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How to Answer the Salary Question

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Q:

Something I've always wondered about is how to handle the "salary chat." What do you do/say when asked how much you made and how much you want to make? I always found the second especially confusing when you know the job you are applying for has a wide range of salary options.

A specific instance that I'd love to know how to improve is what to do when switching from a lower paying industry to a higher paying industry. You know that you could make more at the second job, but it's hard to say well I used to make $100 dollars and now I want to make $300 (the going rate for the new industry job) -- how do you justify the jump and/or not wind up getting paid less than others would for the same position.

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A:

Misterio Galíndez, El hd

It's hard not to panic when asked about salary during the interview and it'll inevitably come up during the interview process. How you choose to respond to salary questions with your prospective employer is a determining factor in the compensation package you'll be offered.

Your future employer understands that you have expectations and a base you must maintain. When it comes to the salary game, if you're the first party to name a price, you're putting yourself at a disadvantage. You'll give the company the power to make an offer based on your previous salary, not your fair market value. If you're underpaid, you risk the hiring manager devaluing your skills and not being considered for the job. If you state a number too high, you risk pricing yourself out of the job before the company fully understands your value.

So be careful with what you say and how quickly you jump into these negotiations.

Penelope Truck give us some suggestions on how to handle salary questions in her post, The Answer to the Toughest Interview Question.

What salary range are you looking for?
"Let's talk about the job requirements and expectations first, so I can get a sense of what you need." That's a soft answer to a soft way to ask the question.

What did you make at your last job?
"This position is not exactly the same as my last job. So let's discuss what my responsibilities would be here and then determine a fair salary for this job." It's hard to argue with words like "fair" and "responsibilities""”you're earning respect with this one.

What are you expecting to make in terms of salary?

"I am interested in finding a job that is a good fit for me. I'm sure whatever salary you're paying is consistent with the rest of the market." In other words, I respect myself and I want to think I can respect this company.

Avoiding these questions makes most people nervous, so rather than step around them, they answer them and spend the next week beating themselves up over it while they wait to see what they're offered. It's understandable that you and the company don't want to waste time if salary expectations are too far off. Just remember that these details tend to become more flexible as the interview process progresses.

If you find yourself in that position and you feel like you need to give an answer to the question, try to find out the budgeted range first and then keep it open for discussion. If all else fails, it's certainly okay to give a range, but don't pinpoint a specific number. You could say "I assume [name of company] in [geographical region] pays between $80,000 to $95,000 for a position with these responsibilities. Is that what you had in mind?"

Preparation is key for these types of discussions. You'll find the best salary data through specific industry salary surveys. Recruiters with whom you have relationships may also be good sources. Be careful with the general salary sites - I find they are usually off a bit from what the industry pays. Same goes for those cost of living calculators if you are considering relocation, especially in a high cost city. The real salaries simply do not meet the difference.

The rules change if you work with an outside recruiter for the position. A recruiter will require your most recent salary history. Their clients expect them to handle your salary negotiations and it's important for them to know where you are and where you want to be to make the offer process move forward smoothly.

Photo credit: Roby72

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2 Comments - Add yours!

Mark L. Olson (May 26th, 2009)

I offer a different approach that combines total compensation history (salary, bonus, stock, perks) plus a spreadsheet calculation of one’s personal budget.

Before I get into that, however, the most important step comes before the question is asked. You should already have a sense of what a position pays based on title, hiring company, and a number or range published in the position advertisement. At the very least you should be able to deduce a range within a standard deviation or two.

I agree that the candidate should have researched and prepared for this question prior to the interview…it’s not like it’s a trick question. Looking at one’s total compensation history, you know what you’ve made in the past that supports your present standard of living and from that you can form a total value of your worth and understand the balance between direct and indirect earnings. If a salary discussion trends toward a lower salary, you know to ask about bonus/stock programs to get you to the total you want.

It’s also critical to understand your lifeplan budget. Especially today, anyone who doesn’t have a spreadsheet-based personal budget needs to build one. Include your mandatory costs (i.e. rent, mortgage, lights, car), your estimated discretionary expenses (dining out, entertainment, etc.) and your future investments (savings, emergency money). This will bring you to an optimal number. Then cut until you reach a worst-case number.

Now you’ve got your answer. When asked: “What is your salary expectation?” you can answer crisply with your OPTIMAL number “I’m accustomed to a base annual salary of $X.” No dancing around. If the hiring manager tells you that your expectation is outside the range, your option is to ask about total compensation options. If that fails to resolve it, then it’s the wrong position for you or you failed to do your homework on the position.

At the end of the day, there’s no reason not to be able to answer the question directly and crisply with a number that’s right for you. If the hiring entity believes you are the most qualified candidate, they should be willing to pay for it. If there’s doubt, remember, the strongest position you can take in a negotiation is being willing to walk away from the table.

Lindsay Olson » Top 5 Posts in 2009 (December 23rd, 2009)

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