate
With whom are you negotiating?(Hiring manager, HR representative, executive recruiter)
- In most companies hiring managers make decisions about how to allocate their budgets. Generally HR representatives are messengers who report your past salary, salary requirements etc to the hiring manager. In some organizations the HR manager negotiates on behalf of the hiring manager. Find out who makes the final decision about salary and perks and, if possible, deal directly with that person.
Type of company (small private company, company with VC money, large corporation, public sector)
- Large companies may have more money but they usually have more policies, procedures, and bureaucracy. In many large companies hiring mangers may not have a lot of latitude to offer larger salaries to new hires. In small companies there may be more latitude but they may have fewer resources. If you think your skill set is worthy of a large salary make a case for that during the hiring process. Make sure your resume sells your unique accomplishments and skills (back this information up with metrics when possible) and be sure to discuss those things when you interview.
Other perks that come with the job
- Jobs that come with big benefits, big bonuses, perks (use of company plane), company cars, tuition reimbursement, sometimes have less flexible salaries because the employer realizes that the job is going to provide lots of other compensation.
Financial situation of the company you are interviewing with and industry trends
- Profitable companies in growing industries are more likely to offer higher salaries so do your homework about the company and industry before trying to negotiate salary or benefits.
In most situations, a recruiter (in house or headhunter) will tell candidates the general salary range before they come in to interview. In fact I haven't heard of too many cases where a candidate doesn't have some idea of what the company can offer. It's just a practical matter - if your salary or experience level is way off the mark it would be a waste of time all around for you to interview.
Salary vs. Total Compensation
When you are asked your salary you can discuss total compensation or actual salary. I used to work for a company that would send us a report each year that explained our total compensation package. That was the dollar value of our benefits, vacation, tuition reimbursement, bonus, and anything else we got from the company. Add up the total compensation you are getting from your current employer and you can use that number in salary discussions but be clear that you are discussing total compensation not salary numbers. If you want to fudge the total compensation number up a few thousand, you can do that without appearing to be a liar. Total compensation isn't always an exact number so that is a number that you could conceivably play with a little bit in order to appear to be making a higher salary. But never ever lie about your salary because it is just so easy to find out what it is.
Before interviewing with a company find out everything you can about compensation practices, benefits, perks, and performance expectations so that you will know what to expect when you get a job offer. Also, if you have this type of information you will be able to figure out what is and is not negotiable at the company.
Never Lie About Your Salary
All that an HR person has to do is call your current employer and ask them to confirm the salary number you gave them.if the number isn't the same (your employer probably won't tell them the exact number anyway - most just confirm information) then you look like a liar. I have also known some companies that require potential hires to bring in the previous year's W2 form and others that contract background checking services to check out potential hires. Again, if you lie about your salary you will probably forfeit the job.
Senior Executives/C-Level Executives
If you are a very senior level executive salary negotiations are much more flexible than if you are a junior player or even a mid-level manager. Most companies have a lot of flexibility in terms of salaries, bonuses, option grants, and other perks for senior level execs simply because the expectations for their jobs are so high. If you are a senior level executive you should probably contract an attorney and/or a retained search firm to negotiate your compensation package, contract, and severance agreement for you. Tell your attorney what you want and let him/her negotiate with the attorney for your potential employer. Top execs get incredible pay packages and perks and they seldom do the negotiating themselves.
If you are applying to a large corporation as a middle manager the salary that they are planning to offer you is probably not terribly flexible. You may be able to negotiate a signing bonus, or get the company to pay back any relocation or tuition assistance that you owe to your current employer. You may be able to negotiate extra stock options or stock grants as well. The key to getting those things is to convince the hiring manager that he/she can't live without you. Be likable and showcase your accomplishments in the interview. Don't lie about or inflate your current salary. When you are asked for your current salary or your salary expectations give a range and find out about benefits and other perks that will factor into your total compensation package. Your new boss will probably want to pay you as much as he or she can but may be constrained by corporate policy or budget issues that you don't know about.
Great sales people can negotiate great compensation packages based on performance. Sales are one area where companies are willing to pay big bucks for top performers because they directly contribute to the bottom line. If you are a great sales person with an outstanding track record, bring some metrics with you to the negotiating table so the potential employer can see exactly what they are getting for their investment in you.
Entry Level or Junior Level Jobs or Non-Exempt Jobs
If you are entry level or a fairly junior player without specialized skills and experience you just don't have a lot of room to negotiate. You may be able to get a higher salary if, say, you have to commute further to the new job or you need to buy a car to drive to the new job. If that is the case, mention it to the hiring manager and ask if they would consider additional compensation to cover your additional commute costs. If that isn't an option for them perhaps you can negotiate a flexible work situation that includes telecommuting for part of the week. You may also be able to negotiate additional days off or tuition reimbursement. Many companies have a dollar amount that they offer to junior employees - particularly those who join the company as a member of training program or a class (i.e.: first year Big 4 auditors or consultants) and that number tends to be pretty rigid.