The Insider Guide to Careers
Insider information, secrets and tips about getting hired and building careers. For employees and job candidates.
Salary expectations are a tricky question to answer. The only reason for an interviewer to ask you this question is if they suspect they may be unable to meet your salary expectations. This reservation may arise if you have many years of work experience, high educational credentials, or are currently working in a company that pays high wrt market.
For the job applicant, there is nothing to gain and everything to lose by answering this question. Companies have a salary range and are trying to check whether your number falls within that range. You certainly have an advantage if you work in states like California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, or Washington, which have salary transparency laws mandating that companies disclose the salary ranges if asked by the candidate. They also forbid the companies from asking you about your current compensation.
Why every answer is a bad answer:
Disclosing salary expectations is always a bad idea and never suitable for the following reasons:
1) If your compensation expectation is way below market, companies may either suspect something wrong in your candidature or jump at a chance to pay you precisely what you ask. Both don’t help you as an applicant. The recruiters may prompt you to justify even the low number you provide for a selfish reason. Once you justify the number you are asking, it is challenging to ask for a different number in a later round of compensation negotiation.
2) If your compensation expectation is exactly meeting the market (an improbable scenario), you still need to figure out if the company can pay you that number. As a thumb rule, 1 in 2 companies pays at the 50th percentile or below it. Also, you have no idea if the target company’s compensation policy is below market or above market. Leaving aside the big tech MNCs, most other companies pay conservatively around the 50th percentile, some slightly above and many slightly below. Companies with high turnover or located in smaller cities pay below market, as they don’t have competition for talent. Summing it up, this is also a losing situation for the applicant.
3) If your compensation expectation exceeds what the company can pay, it will automatically be rejected. This decision doesn’t allow for the fact that you may like other things beyond compensation and may even change your mind later.
The best way to answer the question:
What I recommend is is that you say, “I consider aspects like team culture, benefits, company values, bonuses, stock, and many other factors to be more important than base compensation. I always look at the total rewards package and culture before deciding. As long as you pay me fairly wrt market, I will be happy.“
This answer reveals that you are not impulsive or dogmatic and consider multiple data points to make a decision – an invaluable skill in any company. You are hinting that the company should pay you fairly. There could be factors for being paid below market earlier – belonging to specific racial and gender groups, not negotiating salary in an earlier company, and so on. If you start on a clean slate, you can correct your earlier mistakes.
How to get compensation data:
You cannot sidestep the question forever. This question will return to you at the end of the interview process. Based on all your experiences till that point, you can decide if you want to join the company. If you want to join, you should look at multiple compensation data points:
1) Compensation data on H1Bdata.info, Linkedin, and Glassdoor.com. While H1Bdata.info is a very reliable data source (straight from the US government visa filings), the other two sites are less curated. Glassdoor also has a section on reviews and comments revealing nuggets of company information. Comments on Teamblind can seem like trolling, but can sometimes be very insightful.
2) Payscale, Levels.fyi and Teamblind are also worth visiting to get salary information even though the data may be all over the place. Levels.fyi and Teamblind have a lot of trolls and spam data. At the same time, interspersed within this noise is the most recent and accurate data of applicants who are the best of the best and way above average (at the 80-90th percentile or higher). Note that Teamblind is the most used company discussion forum among early-in-career employees.
3) If asked by the recruiter to give a compensation number, don’t answer that question directly. Instead, in turn, ask back the question as to what that range for the job role is. Even in India or US states where pay transparency laws are yet to be passed, many recruiters will give you some range of comp numbers. This action can save time on both ends if there is no meeting point, allowing the recruiter to move on to other prospects.
4) Talk to friends working in your target company in a similar role. Check with them what a suitable compensation can look like. All these exercises can give you some crude numbers, which can help you make an educated guesstimate.
5) In case you don’t have friends working in that company, use Linkedin to reach out to your university alums or even random managers who may be doing similar work. For example, when I interviewed for Google, I reached out to 7 alums whom I barely knew, and all of them set up time with me to discuss Google hiring and interviews. This connect is less to ask compensation questions but more to get a feel of the culture and interview expectations.
Justification:
Be ready to justify your numbers in front of interviewers and recruiters. Nothing can nuke your interviewers more than your appearing greedy, stubborn, and illogical. Instead, you want to provide thoughtful answers based on facts, numbers, and logic as to why you think in a certain way. Please read my earlier newsletter posts on compensation to help you understand this topic better – Comp 101, Comp 102, and Comp 103.
Provide a range:
When you provide a compensation expectation, offer a range and not one single number. This way, you leave room for negotiation. For example, you can negotiate higher benefits, PTO, or even better sign-on bonuses/ stock. All these options will remain closed if you fixate on a single base compensation number. Therefore, if you ask for compensation way above market, a range will appear more palatable than one number. Also, be pleasant to the recruiter and the hiring manager at every point. You will continue to work with them later, and you want to avoid beginning work with a win-lose situation, where you won everything and the other side got nothing.
Closing thoughts:
Recruiters will also take your compensation expectation more seriously if you are interviewing with other companies. Never work with just one company when interviewing. If you go all out for one company, go all in for others too. Since your only target company may fail to meet your compensation expectations, you want to create a basket of companies. Also, when you keep interviewing, you may find that the dream company may not be as stellar as you think.
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