How much does current salary affect your offer?

[almoststew1990]

Fortunately this is a hypothetical question. How much would someone's current salary affect your offer when moving to a new company?

Would you, as someone responsible for offering a position / salary, offer someone less if there current salary is not competitive on the basis the jump would be the same?

I ask this as someone has recently been promoted from a graduate to the level up. They are on 5k more than I was ( and this is on a <30k salary) when I got promoted from graduate to the next level at a different company! (albeit that was several year ago)

So I'm wondering does a "supressed" salary follow you around in a way? Do you sort of have to claw your way out of it?

I say hypothetical question as I'm fairly sure my salary is now fairly competitive as I had a number of offers and was open about competing salaries/offers.

 

[Moley]

This question comes up often and the guidelines I usually suggest are this: why on earth would you share your current salary with a future employer and undermine your negotiating position upfront?

I've gone from £35k pa 10 years ago to circa £120k pa now after taking advice from a mentor who explained the above to me and I then applied it when moving roles. As an example I was made redundant 5 months ago, found a new opportunity within a week and *told them* what my salary expectations were - gaining £12k pa.

 

[dowie]

So I'm wondering does a "supressed" salary follow you around in a way? Do you sort of have to claw your way out of it?

It certainly can have a knock on effect. If you turn out to be a star performer then that effect might well be eliminated rather quickly, depends on the organisation(s) you work for.

Lots of people don't bother negotiating offers - can't remember the figures I'd seen but AFAIK a majority of candidates don't ask for more money and a majority of hiring managers do have the ability to give a higher offer if there is some request for more from a good candidate.

In plenty of cases, save for promotions or external moves (or indeed turning out to be a star performer) plenty of people just get fairly mediocre pay rises year on year. If you start on a lower salary then it does have a knock on effect.

By not asking for more it isn't just an extra 5k you're missing out on but quite possibly an extra 5k per year for the next few years... managers/HR are supposed to worry about things like "internal equity" within their teams but frankly, for something like a bunch of new grads, then they're probably going to get roughly the same pay rise at the end of the first year give or take a little bit for performance... so the guy who started on 35k instead of 30k gets boosted to say 40k and the other guy who didn't ask for more is boosted to 35k... the effect of asking for more money at the start rolls over. Of course the 30k guy might be a good performer, maybe he gets a 7k rise, maybe in the second year it becomes clear he's really quite decent and he gets a 10k rise... after two years of effort and solid performance above his peers he's now 2k above the guy who simply asked for more money at the start.


As to the other point that has been raised above - whether to share your current salary depends perhaps in part on how well you're being paid. If you're underpaid then it makes sense to try and avoid revealing it - plenty of hiring managers/HR don't want to pay "too much" for a new hire. It isn't always possible, you might find that in some cases a recruiter will claim it is company policy or that they can't take your application further without it, in some cases this might well be correct - but then again no one is forcing you to take the job or carry on with the application.

On the other hand if you're paid rather well then it can make sense to share it - for example someone in a bank moving to a tech firm where people are slotted into particular grades/levels... the grade they try and slot you into might well have a defined salary range, ergo there isn't really any disadvantage to sharing your salary, the advantage comes where you actually earn more than that range and they'd need to put you on some special compensation scheme in order to hire you.

 

[almoststew1990]

@Moley @dowie not going to even try quoting your responses on my phone but thanks, that's interesting but also as I expected.

I was unaware I spent the first five years of my career underpaid as I was simply unaware of typical salaries! All adverts would simply say "competitive salary"! This was all at one company too until I moved this summer so where I started at that company with a depressed salary, I ended depressed salary relative to the role, just as you said.

Whilst I'm still fairly sure in my salary is reasonable as it literally was competitive its still good info to bear in mind moving forward.

 

[randomshenans]

This is why you should always do research on what the current market rate is for your role, location, experience etc.

 

[DarkHorizon472]

As above understand the requirements any rough pay ranges for various career paths. Also understand the company / area of the business as a poorly performing business with low margins is unlikely to pay relatively high wages.

 

[HangTime]

Yes and no. For me it is based on salary expectations more than current salary. If I have two suitable applicants for the same job both with salary expectations within my budget range and one is expecting £15k more than the other, it is likely that they would get differing offers.
Current salary doesn't have a massive bearing on it directly although indirectly it could do due to the above. There is perhaps an element of if someone came in wanting at the top end of what we want to pay, and that was a massive jump from their current salary, then unless they were exceptional I'd probably start the negotiations at a lower level.

As for being on a 'suppressed' salary it definitely does happen because in many organisations significant pay rises only happen as a result of a role change. Managers often have their hands tied when it comes to pay rises so there will be a cap based on an arbitrary value set higher up or from some sort of calculation engine. If you are underpaid compared to peers even if you get bigger pay rises in percentage terms every year, it could take a decade or more to catch them up. I think the biggest non-promotion rise I've ever had was 10.7% but that was less than two years out of uni when I was earning a pittance. Realistically I should have got over 30% at the bare minimum. Subsequently it's been more like 5% max.

 

[dowie]

Current salary doesn't have a massive bearing on it directly although indirectly it could do due to the above. There is perhaps an element of if someone came in wanting at the top end of what we want to pay, and that was a massive jump from their current salary, then unless they were exceptional I'd probably start the negotiations at a lower level.

The second sentence indicates that you still ask what someone's current salary is? Even though you're interested in expected salary? Or is that just from some people voluntarily giving away that info?

 

[mattx2]

I had a lowish salary compared to peers when I was stuck at a financial company for a few years after the crash in 08 not the best time to find a new job or raise. Had to move jobs and moan every year and it took about 3 more years before I was on what I would call market rate.

Having recently moved to the US, I really like the law in NY that makes it illegal for companies to ask what your previous salary was. It's something I would really like to be brought over to the UK

 

[HangTime]

The second sentence indicates that you still ask what someone's current salary is? Even though you're interested in expected salary? Or is that just from some people voluntarily giving away that info?

The information is sometimes already captured in our recruitment portal by the time I review applications. It's difficult not to be influenced by that to some extent, if people are asking for top whack e.g. say you have a range of £45-60k, and someone on £35k comes in asking for £58k, then probably we'd open at a lower level.

 

[SPG]

Depends if money is the only metric you measure against though.

I could double my salary tommorow quite easily but it would mean sitting traffic for 2hrs a day, while thats fine in winter, summer is a different kettle of fish. As it stands now i can walk for 50mins, cycle in 15 or take the car.
So i tend not to worry about, in the higher tax band anyway. Maybe not the same if i was 20k i would take the traffic hit though.

 

[Buffman]

Yes, as employers expect they can get away with your current salary/package + x%

Rather than say "I will not give that information to you" at an interview it would be worth phrasing as something like I believe my current package is worth £X and I believe my worth/would expect a new package value of £Y

I would inflate value X too (I.e. Be keen to include good pensions, extras etc)

 

[dowie]

Rather than say "I will not give that information to you" at an interview it would be worth phrasing as something like I believe my current package is worth £X and I believe my worth/would expect a new package value of £Y

I guess it depends on the job, if it includes a variable component then the questions could be more specific, like if they've literally asked you what your basic was and what your last bonus was then you unfortunately don't have much room for any fudges about your current package.

 

[Buffman]

I guess it depends on the job, if it includes a variable component then the questions could be more specific, like if they've literally asked you what your basic was and what your last bonus was then you unfortunately don't have much room for any fudges about your current package.

Then it would be a case of "I don't believe my current salary is representative of my proposed role and one of the reasons looking for a new role" or something similar to that effect.