On the subject of disclosing your compensation

http://raganwald.posterous.com/on-the-subject-of-disclosing-your-compensatio

by raganwald • 16 years ago

55 35 16 years ago

raganwald.posterous.com

There's been a lot of talk about this lately, and I think I have another vantage point on it. All this talk about "don't reveal your current salary", "hide your current compensation" is totally relaying weakness to anyone you're negotiating with. Take control of the negotiation! Be the confident person who knows exactly what they want! (Even if you don't really know that).

Right now is a great time to be negotiating for salary compared to 20 years ago - there are so many tools that give you an idea of what current pay ranges are for any job. PayScale.com for example is one tool that gives you infinite more information than people had 20 years ago. Use it!

When you apply to a job, you should already know what the salary range is going to be. Negotiation is 90% preparation before the actual negotiation. This is a huge part of it. When you apply, know exactly the range they'll be offering.

When they ask you "What's your current salary" you give them the absolute very top of the range you've found in your research (or even add another 10%). You aim for their reservation point and set a high anchor point from which negotiation can continue. Take control of the negotiation and own the process yourself. Remember, nearly everyone on this site is a skilled employee who is in demand right now.

CodeMage3• 16 years ago

That won't work everywhere. There are places where it's legal -- and even considered perfectly acceptable -- to ask for proof of your salary. In such an environment, it's a lot better to clam up and say your past salary is not relevant to what the prospective employer is going to pay you.

raganwald5• 16 years ago

I applaud the spirit of your comment, namely that the idea is to take control. My post is mostly aimed at dealing with people who want numbers as a screening question before you get down to negotiating a specific offer.

If you're a top person in great demand, you ought to be able to take control of the negotiation by saying either of the following:

a) My compensation for the past five years isn't the issue here, let's talk about what I can do for you, or; b) My compensation for the past five years has ranged from X to Y, but here's why I think Z is the right number for this job in this company.

kscaldef2• 16 years ago

Outright lying during the interview process is almost certainly grounds for a no-hire or dismissal if you get the job and they find out later. It's fine to refuse to give that information. It's fine to say "This is the salary I want". It's not okay to falsely represent your salary any more than it would be okay to falsely represent your job title, your education, your certifications, etc.

CodeMage3• 16 years ago

Great advice. It took me years to learn it on my own. One thing I would like to add is there are times you have to clam up completely and refuse to give out even a range. At one of the companies I worked for, they had a weird policy of not hiring people if their new salary would exceed their old salary by more than 20%. Now, I can understand some of the reasoning behind it, but I personally find it detestable. The best policy in such a case is to either pass (which in this case would have been a shame, because the job was good in all other respects) or clam up and have them decide whether to hire you based on your merits alone.

jemfinch• 16 years ago

Can you explain some of the reasoning behind that policy, because I don't understand it.

haribilalic• 16 years ago

I guess the justification is that if you really worth the new salary, your old salary would have been closer to it.

olivolive• 16 years ago

A reason I've heard is that they want people who really want to work at The Company, not people who are motivated by the pay bump.

raganwald5• 16 years ago

Such rules are usually driven by HR, not by hiring managers. The hiring manager's motivation is to get something done. Your compensation is a rounding error on the revenues from a successful product or whatever it is you are hired to create.

HR, on the other hand, exists to create a "system." One of the primary properties of the system they are trying to create is predictability. If you have a process of some sort, anybody ought to be able to put the same inputs in and get the same outputs out.

Thus, they look for a good way to explain what you are offered. Capping it based on your previous compensation is a nice, simple rule that fits well with a process. Paying you some random amount based on how urgent your skills are needed on a team is not a repeatable process.

In a weird way, although HR talk a good line about people and soft skills and values and missions, they behave just like autistic programmers: They put numbers and rules ahead of people and priorities.

tptacek• 16 years ago

HR departments are a subclass of the same abstract base class as procurements departments. In both cases, the real job of the department is to reduce specifically-enumerated-company-cost X by Y%. All other responsibilities are window-dressing.

Any simple intervention that can be accomplished by HR that comes with a simple story about reducing salary costs is likely to become company policy.

CodeMage3• 16 years ago

I never inquired about it, because I was afraid that I might respond with something I would later regret. However, I speculate that in their case it was because they must have spent way too much money initially, when they first opened up their offices in my country. I don't know whether the salaries they offered initially were a part of aggressive hiring plan or just a result of someone's incompetence in HR; given the usual level of competence in their HR, it would be really hard to tell which of those two it was. However, the job was really good in all other respects.

sshumaker2• 16 years ago

If a company is operating with such byzantine and clearly poorly-implemented hiring practices, there are probably plenty of better opportunities out there.

stewiecat• 16 years ago

I got screwed by a policy like that years ago when I moved from the DoD back into the private sector. I was honest (and naive) when filling out the HR paperwork and listed my low gov't salary. Come to find out later they knocked 15K off the salary.

btilly• 16 years ago

If you'd added in the market value of government benefits (such as pension), you'd have come up with a much nicer figure.

j_baker• 16 years ago

This company wasn't in a place like San Francisco or New York was it? Because 20% on top of a salary from most other places would be laughable.

ericb• 16 years ago

I think if you have a feeling for what the range is, and you know for sure you are in the top of it, disclosing it is good as it establishes your value, and they are less likely to waste your time, or make a stab in the dark offer that is too low and insulting.

gacba2• 16 years ago

I would go so far to say that if you use this technique and find a recruiter doesn't want to deal with that, you've just found a great recruiter filter mechanism. Move on to someone else who actually adds value.

Recruiters annoy the heck of out of me as a contractor: They claim all kinds of value when in fact they have but one thing to add: they know someone looking for a job. They add no other value to the equation (and in fact, often detract by doing horrible buzzword matching analysis to put you in front of someone). They don't necessarily know quality employers, good jobs, or even how to help get you hired. They're like real estate agents: they merely want the transaction to take place, regardless of the actual price. The difference in commission for a house that sells at a "suggested market price" and maybe, your ideal price of $10,000 higher is a lousy $400 to the agent. It's not in their interest to push that with the buyer. It's in their interest to make the transaction happen.

The same is 100% true of recruiters.

EDIT: Having dealt with many recruiters in the past, my experiences reflect what I describe above. It's possible that a shining few exist out there that do add value. If you're out there, for heaven's sake REPLY and tell us who you are. This thread would give you a deep pool of talent for sure.

megamark16• 16 years ago

My first instinct while reading your last sentence is "oh no, now we're going to get spammed by crappy recruiters". Then it occurred to me that if a tech recruiter is actively participating in Hacker News they are probably at least a step above the crowd.

gacba2• 16 years ago

You'll also notice the complete lack of replies from recruiters thus far. :)

thalur• 16 years ago

How does this work out if you believe you are significantly under-compensated at your current job (assuming it's the peak for the last five years)?

raganwald5• 16 years ago

Are you including ALL of the compensation in calculating "Y?" Let me help. I currently work with Unspace Interactive. They're downtown. Most programming jobs require a commute of some sort. What's my time worth? Let's pick $100 an hour based on the fact that I recall paying some random contractor that exact figure for some fun week-end moonlighting recently.

So if I save one hour a day because of Unspace's location, I'm going to add $100 times 250 working days a year to Y, or $25,000 a year on top of everything else (beverages, BBQs, whatever).

If that number is still significantly lower than the compensation you're after, be up front: "My comp has ranged from X to Y, but I think I'm worth Z to you because of a, b, and c."

Ultimately, every job interview boils down to explaining why Z is the right number and why it's in the employer's best interests to pay Z. If you can't explain that to an employer, you aren't going to get Z. I don't make these rules up, it's economics in the small.

jqueryin• 16 years ago

This yearly savings calculation (albeit an example) of $25k for Unspace is based solely on your assumption that one hour less commute time correlates to an additional work hour every day. While this may be sound for how to express added value, I find it unreasonable to believe that most people would work an extra hour simply because they live closer. Maybe I'm wrong.

In my case, I think what you can do is to let them know just how hardcore you are. If I tell my employer that I'll work on R&D and product development in my spare time at home, they can easily get a ballpark of additional hours worked and added value over Joe Schmoe. If I log an additional 10 hours a week from home after work hours, that could equate to an additional 25% hours over the standard 40. I understand alot of you may be putting in more than 40 hours, but that should also be part of your negotiation.

SimonPStevens4• 16 years ago

This might work fine for contractors, but it's nonsense for permanent employees.

5 years covers a range from my first graduate job to my current reasonably good mid-level salary. If I gave that range to a recruiter I'd end up at a bunch of interviews with companies all trying to offer me close to a graduate salary.

raganwald5• 16 years ago

The context here is that a recruiter calls you and says, "Y Combinator is looking for an Arc programmer to work on new versions of the language as well as maintain the HN site. Please give me your resumé and your current salary."

You say, "Here's my resumé." The recruiter demands the salary, saying that Paul won't interview anyone without it. My first advice is that you can just say no. The sun will still shine, you'll find work elsewhere that you enjoy.

But if you really, really want to interview for the Arc job, the thesis of this post is that giving the range is better than giving the salary at your current job.

If the recruiter then tries to jam you into a job paying Ramen noodles because five years ago that's what you were making working for a startup... I agree that's annoying. Only you can decide whether that downside is unbearable.

SimonPStevens4• 16 years ago

I totally agree with your first step (say no).

Like you say though, with the range idea I suppose you have to balance the likelihood of getting low offers. Personally, giving a range like this just gives them a range to make their offers in, which will result in a lower offer than my current salary every time (as my salary has always increased, so the current is always the peak).

If I'm going to give a range, I'd rather give a range from current+x% - current+y%

Of course, that suffers from the same problem as most other ideas, which is they may have been prepared to offer far more, but reduce because they know you'll accept current+x%.

kscaldef2• 16 years ago

a) what raganwald said.

b) Some people have more than 5 years of work experience. One day, you will too.

c) 5 years is not hard and fast. Feel free to make it 3 years or whatever you think works for you.

SimonPStevens4• 16 years ago

a) What I said ;-)

b/c) My point is that if you give a range, companies will tend to offer towards the lower end of that range. It doesn't matter how many years experience you have or what you change the range dates to. If you are going to give a range, you are essentially giving a low end that you will accept. Many companies will take advantage of that.

yalurker• 16 years ago

What if you are moving from a low cost area to a high cost area?

I just checked out an online cost-of-living calculator and my salary in Austin would have to increase by 2.6x to have the same quality of life in Palo Alto.

How many HR types are going to realize that 50 in Austin is 100 in San Fran or Manhattan?

rcoder• 16 years ago

Any "HR type" who does their job well absolutely will know how to do a cost-of-living conversion, and should effectively screen and prepare candidates armed with that knowledge.

It goes both ways, of course; less-savvy candidates might not know what they're getting into, and can be offered what seems like a sizable salary bump only to discover after arrival that they're worse-off in total.

sshumaker2• 16 years ago

The reason hiring managers ask for your salary is because they want to know what your expectations are. If you're not comfortable telling them your past salary, just let them know your salary requirements.

Goladus• 16 years ago

It doesn't matter so much what you tell them so long as you are willing to reject a lowball offer and ask for more. If they are going to negotiate with stupid tricks and use information you give them adversarially, feel free to drag out the interview process at their expense. Once they make the offer they've revealed their intention to hire you.

If they had made you a fair offer the first time around they wouldn't have to worry.

lsc• 16 years ago

really?

I mean, I usually have more than one offer. For me, I've always been open about what I currently make, and about how much it'd take to get me away from that. I'm also open about any other offers on my plate.

I interview often enough that I figure that if I am lowballed, I'll get another offer that is better enough to move fairly quickly. If you want me long term, eh, maybe you shouldn't have lowballed me in the first place?

Key here, I think, is to keep interviewing even when you aren't really looking to move. it's the only way to have an honest view of how much you are worth, and I think it's good practice, anyhow.

(of course, for the last year and a half I haven't been working for other people, and I haven't quite figured out contractor negotiations.)

On the subject of disclosing your compensation

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