The money question

The money question
The money question always comes up in job interviews. If you are a candidate looking at a new position, you can safely assume the person on the other side of the desk will ask some form of the money question. Your answer is difference between moving forward and being eliminated.

In an interview, the employer has four basic questions in mind. However they dress them up, whatever creative spin they put on them, employers really want to know four things:
1. Who are you?
2. Why are you here?
3. What can you do for me?
4. How much will it cost?

That final question can make or break the situation. If you answer it wrong, you're done. The correct answer is non - numerical. A number, whether too high or too low, is ALWAYS wrong.

The employer will invariably ask something like, "How much money do you need to consider for this position?" Or else, "What will it take for you to come to work for our company?"

If you want to be considered for the position do NOT, under any circumstances, give a numerical answer. The correct answer is something on the order of, "I'm here to discuss the position and assess my fit with your organization. I want to make sure my talents are a good match for the duties you're outlining. You're probably thinking along the same lines. I am sure, if we get to that place, we can reach an accommodation."

Why answer that way? Because it's the truth.

The demand - interest barometer tells us that, for a candidate, as demands go up, interest goes down. And as interest goes up, demands go down. If you as a candidate articulate a number too early in the process, you're drawing a line in the sand and creating an impression that you're more about reward than effort, more about price than value.

A number which is either too high or too low is wrong for several reasons.

The interviewer will eliminate you from consideration if you articulate a number that's too high. Whether they can afford the amount you say or whether you're worth that amount is immaterial. If you as the candidate create the impression that you overvalue your skills (in other words say any number above the range they've calculated), they are concerned you will never "settle" for the amount they're offering. So they will remove you from the process.

Conversely, if you say a number that's too low, you might inadvertently wind up accepting compensation less than the amount the company budgeted because that's what you said. You reduced your ability to negotiate because you have too little information.

Over the years, in coaching people on successful interviewing techniques, the money question is the one where people stumble most often. Many times people will tell me, "I just wasn't prepared for the question ... the number just popped out of my mouth." Or else they will say, "I told her $X because I think I'm worth it."

Bottom line, it doesn't matter what YOU think you're worth. The magic number is always somewhere in the range between what they want to pay and what you think you should get. I've been in career coaching and recruiting for 20 years. This has been my experience.

When the employer asks, "How much ... ? " the right answer is, "We'll know when we get there." If they ask again, insisting on an answer, defer diplomatically a second time. Something on the order of, "I appreciate you want a number. I'm a little uncomfortable making anything which could be perceived as a demand at this early stage. I'm interested in the position and would like to learn more."

And if they ask a third time, the correct answer is, "My year to date compensation is $Z."

But why give a number that way? Simple. It's a statement of fact, not an estimate of self-esteem. You compensation is verifiable. An employer can ask for and receive verification of income. You pay taxes. Your income is a public record. In the real world, your current or most recent employer valued you at an identified level. That's the number to share.

So ... don't get caught by the money question. Role play with a friend or practice in the mirror. Be prepared for this inevitable question. Your ability to answer the money question with an non-answer can get you the job or get you more money for the job you really want.

Comment by Sherry Junker on August 19, 2009 at 12:41pm: Is it just me or what regarding this issue? Working as a recruiter both in house for a corporation or as a contingency recruiter in my own business this was just irritating to have to repeatedly ask the candidate what his salary was. To me it was like the candidate was trying to hide information. This question is simply a tool to make sure the candidate isn't expecting more than what the job is paying. Why waste everyone's time interviewing someone at 130k, when the opportunity is in the 100k max salary range?

Corporations are not trying to undercut the candidate. They know that if they bring someone on the low side they would not keep that employee for long. They want to offer a competitive salary to the rest of the market to keep good employees.

I say don't make the interviewers ask a third time. The answer the first time is " my salary last year was $Z", and if you are negotiable just say so.

Comment by Eric Raynard on August 19, 2009 at 1:50pm: Sherry, you are right. There are always those candidates who want to hide their current compensation. Sometimes it gets a little frustrating dancing with those individuals.

My response in those discussions is to explain, calmly and rationally, that verification of income is a legal and appropriate question. It is a public record and, if requested, the candidate needs to supply a W2 or year to date pay stub. Same as the candidate would do to buy a car.

Let's remember, we deal with this compensation issue much more than candidates. Their fear is they are giving away some of their negotiating power if they detail the current compensation.

This post was written for candidates in an employer interview. The came up for me after telling one of my career coaching clients she was too focused on the money question. Before the interview, she kept talking about what SHE thought she was worth and HER out of pocket expenses.

Sure enough, she got in the interview, felt the clock winding down and blurted out a number. Needless to say, she hasn't been called back.

Comment by Kyle Smith on August 19, 2009 at 2:08pm: Yeah, this is a very silly dance. It's very simple: 1st figure out what you're worth: add up your current benefits, salary and bonus. If you have some type of performance based plan figure out 3 numbers: Guaranteed / Expected / Best Case. If you don't know what your medical benefits (etc) cost, either ask HR or do a little online research. Once you have an real total compensation number figure out what type of increase you need to feel like a move is warranted 5%? 10% of guaranteed/expected/best case? If your aggressive are you looking for an opp that provides a much higher best case with similar expected? Or are you ready to reduce fluctuation in pay and take more guaranteed while keeping the best case similar or lower? These are all going to be factors at the end of the interview process. Once you figure out those three numbers (guaranteed money, expected, and best case) this is what you want to share with the interviewer.

Guaranteed means if you can't make that you're walking away from the table, expected means if it doesn't look like you'll be getting that you are going to entertain other offers or walk away, and best case is the number they need to create avenues for you to reach if you turn out to be the bad *** you say you are.

Now everyone knows the expectation and you have open negotiations on how you get to that number whether it be bonuses, base pay, 401K match, additional benefits like tuition reimbursement, cell phone, company car, whatever it may be. Most hiring managers I find like this approach because it shows initiative, perspective, and interest.

Never work from the base pay unless you are a contractor. Always think total package and any time your talking about total package you always have room for negotiation regardless of what last years W2 says.

Final thought: Companies should always have very specific benefits packages, compensation ranges, incentive plans, and career plans they are able to share with prospective employees. If they don't, make sure you investigate their retention rates and employee moral as much as possible because you might be walking into a nightmare of poor management practices, "creative" interpretations of incentive plans, no career growth options, and no chance for advancement - these are the types of companies that are trying to undercut the candidate.

Comment by Tony Crisci on August 19, 2009 at 9:00pm: Sherry - I'm right there with you. If the candidate is walking into an interview blind without a range in mind of what the position is likely to pay, and a range in mind of what they would like to make, then they didn't do their research. It doesn't matter if a candidate thinks they are worth a certain number if the company isn't going to pay that number. If they aren't in the same ballpark then there is no fit, no matter how much either one likes the other. As a recruiter on either the corporate side or the agency side, money is one of the first topics that I talk about (discussed as a range) so I know that the candidate is on the same page with me and I'm not wasting my time or my hiring managers' time. There isn't much worse on either the candidate side or the company side than wasting a ton of time in interviews only to end up with the candidate wanting 130K+ and the position/budget max being 100K and having to start the whole process all over again (this doesn't happen to me because I play it straight.) The best answer is a direct, I made X last year, and I am looking at positions that pay within the range of Y to Z. There is no game playing or posturing, as that can also get you bounced from the interview process. Remember, there are still too many hiring managers out there who still decide based on their uninformed gut, and if they think that someone is trying to hide something whether real or perceived, the candidate has now lost some credibility.

Eric, why would your client want a call back from a job that isn't going to pay her what she thinks she's worth? Would she really have been happy taking less? Most likely not. If the dollar amount she stated was in their range and she is a good fit, everything else considered she should get a call back. Otherwise why would she want to waste her time on them?
My 2 cents.

Comment by Slouch on August 19, 2009 at 11:55pm: Eric, I agree with you completely and what you wrote is exactly how a recruiter should prep a candidate before every interview including the telephone interview. For sure it is frustrating to ask that question and get what is perceived sometimes as a song and dance but if you are a recruiter you needs to be nuts to let your candidate go interview and wreck it because they thought they new better than what you have written. Not sure if you are going to be Toronto Sept 23 and 24th but I know you will love RecruitFest. I made a video last week about something related to this and I had to stop the camera because I started drooling and could not stop. It's in my bloopers file. Making placements is so exciting.

Comment by Charles Van Heerden on August 21, 2009 at 2:57am: Eric, having spent most of years in corporate life, we know that companies have a range that can pay within. At the more senior end, there is also STI and LTI that makes up the total package, again more variables. I would advise and agree with others to confirm current pay and to indicate, based on the underlying premise of your article, that the most important focus is on the role and that if that is right, then the right pay will follow and that you are negotiable on the overall package.