Salary Negotiation Trap

I interviewed for a position a few years back, and among the questions the recruiter asked me was, “How much do I currently earn”. That question was difficult because, at that time, I was leading a team of 30 and heading a major department within my organization. Still, my salary was 2-3 steps lower than my position. My wage has not been increased because, according to the management, sales have not picked up, and no salary adjustment can be made during that period. What do I need to do? There were few options for me. The first option was to lie about my salary- but they could ask for my payslips, I asked myself. If they do, I would need to go deeper into unethical issues by forging a payslip which I will never do. The second option was to be truthful- with that, I would be underpriced and not get something commensurate with my worth of experience and value. I had to play in the middle- a mix of both options.

Luckily, I had a few non-monetary benefits like an official car, an official house, lunch in the office, per diem when I go to the field etc. So, I told them the value of both monetary and non-monetary benefits but didn’t mention the respective amounts. I told them that my salary would likely increase by an extra 30% in the next couple of months, and only about a 30% increase could “lure” me from my organization. I eventually got the job, with a 200% increase from my previous salary. When I got to the company, I discovered that two of my reports earned higher than me – I had under-negotiated. But again, I knew that was the risk I was entering to. When I spoke with them, one told me he had inflated his previous salary, and because they were pressed to fill the role, they needed to accept his position. The other person was earning well and only marked up by 20%.

In contrast, when I left the organization for my current organization, they did a salary check with me and communicated how much they would offer for the role. Even though the total package was almost 80% above my current salary, they never asked what my salary was. It was only my performance and the benchmark for the role that mattered. They also stated that the threshold for negotiation is so small. 

This gets me thinking- why do companies ask how much you currently earn or for you to share your payslips with them? Someone once said, “Why should I pay you more than 50% of what you previously earned”. I found that to be quite absurd. Your current salary may not reflect your skills and competencies and the complexities of the new project. Also, salary is a reflection of organizational revenue. I do not expect to earn the same amount as an established organization in a start-up. Salary should also be fair within the organization. A manager earning less than his report and someone making way less than your colleague within the same cadre should be highly discouraged. It will only lead to a frequent turnover rate and employee dissatisfaction. 

I advise organizations to have a salary structure for a role and communicate the same to the candidates early enough. It doesn’t make sense to have up to 3 levels of interviews without an idea of the salary structure. For prospective candidates, except you are so desperate, be firm in stating what you would like to earn rather than coming from a position of what you currently make. Sharing your payslips isn’t ethical and should be highly discouraged. For greenhorns or candidates desperate, you can adopt my style- consider the non-monetary benefits or opportunity costs in negotiation