Compensation can be a tricky part of the hiring process. Give too many specifics early on and you can take yourself out of the running before you get started. Don’t give enough info and you risk coming across as being less than forthcoming and secretive. Currently, there are certain parts of the country that make it illegal for hiring managers to ask you about your compensation history—which seems counter intuitive to us as recruiters—since getting the compensation right in an offer is an important piece of what we do for a living. Here are a few tips for both individuals looking to make a move, as well as the leaders interviewing:

Guidelines for Compensation Discussions:

1. Getting a raise: How much is typical?
Obviously there is no one answer for this, but after 20 years of recruiting for a variety of companies, we’ve found that a 7-12% bump is typical on base wages. That may not seem like much, but when the average internal pay increase is 3%, over time, the multiplier effect can really add up. Add an attractive annual incentive bonus or long term incentive package and that 7% can easily turn into 17-30%+ increase. Add on a lucrative benefits package and that offer can suddenly be a game changer for you and your family.

Cost of living premiums may bump up that number considerably too, making a big base increase seem attractive, but we suggest doing your homework. When you add local taxes, real estate, and childcare costs, that big increase can disappear quickly. When evaluating any offer, make sure you are factoring total compensation vs. base pay and do your research on location specific cost factors.

2. Salary Ranges/Bands:
When an employer discusses a salary range or internal comp band with a candidate (i.e. a range from 95K to 115K), typically the candidate will only remember the top number of 115K, while the employer is more often planning to make an offer at the mid-range point of 105K. That disconnect sometimes starts even before the conversation gets going.

Make sure you are transparent in your conversation about your expectations, but plan on being flexible. If you are making 100K and think your value is 125K—a 25% increase—be prepared to look at the total package being offered. An offer of 110K with a 15% bonus gets you to your goal without going outside a company’s band. Remember that, even if you know you are under market value, it is not the obligation of your next company to make up for your current employer’s pay scale. However, if you are willing to work with them and to look at the total package offered, you can certainly take a big step toward closing any gaps.

3. What to share and when:
As recruiters, we find it impossible to work with candidates who won’t share their current compensation with us—It’s just practical to do so– No reason for us to waste anyone’s time having a candidate interview for a role that is going to pay them 20K less than what they are making now OR when their expectations far exceed our client’s pay scale capabilities. However, the legal rules of engagement are changing in some parts of the country on what employers and third party recruiters like ourselves can ask so that leaves disclosing totally up to you.

(Here is a link to some of the recent suggestions on the legalities of asking about compensation: LaborSphere: Questions about Salary History – What Employers Need to Know)

We understand the bias concern, but find most clients want to offer competitive compensation for talent and feel that they can’t without knowing a starting point. By not disclosing, my personal belief is companies will start lower than necessary and the countering/negotiating stage of the offer process will drag longer than necessary, creating a stressful—potentially resentful—start to a new career. Time will tell on how these rules catch on across the country, but the bottom line is that being upfront and honest—no matter what the subject—is a good practice in today’s business environment.

We are always happy to help you through every step of the process, from determining what your career goals are to helping you reach them. Feel free to contact us!

If you have any questions, please feel free to ask here.

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