The Compensation Conversation – Updated
Since we last wrote about “The Compensation Conversation”, many states and cities have passed laws explicitly prohibiting prospective employers and search firms from asking about current compensation. These policies are intended to stop pay discrimination (the practice of unfairly paying some employees, typically women and people of color, less than others) based on compensation history. These policies are a good start toward limiting pay discrimination (though they don’t go far enough, in my opinion).
These new laws create challenges: in the absence of using current salary as the baseline for your compensation requirements, what information should you use? What’s the best way to approach conversations about pay during an interview process?
Know what to expect. If you live in a state or city that doesn’t allow interviewers to ask about compensation history, you will be asked about your “compensation expectation.” Your response should be your target compensation.
Know your facts. Your compensation expectation should be based on research – there’s no substitute for knowing what similar roles in similar regions pay.
- Review relevant compensation studies. While these studies are imperfect, they can provide a helpful starting point. Bridgespan has compiled a list of resources, which can be found here.
- Talk to your professional network. It’s important to understand what others are seeing in the market (functional area and/or region). While talking about money can be uncomfortable, don’t be shy about bringing up the topic – greater transparency benefits everyone.
- Look at publicly available financial statements (aka: Form 990s). These reports contain the compensation packages of the five most highly paid members of a nonprofit’s executive team.
Communicate your expectation clearly. Your response should be warm, clear, and short. A perfect response is something like this: “In my next role, I’m expecting $100,000 and comprehensive healthcare and retirement benefits.” During a first or second round interview, this conversation is not meant to be a full compensation negotiation, just a starting point to make sure all parties are in the same ballpark, so to speak. There will be time later in the process to specify, for instance, what you mean by “comprehensive healthcare and retirement benefits.” Once the more specific dialogue begins, you may need to adjust your initial expectation, which is fine, so long as your rationale is clear and the adjustment is communicated professionally.
Trust that you’ll be redirected, if redirection is appropriate. Many people like to say, “I am looking for $100,000, but I am flexible if I need to be.” You’re not going to be immediately removed from an interview process if you’re slightly above the range; trust your interviewer to broach the topic if the gap is potentially manageable. You’ll have the opportunity to respond then. On the other hand, if the organization’s compensation range is only half of your expectation, for instance, the interviewer may very well decide the role at hand is not a match without additional dialogue.
You can still share your salary history if you’d like to. While employers are not allowed to ask about current pay, there are no rules limiting what job applicants can communicate. If you believe that your current compensation supports the case for higher pay, by all means, feel free share that information with your interviewer.
There’s no need for apology or explanation. Far too often, candidates follow their compensation expectations with too many extra words. Whether you have kids in college or bills to pay is not the focus of the dialogue. The focus of the conversation is whether or not you would potentially accept an offer of employment if the interview process goes well.
Transparency is best. Many approach the dialogue around compensation with strategies grounded in game theory – don’t do it. You benefit both yourself and your future employer if you make the conversation as straightforward and easy as possible.