What is the biggest misunderstanding relating to the question: “What is your compensation figure?”

Judith Cushman All Posts, Negotiating Skills 0 Comments

Answer: There is no one number to give and the question is the wrong one to ask.

Typically, when an HR Manager in an organization or a search firm executive is at the early stage of a search, s/he is looking for a number to keep it simple and to determine if you are in the ballpark they have in mind. At this point they are casting a wide net and if you give them a specific number it will most likely be the number they use right up until the offer stage, whether it is accurate or incomplete. And, this does not factor in changes in compensation through the months that the interviewing process is ongoing. The problem of the hiring organization becoming fixated on a number is to be avoided at all costs. Be thoughtful and careful as you respond to a question that may affect the entire search process.

Prior to providing any figures a candidate needs to understand what are the most important factors in the package that align with his/her values e.g. immediate incentives, long term wealth appreciation, family perks, flex work time, and possibly a lucrative educational reimbursement program.

For example, are you married with a young family and looking forward to more stability and longer term employment? In that case benefits such as child care, working from home (as an approved policy), parental leave, educational options, generous vacation benefits are the focus. And a stable employment picture in one particular location, to avoid family relocation, counts for many job seekers.

In short if someone is seeking a values “fit” the total compensation picture is entirely different from a “career first” hard charger. And, just because candidates begin a career in one mode does not mean that will be their direction as they move through different phases of their life and career.

Compensation is not a bullseye on a target it is a complex set of moving figures that reflect current values, aspirations and long-term compensation goals. And those are the issues that need to be thoroughly analyzed and thought through before determining how to present your compensation picture.

Of course, the starting point is knowing what your total compensation package is—not only what you have but also what you will lose. That includes any retention or annual bonuses or company contributions (e.g. to retirement plans).

To respond to the compensation question, your objective is to provide a reasonable non-answer that satisfies the person asking the question, usually at the beginning of the process. Here are some suggestions.

If your first instinct is to say, “I’d rather not answer that question.”, that is the wrong approach. If you are in contact for the first time, don’t give any confidential information until you check out who the individual is and say so. Ask for ways to verify who s/he is and what company she represents.

Assuming you wish to continue the dialog, here is one approach. You can indicate you will have some information to respond to the compensation question during the next conversation and that you would also expect to have some preliminary information about the company’s compensation structure and benefits as well.

The solution that works best, I believe, is an effective non-specific response that discusses the several factors that you would like to take into consideration in the total package the company offers. As you learn what that is during this conversation, you begin to see clues about its culture and values. This is an early indication about potential fit. Provide figures for the high end of the range for your total compensation. You can also say how you have reached that number so there is room for negotiation, particularly if you have learned some of the company benefits are attractive.

Where you wish to indicate your flexibility, e.g. if working remotely or flextime are important, mention it at this time. Sharing this information provides sufficient information about compensation to determine if the conversation should continue.

Do not expect to negotiate upward beyond the range provided. It is better to withdraw and suggest that if there is an adjustment to figures more appropriate to your situation, that the company is welcome to be back in touch. That can happen, for example, if an organization is early in the search, discovers it is not competitive and makes that adjustment.

The right approach to discussing compensation is to understand it is a complex, challenging topic. It is where the lure of a new, desirable position along with comprehensive benefits are evaluated for a fit with personal and family values.

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