Yes, yet another blog post about pitching salary expectations. This topic has now become something of a cliché! To my defence, here are some reasons why this topic still needs addressing:
- We're in a post-bonus/salary review season
- I’ve heard some *pretty interesting* salary pitches lately
- The market has slowed, calling for a change of tact
Together, it’s time to consider how tactics that may have achieved a salary increase amidst a hiring boom, may not prove so effective in a slowing market:
Base your pitch on the market – not your payslip.
Interviewer: “What are your salary expectations?”
Interviewee: “Well I’m currently on X, so…”.
In a booming market with applicants in tight supply, sharing your remuneration may have previously served as an auction starting price, with employers queuing to each place their bid. In a slowing market however, showcasing your current/pending salary might not be the best angle to tackle this question.
Sometimes I think people default to sharing their current remuneration simply because they don’t know what to pitch. The good news is that we can help with that – the bad news is that ‘pitching on the existing’ can work against you. It really adds little to the conversation, and while there’s always the risk of pricing yourself out, more likely you are positioning yourself to receive an incremental uplift which you might not happily accept.
Another version of ‘pitching on the pre-existing’ is pointing to rising inflation in the salary review. Before you are tempted to do this, ask yourself, if inflation suddenly turned into deflation, would you welcome your employer announcing you’ve been given a pay cut?
The career manifestation of the salary ‘one-upmanship’ philosophy is changing roles frequently to try and beat the market rate. Outright job-hopping of this kind may temporarily increase your salary in an upturn – but in a recessionary environment, a price tag above market rate might be quite undesirable to keep on the payroll.
Rather than going into your current (or worse still, previous/pending) remuneration, consider a market-led approach. For instance: “clearly salary isn’t the only thing that’s important to me, but I’m currently in processes at the 100-110k range and I’m open to offers.” This sets the range in accordance with current market conditions and adds a flexible invitation.
Don’t confuse ‘value’ with ‘price’
I see lots of posts emphasising the importance of “knowing your value” in the interview and salary review contexts. These typically encourage entering conversations with a list of achievements to justify your salary uplift.
We should distinguish ‘value’ from ‘price’. Take the example of oil – at the time of writing, the ‘price’ for a barrel of crude is around $85. But the ‘value’ of this barrel is far higher – it approximates the 500+ hours of labour needed to physically lug things around without oil-enabled machinery.
Similarly, it’s all well measuring about your ‘value’ by how much you can save your employer in taxes. But your ‘price’ is just a function of what the next able person would accept to provide the same service. This distinction of price and value may seem like just semantics, but that’s not a reason to let them get confused. To understand what salary you can fetch, you need to be plugged into not only your value-add, but also market rates for that service.
Beware – the salary survey(s)!
The main issue of drawing on salary surveys into a slowing market is that they offer a snapshot of what was recorded previously. If coming off a peak in hiring demand, these surveys may still reflect the reality of what other people are being paid – but are unlikely to be an accurate representation of what’s available to you currently.
This problem fixes itself when someone keeps in touch with the market available to them. I’ve long advocated for people passively and selectively considering options from recruiters when they are perfectly happy in-role. That way, they A) know there’s not a significantly better deal available to them in the wider market and B) know a good offer when they see it.
I’ve heard on several salary reviews where the employer uses the internal/WTW benchmark, while the employee rocks up with recruiter salary surveys. In instances of discrepancy, I’ll let you guess which tends to hold more weight. Personally, I’d suggest being in touch with the key recruiter in your market as the best way to go, while being transparent with your employer about the options currently available to you, enabling transparent career and remuneration conversations.
Don’t lose sight of the bigger picture.
My former CEO always emphasised what a salary uplift would mean for jobseekers, after taxes. Spoiler alert: at the higher/additional rate with NI additional, uplifts don’t translate to as much as people think – but I’ll leave the calculations to you professionals. His takeaway point was there are more important things than the overpriced coffee which a 5k ‘dealbreaker’ would buy you each day.
Warr’s Vitamin Model says there are different ‘vitamins’ (characteristics of work) which we need to keep in balance to stay happy in our jobs. Which is to say, there’s no point in loading up on vitamin A, if everything else is out of kilter. While this may sound painfully obvious –consider how many of your peers break their backs to secure a slight salary/bonus increase which has no real benefit to their or career advancement, happiness, or sense of purpose. My advice has always been know 1) market rate, 2) what salary you need, and from that point try to prioritise everything non-financial. If you get the rest right and you are excited to show up for work each day, the money will follow!
In today’s environment of rising prices/debt/taxes, it becomes increasingly difficult to pinpoint with any certainty what salary one ‘needs’. But don’t lose sight of extra perks to be negotiated for, a lateral salary move with a better work-life balance can translate into a pay rise when you look beyond annual salary and into the hours given to receive it.
In summary, you may need to shift strategies if negotiating pay into a slowing market. Rather than just looking to your previous salary (/salary surveys) or the financial value you have added your employer, keep in touch with an agent you trust who can give you a snapshot of current rates and demand by looking at live options. Remember, negotiations can extend beyond the payslip – sometimes that extra day working from home, or early Friday finish can add greater value to both your work and personal life more than a marginal salary increase alone.
To discuss this topic in more detail, or explore your options, get in touch with Jay Sky via Jay.Sky@pro-tax.co.uk or 07494 414999
