Sharing your current salary? The whys, the dos and the don'ts

So you apply for a job online, and you get a response from the recruiter. A call is arranged where you have a good exchange about the opportunity and your experience, and towards the end of the call you are asked the golden question, “What is your current salary?”

What do you say?
Should you be transparent and share the details proudly? Do you try to evade the question using a mastery of words? Or should you be outrightly blunt and maintain that it is personal information which you chose not to share?

Let’s first look into why that question is asked.

The most simplistic of reasons really, is our clients ask for it. Sometimes it is included in the SLA’s (Service Level Agreements) which we are required to sign, in order for us to represent the employer. Which leads us to the next question, why do employers ask for your current salary?

There are a whole host of reasons, but one key reason is that employers use your previous salary as a gauge of your market value and employers use that information for the purpose of:

  1. Establishing if your current salary is above the budget for the role
  2. Preparing a salary proposal in the final stages

So, is your current salary a good gauge of your market value?

In most cases, it probably is. Why else would you have accepted that job, or stayed on with it for X number of years? Granted, there are exceptional cases such as working in the same company for an extended period of time, or, you were made redundant in your previous role due to a company restructure, and because of poor economic conditions and after countless interviews, you were finally offered a job, so you accepted a 15% pay cut. We will address how we can tackle these exceptions later on.

So, why do employers need to know if your salary is above the budget for the role?

The clearest reason, is so they do not waste your time. Of course that is an assumption. There are candidates who are happy to accept a lower salary for several reasons (dream job scope, difficulty in securing a job, industry shift, change in personal priorities, etc), and to make a decision based on this may not be 100% fair. What it provides, is a basis for the client to enquire on the candidate’s motivation since money clearly isn’t a pull factor in this scenario; which is an important factor to establish during the interview process.

What I believe is the largest point of contention here is, is it fair to form a salary proposal based on your current salary?

Whether we agree or not, the most common and basic benchmark employers use to formulate a salary package is based on a percentage increment of a candidates current salary. The appeal of the offer is then measured against the industry benchmark of 10-20%, and offer management conversations typically revolve around a discussion around these figures.

Is there an alternative?

Yes. there is. Most MNCs have a database of information compiled by HR professionals specialising in Compensation & Benefits. They often use compensation methodologies designed by HR Consultancies like Mercer, Aon Hewitt or Willis Towers Watson to determine internal job gradings and thereby using that as a basis for formulating salary packages.

In fact, states in US such as New York have taken a stance to do away with asking about current salary. (http://www1.nyc.gov/office-of-the-mayor/news/285-17/mayor-de-blasio-signs-bill-prohibiting-all-nyc-employers-inquiring-salary-history-job#/0)

While I believe that this is a quantum leap in the recruitment industry and there have been some preliminary studies, HR Professionals across the world are still observing to see if this in fact will close the gap in pay equity. Having said that, until all employers have made the shift, my advice to candidates is, continue sharing your salary details with your recruiters if you are asked. There is no larger red flag than someone who is unwilling to share their salary details, especially when you are being assessed in an interview, and trying to build trust with the recruiter/ employer.

What should I do if I’m paid below market?

No one wants to receive the short end of the stick, especially during a job hunt. If you feel that you are currently paid below market value, here are some quick tips to ensure that you receive what you deserve in your next job.

  1. Be honest about your current salary, it is highly likely that you will need to reveal that at some point. Avoiding it, only casts doubts on you as a candidate.
  2. Do your research, there are online resources like Glassdoor and Getraised as well as annual salary reports from recruitment consultancies which provides salary benchmarking data.
  3. Make sure you have a powerful pitch to substantiate why you would deserve your expected salary.
  4. Highlight your priorities and if salary is a top priority for you, make it known that you require a strong pull factor.
  5. Sit tight and wait for good news.