What’s really going on in a salary negotiation | Hacker News Reader

What’s really going on in a salary negotiation

alexpotato.com

36 pointsalexpotato48 comments

Quick anecdote to underscore the importance of being in a position to say "no" to an offer in salary negotiations:

I'm working for a company who has a base in NY, and asked for a salary commensurate with what the majority of their workers were making (I'm in a satellite branch), particularly since I have skills and experience nobody in their NY office had (I have also since learned that they would be effectively unable afford someone with my skills and experience in NY).

Despite being unwilling to provide them with my current salary, I had effectively followed my previous boss to this new company, so they were able to provide HR with my previous compensation numbers. This resulted in their offer being based solely on that compensation, not my valuation or a valuation based on my ability.

I wasn't in a position where I was willing to say "no" at that point in time, but it certainly underscores how important it is to be in a place where you can say "no" if you want to counter the information and power asymmetries.

To me, this also underscores how jobs don't operate in a free market economy: we're naturally short a method of making money to survive, and this method of providing for ourselves typically consumes half (or more) of our waking hours. Corporations can and do exploit the resulting need for a job which isn't our current job to not pay us according to the the actual value of our skills, but just enough to be better than the previous company.

Being able to walk away is always the strongest position. At a previous company I fully intended to move across the country to be closer to family and try my hand at creating a business. Instead of just quitting, I was able to negotiate 75% pay for 75% time with no reduction in benefits and no COL adjustment (I was moving from a high-cost to a low-cost area). With the loss of state income-tax, my new take-home pay was almost the same.

I'm not saying you should disclose current salary, but one reason to do so is to prevent prospective employers from accidentally lowballing you.

If you're making 100k now, you can set the negotiation floor above 100k by telling them that. Otherwise, they might start at 90k.

Another reason, less important than the previous, is that (if they ask early in the process), it can keep you from spending 2 weeks interviewing with a company that can't afford you.

This happened to me a lot when I was hiring. I didn't have an HR department to mechanically set incoming salaries; that was my job. I didn't mind candidates who wouldn't disclose; in fact, early on, I yelled at my partners for asking candidates the question. But I came to learn that the number is very useful for speeding negotiation up and avoiding offense.

Even at the highest level of company management, where surplus dollars stood a good chance of going directly into my bank account, my incentive was never really intrinsically to minimize the cost of an employee. The bigger pull was maintaining parity with the rest of the team.

One thing this article suggests, but you should be careful about: you can disqualify yourself by giving numbers that are too high. If you say you want 180k and the role goes for 110k-120k, there are hiring managers that will pass on you even though you could be negotiated to the realistic range. They'll assume that to hire you, you have to be squeezed, and they don't want team members they have to squeeze, because good managers track retention too.

I was going to say something along these lines. Basically I have a budget for a position and I start from there.

The other aspect is fitting in the person with the other people at the company. It doesn't engender a lot of trust if the salaries of engineers are all over the map based on their negotiation skills, what I want are engineers with engineering skills so I try to start with the median and work from there. A conversation might be "The median salary for this role is $X, based on your experience related to the role you could start a bit higher or a bit lower than that."

While the article correctly describes the basic situation, not all of the advice presented at the end is good (unless you are a really strong candidate).

Especially the "Don’t give a hard number when asked what you want." is a red flag for many hiring managers and they usually interpret such reaction against the candidate, for example: "He's indecisive, doesn't know what he wants, doesn't know his value" and similar over-interpretations.

I'd say it's much better for the candidate to anchor the number a bit above his expectations and lead the real negotiations from there.

We were discussing something similar on Metafilter when a hiring manager chimed in:

"Whenever I hear a candidate dither about specifying pay, I know they are either extremely flexible about pay, don't know the market very well, or don't value themselves very well. I know they will be willing to accept a lower amount than I would otherwise be able to offer.

In other words, if you don't specify a number, I'll specify one for you - and it'll be at the low end of what I can offer, not the high end. The highest paid candidates are the ones that know their value and refuse to work for less than their value. Most of those highest paid candidates are the ones that don't even bother giving a range of pay and simply say, 'I will work for $x'."

Why would anyone give a range? There's no such thing.

In the past I have given a range (for what I was asking) when it was at the very beginning of the process and I had no knowledge of the benefits package.

The last time it did this, I was told that the bottom of my range was above the top of their range for the position.

I told them: "That's not my problem."

They responded: "You're right." and I continued the interview process with the rest of the team.

This is what you said: "I'd like between $x and $y." This is what they heard: "He'll take $x."

And, I think it's obvious, but $x includes the whole package you're asking for, converted to $. If you're describing the tactic of trading off various components of x, then that begs the question.

Yes, that's true.

However, by doing so I have anchored the minimum salary at the top of their range [in their case, a little above the top]. At that point they could terminate the interview or go forward - a clear indication that salary was negotiable.

In reality, that isn't how I think. I'm very frank and open. I tell them what I want, because that's what I want.

On the topic of frankness: I also tell them anything that could possibly discourage them from hiring me. I'm not trying to talk them out of hiring me, I just want them to have all the data they need to make a good hiring decision.

I was once hired for a contract that I was unqualified for and let go a week later. When I asked the guy who hired me why they hired me for a position that required expertise in "X" technology when I told them in the interview that I only had a week of experience with "X" he told me: "We just liked you so much." Getting hired for a position you aren't qualified for is worse than not getting hired.

As a lowly pleb, I really appreciate it when a prospective employer think me honest enough not to lie about my current compensation. Some employers dispense with human moments like these and instead just outright demand W-2 forms:

http://www.sfgate.com/business/networth/article/Employers-as...

I've never revealed my salary, it's irrelevant, and I always get higher than average offers. I've jumped past peers quickly by using this strategy. Hiring managers can get bent if they don't want to pay you what you're worth. There are hundreds of companies looking for good talent, and if you are good talent, you should make the most money possible.

What kind of thing would you say to avoid giving your current salary without appearing like a jerk?

It is rude for them to ask about your current wage so you should get offended by it. There is no legitimate reason to ask for someones salary; the only reason they ask is to screw you over. If you don't think that it is rude then you could just as well ask the company whats the highest wage they offered an employee for this position and see how they react. It is the same thing really since if you have that number then it gets really hard for the manager to argue why you should get significantly less than that.

But sure, usually hiring managers expects that the applicants will endure any form of bullying without complaints, but do you really want to work for such a place? If you really need the job then you might have no options, but in that case you will get screwed no matter what.

"As a matter of personal policy and professional courtesy, I don't discuss the details of my engagement with my current employer with third parties. I'll do the same if I work for you."

http://www.kalzumeus.com/2012/01/23/salary-negotiation/ is a really good article on salary negotiation. It has some ideas about how to handle the discussion.

Most of the time your contract forbids you from discussing your current salary in any case.

Most of the time that clause is illegal:

http://www.npr.org/2014/04/13/301989789/pay-secrecy-policies...

*ianal

You still tell that to the company. Then they think that you are scrupulous and honest.

If they tell you the clause is not enforceable, you can still say, "That's interesting, but I'm still not comfortable. Perhaps you'd pay for me to consult with an employment lawyer of my choosing to have a third-party verify your claim."

In reality, it's all smoke and mirrors. You just have to have a reasonable sounding excuse for not disclosing; they can't push without looking like a jerk.

Oh absolutely. I just wanted to help dispel that myth.

My favorite line is "It depends on many factors, but I'm confident that you'll come up with a compelling offer."

After all, the information disparity favors them by a wide margin, so the ball can stay in their court.

"I'm very sorry, but I'm afraid that's none of your business."

Be prepared to walk away. If you want $Y find a job that pays $Y. If they don't offer you $Y, go find the next offer.

As long as you know what $Y is, it's that plain and simple.

The hiring manager or recruiter can't help you find $Y. You've got to be prepared ahead of time by using sites like salary.com and glassdoor.com where you can find the national and local averages for your skills and experience. These estimates help you sort out your market value. You also need to know what your personal budget is, what standard of living you seek, and what you truly value.

Do you only value money? Do you value time off? A great manager? Awesome co-workers? The stability of an enterprise? The excitement of a start-up? Does the CEO impress you? What is the estimate cash value of the benefits? Know what you value before you you start looking.

When you evaluate an offer it's real important to compare it. In other words, don't jump at the first offer! Having an offer letter or two in hand is powerful for you and the hiring manager too. And it makes walking away obviously easier.

Above all be truthful with yourself and with your potential employer - and expect the same from them. Do you honestly think that you're going to enjoy working for a company that is deceiving you from day one?

We are fortunate to work in a time where our skills are in incredibly high demand. You, as a job hunter, have more opportunity, advantage, and resources than the vast majority of the work force. You can use this privilege to achieve a happy life and successful career.

I never ask what people make; it's irrelevant. Instead, I ask them what they want and then I try to figure out how to justify at least 5% more.

Why? Because I want people to be happy and productive coming in. Salary and benefits should be the last thing on their mind.

I've hired a few people who refused to give me a number up front even though I explained the basic rationale. More often than not that lack of trust shows up in their work and their effectiveness as part of the team. Not always but more than 50/50. So now I use the question as a qualifier as well.

Don't get me wrong though, I know why people do this and I respect their choice. It's a bit mercenary and the corporate world is a mercenary place. Personally, I just place a higher emphasis on teamwork.

Also, it's worth mentioning that despite what many hiring managers believe, budgets for positions are rarely set in stone. There are many creative ways to bump positions up, even in the most rigid of corporate hierarchies. So when someone in HR (or your boss) asks what a person is making tell them it's irrelevant and then tell them why the person you want to hire is worth what you're asking for.

> Don't get me wrong though, I know why people do this and I respect their choice. It's a bit mercenary and the corporate world is a mercenary place. Personally, I just place a higher emphasis on teamwork.

You seem to be assuming that candidates somehow know that you are not going to attempt to fleece them, unlike every other prospective employer.

If candidates don't know any better, and it's fair for them to assume that you are the same as all the others, then I don't think you can draw any conclusions about "trust" and "teamwork" from them refusing to state a figure.

> More often than not that lack of trust shows up in their work and their effectiveness as part of the team. Not always but more than 50/50.

I think you're probably just seeing a correlation with the sort of people who either negotiate well already, or have read up or received advice on what to do.

But if you still choose not to make an offer on this basis, I suppose it's win-win - the candidates you turn down probably wouldn't want to work for you anyway.

That's a fair assumption on your part.

However, I think if you open the topic with, "The position is budgeted at X, but what would you like to make?" You're being about as open as possible, and that's what I try to do.

I was investigating this the other day, as it happens. Recent research from France (can't find the paper now, sorry) shows that unless you're very, very highly skilled your personal bargaining power is almost zero. What was important however was how many companies were competing for you, how profitable those companies were, and the current state of the economy.

This implies that a negotiation like this is just back-and-forth-ing within some window of acceptability that was probably predetermined before you walked in, and if you want to have a successful salary negotiation and get your prospective (or current) employer to redefine that window, your best bet is to a) orchestrate (some) of these external factors to work in your favour; and b) find a way to get that information into the exchanges without being a dick.

They also noted that doing all this then staying with your current employer was often the best strategy because at the very least you can expect to capture some of the hiring/firing costs associated with replacing you.

Surely this only demonstrates that your offered salary can only go down, and not up, and therefore you are still better off not stating your previous salary or salary expectations?

I've been a hiring manager for tech many times, and also a candidate. This article is wrong. Revealing current salary no matter how low it is, loses you no leverage.

It's quite simple: If you got through the entire interview process then you are the best candidate they could find for a role they needed to fill months ago. They are ready to hire you. Now you have the leverage to demand what you know this type of role pays in this market, no matter what you were paid before. The hiring manager knows if you walk away then they have to start the candidate search again or hire the runner up who is not as good as you, so they'd rather just meet your demands as long as it is reasonable and get you onboard without further delay. So stand your ground. They are paying for your skills and ability to do this job, not your last job.

So why ask what the candidate what they were paid before if it does not influence negotiations?

What it actually does is give you a strong hint on where to start an offer and how hard to push since most people will be unlikely to decline an offer that is 10% higher than what they were making unless they have a better competing offer (another reason why you should aim to have more than one).

You are right that company has already heavily invested in the candidate, but so did they. Walking away means losing time and energy invested in pursuing this position, not to mention emotional investment in getting the job they want (again mitigated by pursuing more than one).

One thing I strongly advise not to do: lie about your current salary. Why? If you get hired at the new company and it comes to light that you were dishonest about your old salary (via background check, verifying with your old employer etc), you may be in for a lot of trouble. Your new employer will most likely see this as unethical and raise questions about your professionalism in general.

What guarantee is there that the old employer would give out correct salary information for a former employee? Why does the author of the article assume that the employee is the only party that could potentially lie?

Person X leaves company Y, and her manager is not happy about the extra effort needed to fill her shoes. A month later, someone calls from company Z and asks how much X was making... Why would the disgruntled manager tell the truth?

I think the point is to take the high ground in all cases. There's some old saying about telling the truth being a stateless transaction, ie you don't have to remember what BS you told.

The correct course of action, therefore, is to decline to give your current salary. The article is correct, at least in my recent experience: indicate that your current salary isn't relevant, and say what you want to make. They'll come back with a counter-offer which you can then choose to take or leave. It helps to be willing to leave it.

I've always politely declined to discuss my current salary, usually starting with simply "Job roles and compensation structures vary so much that I think it really confuses things to try to compare apples and oranges, I'd prefer to focus on the value that I can bring $company", which has worked well for me in terms of either getting reasonable offers or identifying companies that are going to undervalue my position.

If your old employer does lie, you have documentation to back up your statement (W-2's in the US, tax returns, etc.). And your old employer knows this.

In the UK we have this thing called income tax. With most people it is 'Pay As You Earn', hence, when starting a job, something has to happen to calculate how much tax is to be paid. I would like to know if it is possible to infer one's previous salary from this information. Also, are there any 'golden windows' where this can not be a possible problem, e.g. by starting a job in a new tax year (April), will it be possible for a lie about previous salary grade to go unnoticed?

As far as I've seen, all new employers (or at least the HR department) have required a P45 which includes all previous salary information - making it easy to see if you've been flexible with the truth. I've always gone with the advice of declining to say what you're earning and just explain what you're looking for.

So one could go for P46 and pay emergency tax rate, which is presumably higher. This would not be a problem if one had bumped up the previous salary by £10K or so to a credible 'market rate'.

I think there are more advantages in sticking to the "good and honest" method.

> You asked how much I make and because I’m a good and honest person, I told you. You then asked me what I wanted in salary which I also told you. My expectation is that because I disclosed my current compensation, as a good faith exchange you will offer me what I asked for...

...and if you act in obvious poor faith then this gives me great information about how your company will treat me, just at the exact moment when I need it.

Putting your future in the hands of a complete stranger you expect to be acting in "good faith" seems like a tall order...

One thing if you do feel compelled to share your previous salary: I think it's only fair to include things like bonuses and overtime. Be honest, but be honest in the way that reflects best on yourself.

I find fulltime jobs to be full of these kinds of things.

Salary negotiation and all that goes into it, described in part by the OP.

Once a yearly salary is set, the employer's incentive is to make you work longer than 8 hours a day (and many companies encourage a culture of "come early, leave late, for reputation points"). Demanding overtime pay through hinting at legal threats isn't going make your relationship better.

Having to be comfortable selecting an appropriate number of "allowances" on w2 forms if you know you prefer to pay taxes later in the year even if the allowances do not represent havingb actual children etc.

Commitment for minimum 1-2 years, asking for time off within the first year can be hairy.

Giving no indication that you have other things going on in your life, that your full focus is on the company's mission.

Pretending to be busy 8 hours a day at work even if you finished everything, because you don't want to keep asking for something more to do, and make everyone else look bad

A lot of fulltime jobs are about socializing and having a mix of fun and productivity at a workplace with a group thrown together. While that may be what you want, keep in mind it will happen more than 8 hours a day for over 2 years in a "good fit" job.

=====

Compare all this to consulting. It's less of a marriage. So:

Salary negotiations are more about quoting your rates, and having done different projects in the past you are under no obligation to play by their game of "5% increase".

They pay for your time hourly not daily so they value it.

You are in full control of your tax withholding, working with your accountant, instead of waiting for a refund (and not earning interest).

Clients are HAPPY if you leave 3-4 months later if the project has been completed successfully. It's about results, not appearances. You can take vacations between projects and still get recommendations from the (much more numerous) past clients. Did I mention that they are more numerous so you also have greater choice in who will give a reference?

As a consultant everyone understands you may have other clients where you use the same skills. Non-compete agreemeents are usually not enforceable when you are doing similar things for all clients - but exercise your ethical judgment. The point is you have the option and so your loyalty is valuable and there is mutual respect there.

You don't have to pretend you are working when your job is done, and make others "look bad". There are no such expectations. For me, the need to lie and pretend in a futime job was the most uncomfortable thing, even more than the commute. Did I mention the commute? Consulting jobs are less insistent on "face time" than they are about results, so you have more flexibility. You can attend conferences and events that benefit you as a professional in your industry, instead of genersting friction with your employer for how often you attend things not directly related to the company's mission. And so you can develop yourself as an individual and as a professional in your industry.

Most consultants will flit from location to location, staying 3-4 months or working from home. You get to see a lot more people and environments. If you choose to stay in touch with 1 or 2 you can do it. The fact that you won't be their "fulltime friend" is just a testament to how grown people can't fully choose who to socialize with if they are in a fulltime environment. Better to get drinks or get together on the weekend with them, just like you still probably do with people who you once worked with.

=====

For me, the biggest draw is being able to enter into contracts based on mutual respect and the luxury of being honest in my commitments.

In short, just like marriage, fulltime jobs set much high expectations for commitment, and therefore you had better be sure that you and your contributions will be valued IN the relationship, when deciding IF to begin one. You have a choice. You can be placed by recruiters as a consultant also. The W2 arrangement with a consulting company is not about full-time employment, only about tax withholding and how they typically prefer to process the payments.

Not saying consulting is all roses, of course. But if you have a recruiter placing you anyway, consider it as the default (like dating) and FTE only if you're really sold on a marriage and feel it's going to work out.

Finally, I think the progression for many people is:

Employee -> Consultant -> Agency -> Entrepreneur -> Shareholder

> One thing I strongly advise not to do: lie about your current salary. Why? If you get hired at the new company and it comes to light that you were dishonest about your old salary (via background check, verifying with your old employer etc), you may be in for a lot of trouble.

I disagree 100%. First of all I would take great issue with my previous employer if they handed out that information (If they I did I would subsequently inform all my ex-coworkers what I was making as all bets are off) and while IANAL I feel like that is not legal and/or you would have legal recourse.

Secondly, why are you assuming that the (potential) employee is the only one that would be lying? I don't trust a word that comes out of the persons mouth when it comes to salary negotiation, it's just not in their or the companies interest to be anything close to "on your side". Hearing "Well you're making more than anyone else here", "You got one of the biggest raises this round of evaluations", "I didn't get a raise so you should be happy you got anything", "That's over what we normally pay for this job" all reek of BS. Unless I see accounting documents I'm not going to believe a word you say (even if I think you are a nice guy/girl or I like working with you, assuming we are talking about a raise not a hire).

The hiring/raise manager job is to get you for a low as possible and since these negotiations only happen about once a year we are talking about < 1hr of time (normally the whole meeting is 1hr with only 15-30 min being on salary, be that for hiring or evals) that you have a small window to effect the other > 99.95% of the time you are working for that company (Assuming a rough ~2000hrs/year). I pull every trick in the book and don't feel one ounce of guilt about it. This is my future we are talking about I'm not going feel bad about bending the truth when I know the guy on the other side of the table is probably doing the same thing. If there was more transparency in the process I might feel differently but there's not and I don't.

Especially with articles like "Your Lifetime Earnings Are Decided in the First 10 Years of Your Career" [0] and "Employees Who Stay In Companies Longer Than Two Years Get Paid 50% Less (over 10 years)" [1] I'm not about to take a sword to a gun fight, I'm coming out swinging because I know the other person is going to be. I never give a current salary number (only a range normally) and if they push for a number after I've said no then I feel no remorse in giving them a number that is not accurate. Pay me what I'm worth NOT what you think you can get away with because I know what I'm worth and if you can't pay it, no hard feelings but I'll be looking elsewhere.... Just my 2 cents.

[0] http://www.bloomberg.com/news/articles/2015-02-09/your-lifet...

[1] http://www.forbes.com/sites/cameronkeng/2014/06/22/employees...

EDIT: Also to the people talking about "good faith" and the like: I'm sorry, I'm not going to take that chance, as I said what may appear to be a small decision can (and will) affect you for the rest of your career. Are you really willing to bet your future on the hope that the person you are interviewing with is going to do what's best for you (a stranger) over the company they work for?

Lying about your previous salary as part of negotiation is fraud. Don't do it. Use other techniques to negotiate a higher salary.

I'm still conflicted, I hear what you are saying but I've watched a number of friends get screwed on salaries due to giving their real salary and the hiring manager trying to get them at the same price or a very small percentage above it when I know they are worth more. I guess the better advice is never give out your previous salary and refuse to show proof of it. Only talk about "what you want to make".

Lying about actual numbers may be fraud but if you can re-frame the discussion in terms of your total compensation you can probably get some more wiggle room since you can decide what dollar amount you want to put on various fringe benefits.

In England those benefits have a tax value.

It's deceptive and unethical to lie about what you used to earn. I'm surprised it's even being discussed.

Don't lie, it'll bite you in the ass. I've had friends go through rounds and rounds of interviews and get dinged on things like this. Ethics is important.

If you have to lie to negotiate a good salary then you need to improve your negotiation skills.

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