We've all been asked the compensation question and there are several schools of thought on how to answer. I believe most candidates sell themselves short and/or handle this question incorrectly (ignoring the question or being evasive), which ultimately results in leaving some money on the table, as well as starting the process off inauspiciously.
Keep in mind it is not appropriate or polite to simply ignore the compensation question. Many recruiters and hiring managers want to make sure both sides are starting off on the same page from a comp standpoint in order to not waste each other’s time, which is why this question is asked early on in the process.
Conventional wisdom states you should never reveal what you are seeking but instead ask what the salary range is for the particular job in question. However, as a candidate you need to control the conversation about comp, especially if you have the requisite marketable skills and experience. When you ask for a salary range, you allow the employer to dictate the conversation. If you owned a restaurant and your customer asked how much for the filet mignon, would you respond by asking for the price range they are willing to pay? Exactly.
Here is my advice for candidates:
- Do your research. Find out what the market rate is in your area for a similar position. Recruiters are wonderful resources for this type of data. They can tell you the approximate median and what the typical range is for your particular functional role and level. There are also websites that provide this info but you typically have to pay.
You can also talk with associates in your line of work and ask them what they are getting paid. It baffles me that people do not share compensation data. The more info you have the better prepared you are to go to market on a job search and maximize your earnings.
- Know where you fall on the comp spectrum. Once you determine what the market range is for your position and experience, determine where your desired comp falls along the spectrum. If your comp requirement is below the median, obviously you have room to go up. Use your job search to upgrade your comp accordingly. If you are on par, you have validated your worth in the market and are likely in the sweet spot for the employer.
If you are above market, be prepared to justify the premium with some type of specialized subject-matter expertise, unique skills, etc. Employers are willing to pay above market (especially for high-demand positions such as software engineers), but they want to know what they are getting for their money.
For the purposes of this exercise, have a good idea of your desired total cash compensation (gross W2) when you start a job search. As long as you have this figure, you can always work out the details on how you get there from a base, bonus, and equity standpoint during negotiations.
- Be resolute. This is the most difficult part. When you are armed with market knowledge, you will be emboldened to hold your ground as well as prepared to make the best-informed decisions. You will not get overlooked or lose out on opportunities if you are in the compensation sweet spot.
Know what you are worth and stick to your comp requirement. Assuming you are on par with the market rate and offer comparable skills and experience for the job, employers will pay what you are worth. You’ll be happier when you do come across an organization that recognizes your value and is willing to pay accordingly.
How to Answer the Compensation Question
When you are asked what your comp requirement is, simply answer “My comp requirement is a minimum of $XXX to $XXX total cash.” This is the figure/range you know would be compelling enough for you to make a job switch and be happy walking through the front door on the first day. This answer leaves room for some flexibility, yet establishes a floor that you are not willing to go below.
If a recruiter or prospective employer asks what you are currently earning, answer accordingly: "my current compensation is comparable to my compensation requirement."
If they insist on knowing, reiterate your comp requirement is the amount you consider compelling in order to make a move and anything less doesn’t make sense for you at this time. Most recruiters and hiring managers will respect this. If they do not, then I advise you to move on.