Simple Truths About Handling Salary Questions in an Interview

An esteemed colleague, Jack Chapman, who literally wrote the book on salary negotiation (How to Make $1,000 a Minute: Negotiating Your Salary and Raises) uses the terms “budget,” “fudgit,” and “judgit” when explaining the right time to discuss salary with your next employer. He goes on to use the analogy of buying a car that you can't afford. First, you start out by establishing your budget: “This is how much I can afford. That's my budget, not a penny more.” Second, as you admire the car, you begin to waver and think, Well, I really like it and if I go ahead and buy, it I'll figure out a way to pay for it. I can cut corners in other areas: no premium movie channels on TV; we only eat out once a month; maybe a more modest vacation for a couple of years. That's the fudgit stage. Last, you enter the judgit stage, in which you carefully compare the value of the new car as it pertains to your lifestyle versus the cost of owning it. Perhaps some or all of the payment can be deducted as a business expense, and the car may even enhance your business opportunities by making you more mobile, or by adding to your prestige if it's a luxury model.

Applying this concept to your job search, the employer may start out looking to fill a position with a specific salary in mind: “This is what we have budgeted for this position.” During the course of the interviewing process, you establish your unique value and cause the interviewer or hiring manager to start thinking, This person could really make a difference for us. I wonder what her salary expectations are—I wonder if we can afford her. Finally (hopefully for you), the decision-makers are so impressed that they start thinking, If this person can do for us what she did for her previous employer, we could increase top-line revenues by $1.2 million and bottom-line profits by $150,000. With that kind of return on investment, she's easily worth $100,000, even though we only have $72,000 budgeted for this position. Of course, if we can get her for $85,000 or $90,000, all the better for us. The employer is now mentally justifying hiring you at a potentially higher salary than what was originally budgeted. The higher salary would be seen as a good investment due to your perceived value and the employer's projected return on that investment.

If, during the first interview, the employer asks you, “What is your salary expectation?” and you volunteer that you would be willing to join their organization for a salary of $85,000, one of two things might happen. The employer may dismiss you as a candidate because your salary expectation is well above the firm's budgeted number ($72,000). On the other hand, the hiring manager may decide to continue talking with you, ultimately choosing to hire you because of your qualifications and demonstrated track record of success. Because you already stated that you would accept $85,000, more than likely you will get an offer between $75,000 and $80,000. You may be able to negotiate a salary in the low $80,000 range, but certainly not more than the $85,000 you divulged in the first interview.

If discussion of salary is deferred until much later in the process—perhaps during a second or third interview—you might receive an offer of $85,000 and be able to negotiate your way up to $100,000. Remember, in the previous example the employer recognized your value and was (in his/her own mind) willing to make an offer as high as $100,000 in order to hire you.

In another variation of this scenario, once you understand the responsibilities of the job and the employer's expectations of the person hired, you decide that you would only consider taking the job for a salary of $100,000. But you already mentioned the figure $85,000 before you knew all the facts, and now you're stuck. If the employer offers you $85,000 and you ask for more, of course he or she will say, “But you said you were willing to take the job at $85,000, and, frankly, that's a lot more than we were planning to pay. We're willing to meet your expectation, so when can you start work?” Even if you explain that the position is much more involved than you realized, and you therefore believe a higher salary is appropriate, you're at a negotiating disadvantage at the very least, and could very easily lose credibility with the hiring authority.

The bottom line on the question of salary is to defer that discussion as long as is reasonably possible; you should never be the one to mention salary first. Give yourself as much of an opportunity as possible to gather information about the job opening, while showing the prospective employer that you would bring exceptional value to the organization. When the employer inevitably asks you the salary question, be prepared with a well-thought-out response.