You’re in an executive search interview and the inevitable question comes up: ‘what’s your current salary?’
Do you: a) change the subject and discuss the weather; b) say you’d rather not answer; or c) spill the beans.
While you may be tempted to be coy about what you earn, what you should in fact be doing is c) spilling the beans, however many there are.
It’s a quick qualifier for a search consultant
Search consultants need to know you are the right fit for the role, both in terms of your skillset and your salary expectations.
At the end of the day, if you are currently earning well above the market value for the position you are going for, you are probably highly unlikely to move. The last thing both parties want is to waste each other’s time.
If, on the other hand, you are earning way below what you’re worth, you may be pleasantly surprised by how much the prospective employer is willing to offer you.
“When search consultants ask, ‘what’s your current salary’, it’s always fraught, because one time in 10 someone will say they are not prepared to tell you about their current salary,” says veteran search consultant and Executive Interview Coaching founder Richard Elstone.
“Really, it just doesn’t help us as search consultants. At the end of the day, it’s a really important part of the equation. We need to know reasonably rapidly upfront whether a person is in the ballpark from a salary perspective or not.”
It reveals whether you are the right sized fish
The reason headhunters talk about salary early is that it’s a quick qualification question to see whether a person is in the ballpark in terms of the role that we’re recruiting for.
It also tells us whether a person is a genuine executive or not. In other words, the salary sometimes reveals whether someone is too small for the role.
As an example, if a person is earning $250K plus bonuses as a Chief Financial Officer for a $25 million company, they may not be the right fit for a $50 million company offering $420K plus bonuses. “It’s a quick way of cutting to the chase,” says Richard.
Possible scenarios when you show your hand
You discover you’re being underpaid
The most common way someone could be underpaid is if they have been with their existing organisation for some time and their existing organisation doesn’t know their value out in the marketplace.
“People are sometimes paid 20-30% less than they would be in the open market,” says Richard.
In this instance, there’s no harm in revealing how much you are earning, because you’re likely to be earning a lot more if you are offered the new role you are discussing!
“If a person is being underpaid, I’d generally tell the client,” says Richard. “There have been times when people have had a significant percentage increase from one job to another.”
You’re being overpaid
There are other times when executives may be overpaid for the job they’re doing. They too could have been with the organisation a long time and be of considerable value.
“In this instance, it’s obvious the candidate has golden handcuffs and the firm doesn’t want them to leave and will pay them above market value to keep them,” says Richard.
In this kind of scenario, you really have nothing to lose by being upfront about how much you earn.
Should you provide a salary range?
Richard says if you are considering giving a salary range, there’s really no point.
“It’s best not to be coy and to come out with it,” says Richard. “If people are really shy, then what they could do is instead of stating the actual amount, you could give a ballpark.”
As an example, say you are earning $340K-plus super. You could say “mid $300K plus super”. “That’s one way to answer the question without talking about specifics,” Richard says.
Should you ever bring up salary talk?
Absolutely not. “Whatever you do, as a candidate, don’t bring up salary,” says Richard. “Always let the search consultant lead the salary discussions.”
What happens after you show your hand?
Richard says in most instances, the search consultant will reveal how much their client is offering.
In some instances, clients may ask for evidence of salary to verify what’s been discussed during the interview.
Counter offers are when a person resigns and the existing company throws money at them to entice them to stay. Generally candidates who are looking for another opportunity have a problem with their existing company or reporting line and this is not going to change.
“It’s very flattering, but more than 60% of the time after a counter offer, the person who has been counter offered will generally resign within six to 12 months,” says Richard.
“They were obviously not satisfied previously but this has now been compounded by a lack of trust. When you show your hand and resign, that trust has gone. Once they remain with the company, on the most part, already the relationships have changed and it can quickly become untenable.”
Incentives companies use to poach you
At the end of the day, there needs to be some sort of incentive for executives to move on from one role to the next, whether it’s the prospect of job progression or financial gain.
“At the pointy end of the salary negotiations, very rarely do candidates leave for a salary that matches their current one,” says Richard. “Most are going to be looking for a salary increase if they’re going to be moving jobs. That’s another reason why salary gets talked about early in the process.”
At an executive level, prospective employers may offer all sorts of “deal sweeteners”. Common examples include:
STIs – short-term incentives based on Key Performance Indicators (which may relate to revenue, profit, internal KPIs like staff turnover reduction or new contracts). There’s typically a bonus component attached to those KPIs.
LTI – long-term incentives, for example, shares. There might be a longer-term bonus pool, which can act as golden handcuffs. For example, you may be given 10,000 shares today, but they won’t vest for an extended period such as five years, or some they may vest at some other point, such as an IPO or a sale. You also might be offered the dividend of those shares which can at times be used to pay off the value of the shares, but still not be able to sell the shares for some time.
“Loads of different things can come up during salary negotiations,” says Richard. “Generally, it’s a lot easier for an organisation that’s not publicly listed to be able to do these things. If it’s a private equity organisation, they can do all of these deals away from the public eye. It’s all about those golden handcuffs.”
One last no-no
If you give an indication of your salary expectations, it’s important not to suddenly change your mind at the pointy end of the interview process and demand more money.
“That reflects really badly on the candidate and they’re risking not being appointed in the role when that happens,” says Richard. “For a candidate to try to play games is not a good reflection on them as a candidate, particularly after a three-to-four-month process when you’re at the back end of it and there’s a job offer.”
Like to know more?
When it comes to salary talk, it’s best to cut to the chase early and show your hand. Being honest and transparent will pay dividends in the eyes of the search consultant and will inevitably lead to a better outcome for all.
Executive Interview Coaching offers a range of services to maximise your chances of being appointed to your next executive role. Richard is not afraid to delve into the difficult questions, like how to navigate salary talk.
To get started, get in touch today!