The scenario is one many of us have faced in the course of navigating our career paths: You are underpaid and underappreciated. You apply for another job knowing that, if you get it, you will be better compensated and better treated. Indeed, you get an offer, but in the first few minutes of the salary negotiation, the human-resources director asks you, “How much are you making now?”
As someone who teaches a class in negotiation, I’ve been asked for help with variants of this question countless times. A survey conducted by compensation-data website PayScale found that 43 percent of respondents were asked about salary history during a job interview, and just over three-quarters of them provided an answer. The same survey found that women may be penalized for withholding their salary history—women who refused to discuss their salary earned 1.8 percent less than women who didn’t—while the reverse is true of men. The situation is so treacherous for job seekers that, as of May 22, 2018, it has been banned in nine states (including California) and eight cities (including New York). A number of these bans were approved since we posted the above scenario for our first installment of Business Practice in April! In some cases, employers are prohibited from asking for salary information on an employment application in addition to during the negotiation process.
Nevertheless, in most of the United States (and other countries), many interviewees still encounter this question, and a large percentage of them are flat-footed and unprepared.
So what’s the best way to handle it? Should you tell the truth, acknowledging that any offer from your prospective employer would be a step up and thereby sacrificing most of your negotiation leverage? Should you lie? Make an artful dodge? The hundreds of answers and thousands of ratings we received via Business Practice offer some valuable insights.
We posted this scenario—in which we asked readers to imagine they earned $105,000 a year at a company called LexCorp but had hopes of scoring a position at Wayne Enterprises—on April 24 and closed the survey on May 18. We received 364 separate responses, ranging in length from one word (37 responses) to 190 words, with a median length of 23 words. The responses collectively received 7,273 ratings. Each response was rated, on average, 19.9 times (median: 13) with 293 responses (80 percent of them) receiving five or more ratings. (The infrequently rated responses were submitted late in the cycle, close to when the survey was closed.)
Responses were rated on a scale from 1 (“Strongly disapprove”) to 7 (“Strongly approve”). The mean rating was 3.36—considerably below 4, the middle of the scale. A histogram of all ratings is shown below.
Two observations jump out:
- There are very few 7 ratings.
- While the modal rating (the one given most often) is 4, the next most common rating is 1.
The analysis below is restricted to the 293 responses with five or more ratings, starting with a histogram of the average ratings for each response. Average ratings range from 1.57 to 5.44.
About 75 percent of responses came from men. However, female responses were rated slightly higher (3.5) than male responses (3.27). Just over 16 percent of responses came from participants who used a ChicagoBooth.edu email address; these responses were rated significantly higher (3.76) than others (3.26). I’ll let you draw your own conclusion.
You can peruse responses in random order below.
To give you a sense of the range of ratings, I’ve listed a few responses, spanning from the unfavorably rated (5 percent, 10 percent, and 25 percent in the distribution, meaning that 95 percent, 90 percent, and 75 percent of responses were rated better), to average (50 percent in the distribution), to favorably rated (75 percent, 90 percent, and 95 percent in the distribution). All of these responses had 20 or more ratings. (All responses included in this article were subject to light editing for grammar and style.)
1. 5 percent response
- Answer: “Nope.”
- Average rating: 2
- Rank (out of 293): 278
2. 10 percent response
- Answer: “$115,000.”
(“I know it’s a lie, but I am convinced that telling the truth with HR is dangerous business.”)
- Average rating: 2.21
- Rank (out of 293): 263
3. 25 percent response
- Answer: “$105k.”
- Average rating: 2.78
- Rank (out of 293): 218
4. 25 percent response
- Answer: “We can discuss it later in the process.”
- Average rating: 2.79
- Rank (out of 293): 217
5. 50 percent response
- Answer: “I would like to get a sense of typical salaries for this position at your firm. My expectations are in the range of $125k and above. Let me know?”
- Average rating: 3.26
- Rank (out of 293): 153
6. 50 percent response
- Answer: “Less than I’d like, but $160,000 would be around my comfort level.”
- Average rating: 3.31
- Rank (out of 293): 147
7. 75 percent response
- Answer: “I feel I am underpaid now, which is one of the reasons I am looking for new opportunities. I am looking for a place that appreciates the value I bring to the table and gets the economics to attract and retain talent. I know Wayne does a great job at this.”
(“From there, I expect them to offer something much lower, and we end up somewhere in the middle.”)
- Average rating: 4
- Rank (out of 293): 68
8. 90 percent response
- Answer: “I am glad you ask, Sally. I have done my research, and it sounds like the range of salaries for a similar position with my experience would land me in the $130k–$170k range. Does that match what you would be willing to offer?”
- Average rating: 4.38
- Rank (out of 293): 29
9. 95 percent response
- Answer: “I’m not comfortable with the idea of anchoring this conversation to my current compensation. I believe that the value I can provide to Wayne Enterprises is the most important factor here.”
(“The HR director might push back, in which case: ‘I appreciate your interest, but I know the market rate and only want to ensure that as a top performer, I receive commensurate pay.’”)
- Average rating: 4.72
- Rank (out of 293): 12
The responses judged to be most effective attempted to pivot the conversation to value (“The value I can provide to Wayne Enterprises is the most important factor here.”) or anchor the conversation at the high end of the range (“My experience would land me in the $130k–$170k range.”). Some cautiously acknowledge the disadvantageous current salary. (“I feel I am underpaid now.”)
To me, the best-rated responses are solid responses, but they are not bulletproof. They do not fend off the obvious retort: “Before we go there, can you answer my question? What’s your current salary?” You need to be prepared for an onslaught of badgering of this sort. The HR manager’s script is really easy to play, and this explains why even the best responses are not rated that highly.
Responses 2 and 3 are interesting. Both provide a specific answer to the employer’s query. Response 3 includes a truthful $105,000; Response 2 contains an admittedly fraudulent $115,000. People rated the truthful response more favorably. Overall, 99 of 293 responses (34 percent) provided a specific salary figure, with 19 percent of responses surrendering the $105,000 figure, and 15 percent suggesting a salary that was, well, not quite truthful. The scatterplot below shows the ratings for each of these 99 responses. You can see that Responses 2 and 3 are somewhat typical of the general pattern of ratings: people thought that it was more effective to tell the truth than to lie. Responses that truthfully reveal $105,000 received an average rating of 3.49, slightly higher than the average rating of all responses, 3.36. Untruthful responses got a rating of 2.52.
Of course, every response that contains $105,000 isn’t equal. The two responses below reveal the true salary, but they nevertheless are judged quite differently.
- Average rating: 4.73—“I am currently making $105k; however, I feel this salary is below my market value considering my level of expertise and experience. I have talked to numerous colleagues and industry insiders and the market for my skill set is closer to $160k. Considering I value Wayne Enterprise’s brand name, I would be willing to accept an offer closer to $150k. I hope this number is amenable to you and we can both move forward in the hiring process.”
- Average rating: 2.61—“I am making just over $100,000 but I believe I am drastically underpaid.”
The strategy of the more effective disclosures seems to be to get the salary out there and out of the way, but to quickly pivot the conversation to one of value. If I am going to surrender the number eventually, why don’t I control the discourse and minimize the hit to my reputation?
Another interesting strategy—one that involved deception but not a false salary—was for the respondent to suggest that he or she was not at liberty to say:
- Average Rating: 4.45—“My firm has a nondisclosure policy that I wish to honor; however, why don’t you tell me the salary range of the position and I can tell you if you are in the ballpark.”
I am assuming that your firm doesn’t have such a nondisclosure policy. (Otherwise, you would indicate so and this would cease being a hard question.) This answer, nevertheless, elicits a varied response, with a modal rating of 7 but almost 20 percent of ratings at 1. (See “An interesting response,” below.) Indeed, this is the single response with the widest variation of ratings.
Incidentally, my favorite kind of falsehood is in Response 8 above: “I am glad you ask, Sally.” No, I’m pretty sure that you are not glad that she asked.
The best of the best
Below are the top five responses among all those that received at least five ratings. I’ve listed names and background information when I’ve gotten permission to do so.
- Response: “I understand that you are trying to gauge whether or not I am within your ballpark of salaries, to make sure that we are using our time wisely. The jobs that I am interviewing for, and that I believe I am qualified for, offer salaries in the range of $150k to $180k. I like the job at Wayne Enterprises, so if that is within your range, I think we can continue to explore this further.”
- Average rating: 4.84
- Response: “I’m glad you asked. In addition to many of the superior benefits of Wayne, another reason I’m excited about the company is the way it values it employees and aligns compensation accordingly—not all organizations are so reputable. From research, understanding the role through interviews, I’d consider $150,000 within range. At this point, I’d also like to make sure I understand benefits as well so I have a good understanding of total compensation, not just salary.”
- Average rating: 4.88
- Participant: Krisinda Doherty
- Background: Five years as a management consultant and five years as a career coach and program director at the University of Chicago
- Response: “I appreciate that you want to understand my expectations, but every firm’s approach is different. I would like to focus on a fair compensation package from Wayne for someone with my credentials and skill set. My research shows that similar candidates are paid $160,000 in this role.”
- Average rating: 4.93
- Response: “I make a competitive salary rate in relation to my position and the industry, together with great benefit packages. But instead I would like to tell you what my expectations and goals are for this position regarding salary. I’m looking to be in a range that covers my experience and expertise but also gives me room to grow as I prove my value to this company.”
- Average rating: 5
- Participant: Efren A. Candelaria
- Background: Founder and CEO at Sobremesa Chicago
- Response: “I’d prefer not to anchor on my current salary and to discuss total compensation instead. Based on my research, I understand that total comp at Wayne is XX, and I’m looking for a salary range from that between X and Y.” (“From there, I expect them to offer something much lower, and we end up somewhere in the middle.”)
- Average rating: 5.44
- Participant: Adil Tobaa
For their contributions, each of these respondents will receive a Business Practice coffee mug. Display it proudly!
I noted earlier that the ratings are not particularly high. This is because the situation is just plain hard! One part of your preparation should be to ask yourself: “Why is this question difficult?” When I ask my students, a few reasons surface:
- If you accept the offer, you are going to work at this company and do not want to start with a tarnished reputation.
- If you push too much, maybe the employer will rescind the offer.
- The HR manager is more knowledgeable and more experienced. She may very well know salary figures in your industry (and perhaps your company), as well as existing HR practices (such as whether your company has a nondisclosure policy about salary). She also negotiates salaries all the time. You do so once every few years.
- Your silence itself is revealing. Most of us do not have a problem disclosing salary per se. We have a problem disclosing salary when it is disadvantageous for us to do so. Silence is a signal that you aren’t making very much.
I will offer one final reason: this situation violates a strong norm in negotiation, that of reciprocity. In most social situations, when I offer information, my counterpart will reciprocate by giving me something. In this case, the HR manager asks but does not give. So, I close with a response that I got from one of my students a few years ago.
You understand that your question makes me very uncomfortable in the same way that you would feel uncomfortable if I asked you for the salary of the last four people who have been hired into this position. So, if you don’t mind answering my question, I don’t mind answering yours.
The norm of reciprocity. I love presenting this response in class. My students’ faces reveal all. Reactions usually divide themselves evenly into three categories:
- “No way!”
- “I’d love to do this, but I know that I can’t.”
This motivates my final and perhaps most important point: the best response is the highest-expected-value response that you can pull off. The data above show a considerable variation in how different language is evaluated, and that variation makes it impossible to predict perfectly how someone will respond. But don’t lose sight of the fact that the most effective response for you will be something that you can execute.