Having worked in the recruitment field for close to 10 years, one of the common questions I get from candidates is, “Why do I need to disclose my last drawn salary?”
Whenever I come across this question, I feel for the candidates. Some of them will think that if they are underpaid currently, they will be underpaid forever, with their current salary as the (always low) base.
Regardless of perception, this is still one of the critical questions that we need to ask candidates at advanced stages of the interview process, or even right at the application stage, for the following reasons.
Reasons why employers ask for last drawn salary
1. Justification of proposed salary
Be it multinational corporations or small-medium enterprises, many employers have to request the candidate’s last drawn salary before getting approval for the hire, as this will justify the proposed offer and is often a fixed part of the administration process.
2. At the minimum, matching your last-drawn pay
The “market rate” can be rather subjective, making it tough to have an absolutely accurate indicator of the “right” rate, even with salary surveys or consultancies in the market. Knowing your latest pay makes the employer aware of what you are earning. If their offer fails even to match your latest salary, it is mutually beneficial to stop the recruitment process sooner rather than later.
3. A job title does not always reflect the salary
Organisational structure and job titles differ significantly among different organisations. Some companies may have a flat hierarchy with seemingly humble titles that, however, carry a great deal of responsibility. In contrast, other companies may have job titles that are inflated. Therefore, job titles may not reflect true seniority, making salary an important indicator that can add to the complete picture of your responsibilities and work experience.
What is an appropriate salary increment to ask for?
When making a career move, recruitment consultants would usually advise candidates to aim for a salary increment of 10-20%. However, if you’re one of those candidates who really are underpaid, or you simply expect a big jump in salary for your next move, we advise adopting the below approach to reach the salary you want.
Be upfront with your salary expectations from the day that you apply for the job. Some candidates try to meet the company first, impress them, and then negotiate hard for an increase in salary only when they feel the ball is in their court. This could work but is often detrimental to the overall impression of you as a candidate. From the very start, justify the larger percentage that you are asking for, and ensure you have the skills and experience to back it up.
Your previous salary might not always be reflective of the full remuneration package offered by your company. Perhaps you held equity or stock in the previous company on top of your paycheque, or perhaps a large portion of your salary was a variable bonus/commission. If this is the case, try to present data points that show you are entitled to this portion of the variable bonus for the past few years or quarters.
Keep in mind that it might be challenging for your future employer to factor your variable bonus into guaranteed basic salaries, since bonuses are, after all, variable. However, it helps to have the numbers ready.
Have a fair and honest assessment of your own hiring profile
You can expect a more considerable increment if you have a stable CV with steady experience. Alternatively, if you are in a niche, up-and-coming function with a talent pool that is highly sought after, it may also be easier to secure a higher increment percentage.
We all work hard to reap reasonable rewards, and it is natural for all jobseekers to aim for as competitive a package as possible. It is thus crucial to learn about the market landscape, market practice, and the timing and techniques of negotiation to get a salary that is fair and reflective of your skills and experience.
This article is contributed by Michael Page.