You are going to an important job interview. You know you can nail it with your skills and experience and sparkling personality (they would be foolish not to take you on, right?). The one question you dread being asked is "so, what is your salary expectation?" What do you say when you have no remuneration guidebook to follow?
Perhaps you are the hiring manager, sitting across the other side of the interview desk. You know you should pay 'market rates' for the right person, and you are conscious that you don't want to overpay someone if you don't have to. You also know that you may have to pay a bit more to attract top talent, but how do you know if you are even in the right ballpark?
The setting of salaries will be driven by various factors, including:
Historical data.
Salary budget.
Company size.
Value perception.
Negotiation.
The marketplace.
The overseas factor.
When you throw all of those variables together into a hat, you can see how it becomes difficult to pull out a magic salary-rabbit.
Historical data
When trying to figure out salary levels, the first place a person usually turns to is some sort of industry salary report. Such a report provides an overview of salary ‘bands’ based on an accumulation of salary data over a period of time.
The report gives a salary ‘band’ for various roles - low and high. Where you sit in the band is usually determined by the amount of experience you have accumulated at that level. For example, if you are new to a role, you’ll start at the lower end of the band.
In the absence of a salary report to refer to, hiring managers will often base their team salaries on what they have been used to paying (or receiving) in the past. They may also consult with an industry recruitment consultant to gain an understanding of what the market is paying.
Salary budget
It’s no news-flash to say that it is becoming increasingly difficult for a companies to make money. The market is more fragmented than ever before, and clients/customers are savvier about where they are spending their discretionary dollar.
When company budgets get squeezed, the first place managers look to reduce their overheads will be head-counts and salaries. This is the primary reason why New Zealand business have seen a reduction in salaries in the $200K+ bracket over the past few years; and there are now fewer companies with the ability to offer this level of remuneration. It is not uncommon for business to replace one senior salary with one or two junior salaries.
It will be difficult to conduct a salary negotiation based on skills, experience, value, or inflation when budget will inevitably dictate the outcome.
Company size
There is a common misconception that ‘the larger the company, the larger the salary’. Whilst being able to command a (very) healthy salary is certainly still a truism for senior roles within a large business, the opposite can also be true.
Large agencies tend to have strict salary bands, which they adhere to for consistency and budgeting purposes. It is not uncommon for even large corporates to remunerate certain roles (especially at the junior-to-intermediate levels) at below market-rates. A person may still choose to accept this low salary offer if they feel they can gain other benefits from working at that agency (such as CV-prestige, business reputation, flexible hours, career progression potential, clients, type of work, etc.).
Value perception
‘Where there is mystery, there is margin’. An oldie, but a goodie, especially where salaries are concerned. If you have been fortunate to find yourself in a part of an industry which is new, cutting-edge, or rocketing forward at such a pace that demand cannot keep up (such as A.I.), then you may be able to command a higher salary.
If you have built up a wealth of experience in a particular area, this may mean it becomes harder to find a job in your niche, but when you do, you may be able to ask for a salary to suit your experience.
If your CV is ‘vanilla’ (with nothing to differentiate you from your competition), then you could receive an average salary offer. Your CV will get you an interview, but the interview will get you the job. This means that through your personality and presence you’ll still have a chance to improve your salary prospects.
Negotiation
What place does negotiation have when discussing your salary level? For a junior-to-intermediate candidate the answer may be “not a lot”. There is more latitude with senior roles, especially once you start to accumulate a range of experience and knowledge. Whatever your career stage, negotiation is always worth a try - if you never ask, you’ll never receive!
For a salary negotiation to be successful, it’s best to try for a win-win outcome, so that both parties feel they will benefit from the result. You’ll have to work together at the end of the process, so you want to aim for the most positive outcome possible.
No-one on this planet has exactly the same sum-total of experience, attitude, and personality as you do. To achieve the highest salary possible you need to be able to articulate your unique value package in a way that relates to each agency/business, their clients, and the type role they need to fill.
If your ability to negotiate proves limited (or, in some cases, non-existent), and you are presented with a maximum possible salary, then it’s up to you whether or not you accept.
The marketplace
The economic principle of supply-and-demand is actively working within New Zealand businesses. If there is an over-supply of candidates, then companies can be selective about who they hire and at what salary. If the market is candidate-short, then salaries will tend to be higher.
The market will fluctuate periodically for each type of role, so it pays to gain an understanding of what the market is doing when you are actively looking for a job, or are looking to hire talent.
The overseas factor
It is quite common for a person to arrive in New Zealand - after working in overseas companies - with a high expectation of the salary level that they will achieve in New Zealand.
If you do a straight currency conversion, agency salaries in New Zealand often seem much lower than countries such as the UK, USA, and Australia.
If you will be looking for a role in New Zealand after working overseas, it pays to find out what the local salary bands are before you start interviewing. Whilst you are welcome to try to negotiate a higher-than-normal salary, you need to be careful not to price yourself out of the market.
What are you worth?
‘Worth’ is a highly subjective concept, and largely depends on the eye of the beholder. Hiring managers will make their decisions of a candidate’s worth and salary level based on their own, personal experiences; their opinions and prejudices; their clients; and the type of work that they do, and they will be ultimately limited by their budget. Sometimes ‘worth’ doesn’t even have a chance to come into the equation!
The main thing is to have confidence in your worth as you see it, and be able to project that confidence during an interview. If you are confident that you are worthy of a particular salary, then you’ll have a better chance of convincing others of the same (including recruitment consultants who act as your advocate to agencies). Confident, determined, ambitious people will inevitably get paid more because they are not afraid to ask for more, and will happily prove that they are worth every penny.
How to answer 'that' question
If you do get asked the "so, what is your salary expectation?" question, what do you do then? If you mention the salary you've been previously paid you may be lowballing yourself. If you say what you'd like to be paid you may be either pricing yourself out of a job or still lowballing yourself.
The first thing you do is try not to answer the question! Like any negotiation, if you show your hand in the first instance, you have nowhere to negotiate to from that point.
The best response is to first ask what the salary band is for the role. That way, you will get an idea of what the budget is, and where you think you may fit into the band based on your experience and specific skills and knowledge.
If you decide to pitch yourself at the higher end of the band, or at a level you know may be higher than what they can immediately see in your CV, then you need to be prepared to back up your request with proof of the value you can offer to.
Try to go into any interview with a good idea of salary market rates, so you'll at least know your thinking is in the correct zone. The last thing you want is to have a great interview and then leave the hiring manager with doubts once they find out your salary expectation.
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