In the November 29, 2016 Ask The Headhunter Newsletter, a reader is puzzled about how to answer salary questions in interviews.

salary questionsQuestion

What’s the best way to deal with an interviewer who wants to know my salary history and salary requirements? While I know employers always ask this, I feel it takes away from my edge when I divulge that information.

Nick’s Reply

You’re absolutely right — to a point. When you show your salary cards at the wrong time, your negotiating edge disappears. When employers ask for salary requirements, they usually follow up quickly with a question about your salary history. Then they use your last salary to influence any offer they make. And that’s why you need to take control of the discussion.

There’s no puzzle here, if you keep your objectives straight. Your goals should be to:

  1. Avoid divulging salary history.
  2. Determine your worth with respect to this job.
  3. Express your desired salary as a range you can justify, and
  4. Negotiate a salary that reflects what you can contribute to the company’s bottom line.

Rather than go through the steps, let’s look at the underlying logic. How you apply these ideas is up to you and depends on the situation and on your good judgment.

When salary questions come up, profit is the issue

My advice is to turn any salary questions around and ask what exactly the employer wants you to accomplish for its business. But be even more specific than that.

How to Say It
What kind of profitability goals do you have for this position?

The more the employer expects you to contribute to the company’s profitability, the more you should be paid. Remember that every job contributes to profitability, either by increasing revenue or decreasing costs. If a manager thinks a question about profitability is odd, reconsider whether you want to work for him. This is someone who may not have a job himself in three months.

How to Do It: The PDF book, How Can I Change Careers? — which is for anyone who wants to stand out in a job interview, not just for career changers — provides detailed exercises to help you demonstrate and justify your value. See the section titled “Put A Free Sample in Your Resume.”

Salary history is confidential

In my opinion, discussing salary history is a no-no. It’s no one’s business. Some employers will object, but keeping your past salary confidential is pure common sense because it directly affects your ability to negotiate.

Although an employer may suggest that your old salary is a good indicator of your value, the truth is that it’s up to him to make an independent assessment of your value to his business. Your salary history is personal and confidential, and in some cases your prior employment agreements may even prohibit you from divulging it because it is also confidential to your old employers.

If you still have trouble with this logic, ask yourself, Would an employer divulge the salary history of the job you’re applying for?

How to Do It: Keep Your Salary Under Wraps shows you how to say NO when employers demand your salary history, to make them say YES to higher job offers. Learn how other Ask The Headhunter readers avoid disclosing their salary history politely but firmly. (This PDF book comes with a bonus audio lesson.)

Know what you want

Now let’s talk about your salary requirements. It’s a legitimate question for an employer to ask, as long as it’s couched in a larger discussion about how you will contribute to the bottom line. As we said above, the more value you can contribute to the work, the more you’re worth. There’s no way to provide a desired range until you know what the job entails and what the expectations are — and that requires some discussion. That’s not a cop-out or a clever response to the question. It’s the truth.

But, at some point, it makes perfect sense to decide what salary range you want and to share that information. (Wait until you’re satisfied the employer is one you want to work for, and that this is a job you want.) I think this actually gives you a negotiating edge because it establishes a level of agreement before you get to the offer stage.

When you share your desired range at the proper time, the employer should either agree that he will continue the discussions in good faith based on that range, or you should terminate your discussions. For more about this, see How much money should I ask for?

How to Do It: “The Poolman Strategy: How to ask for more money” is one of the key sections of Fearless Job Hunting, Book 7: Win The Salary Games (long before you negotiate an offer). Many years ago, my own lawyer taught me how to start a negotiation. In this lesson, I teach you how to dominate talk about salary.

Negotiate responsibly

Some people believe you should hide your requirements until an offer has been made. They seem to think that if you divulge what you would accept, the employer will low-ball you. This is nonsense. If you present a well-thought-out range, it gives you room to maneuver based on how well you can articulate your value.

No employer is secretly thinking, “Gee, I was going to offer 50% more than he’s asking for. Lucky me!”

It just doesn’t happen. While some employers are looking for ridiculous bargains, I think you will find that an employer’s target compensation is probably somewhere in the ballpark. (If it’s not, you walk.) When salary questions arise,providing a range and being able to justify it opens the door to a responsible negotiation.

It’s easier to negotiate the right deal when you’ve demonstrated good faith — and firmness — by demonstrating your worth and sharing your goals with the employer.

How to Do It: I know you’ve asked yourself this question — “Am I unwise to accept their first offer?” I cover this in detail in Fearless Job Hunting, Book 9, Be The Master of Job Offers. You’ll also learn a surprising tactic: How to say, “I accept your offer, but I’d like more money!”

Do the salary questions make you nervous in interviews? How do you handle them? What additional tips would you give this reader?

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  1. One other thing I point out to practitioners who try to justify ask for salary is that they generally won’t share any relevant information on from their end, for example: What is the mean/median salary of the team I will be working on? # of years experience/at company the team members have? Mean/Median yearly bonus/raise percent? Direct supervisors salary? Pay range for position? If dealing with a third party recruiter, what is the cut of the action? If replacing someone who left position, what was their last salary? And so on.

    Secondly, there has been a “Jobless Recovery” since the last recession ended. It seems like unemployment (the U-3 number) has gone down only because more people have dropped out of the workforce, not because there has been massive job growth. I’d argue that this has had a negative force on previous salary – in other words, wages have not kept up with productivity.

  2. With respect to salary, whenever I get asked the question I simply reverse the question and ask for the budget for the position. For example
    Q: “What kind of salary are you looking for?”
    A: “What is the budget for this position?”

    I find most of the time I get the range the employer is intending on offering and I simply have to decide if this is a range I am interested in working at. More importantly it gives me a good idea if the employer has thought as far as salary and not using my salary history as the base for the new position.

    Once you get the salary range, the issue of current salary normally goes away.

  3. The crux of the discussion is Nick’s point..Negotiate responsibly. From both sides, jumping into salary discussions too early pollutes the process. A company should have a recruiting process they are confident in, that they believe will effect an objective assessment of fit, current capability to do the job, potential to grow and add value, cultural fit, etc. Salary information contributes zip to this. The job seeker should have prepared beforehand to determine if the company has the potential to offer what they are looking for as to job content, and career potential. Until you know this, talking money is moot.
    As a company how do you know you “can’t afford” someone unless you know the above, and as s job seeker how do you know you won’t make allowances if you don’t understand content & potential. But…too bad it’s done all the time from both ends. When a company asks your salary history off the bat, it’s akin to advertising, “we’re too lazy to really search and recruit”. If both wait for when mutual interest is firmly established, in most cases a workable deal will result. And often it is a deal, the result on a negotiation, 1st inside the company up a chain of command & HR, and outside between the manager and the job seeker (who is negotiating with his/her interested parties)

    And Nick’s point that companies aim to low ball you are correct in my experience. If a manager (and HR) succeeds at this, you pave the way to a future implosion, build a revolving door. It’s bad business.

    I can give you a personal story regarding lowballing starting salaries. I worked for a feisty technical computer company. Software, Hardware Development & related support functions, one being technical publications. We employed software and hardware tech writers, who were not easy to come by especially since we set up shop in the boondocks. Over time we built a good team who got smarter and more valuable every day. The Manager was a colleague. Via a reorg I inherited Tech Writing and the team. When I reviewed salaries, I was floored. Just about every one of them was not only below market, they were below the company’s own range minimum for the job.(Hr Mgmt changed too in the process). I found what he was doing was going to local universities, recruiting professors and instructors who loved to write, and also loved working with computers, revealing a path (tech writing) where they could combine their 2 loves and brought them in as entry level writers. Up to this point, it was a great tactic.
    Then he lowballed it. The Universities at the time paid so low that his offer was relatively very attractive, though as I said unbeknownst to them it was out of policy on the low end. He thought he was doing a marvelous thing. Getting people at a low cost. I have to assume the HR Manager aa the time was aware. I let him know it wasn’t clever, it was a potential time bomb, putting us at risk of losing our best writers. He moved on on his own. I went to HR, worked out an out of policy blue bird special that got them on the mark after a couple of raises, sat down with them and let them know they were getting put into line and the plan.
    It should never have had to be done. It’s NOT good business, not to mention not the right ethics. Over the years I’ve come across other managers that had this same idea, Oh how smart I am to talk someone into my team for bottom dollar. It never never paid

  4. I think employers should publicly post and/disclose the salary range for any job vacancy. This way there is no guessing on the part of job hunters–if the posted salary range is too low, and if there’s no wiggle room (i.e., the employer will NOT go higher for anyone or any reason) to negotiate a higher salary, then people won’t apply. That will save both the job hunters AND the employers time and money.

    I do what Dave does when asked for my salary history and salary requirements: I turn the question on the employer “What have you budgeted for this position?” or “What is the salary range for this position?” and I make a point of asking about benefits (if the salary is lower but they offer a great health insurance plan that doesn’t cost me much, or there’s a generous vacation/holidays/sick time package, or they will pay for a master’s degree, etc.) then I factor that into the salary.

    Nick is right–when employers guard the salary range for the job vacancy zealously and refuse to tell me but demand I tell them my salary history for every job I’ve had since the age of 10 as well as what I currently earn, I thank them for their interest in me and wish them luck in finding a candidate. There’s no point going further, no matter how great the employer seems or the job is if I can’t afford to work there because the salary is too low.