By Jose Ruiz | Alder Koten
How much? There is no easy answer to this question but the best way to address it is to understand a company’s typical thought process. Regardless of what companies will openly admit there are three things that will determine what a company will offer you when changing jobs:
What you are worth in the Market
This has nothing to do with your perceived value, and it is important to distinguish your perceived value from your market value. What others with a similar skill-set and experience (your competition) are currently making or are willing to make defines your market value. I have had candidates tell me: “I saved the company 500,000 dollars last year why can’t they pay me 50% more?” The answer is pretty straight forward, harsh, but straightforward: Because they do not have to if someone else can save them the same amount for 25% less than what you make.
Research the market when setting your expectations. Once you arrive at market data, it is important to understand how companies use it. If you take market statistics as a reference, consider that companies will try to make offers below the 50 percentile to guarantee a room for growth and development. The area above that percentile is reserved for compensating performance and experience at the corresponding level. If you can negotiate above the 50 percentile be cautious of the limitations that come with that. You might be staring at a few years with below average salary increases.
Your current salary
This becomes a non-issue if you are at market, but if you are under the market it will force a question: Why are you below market? In many cases, there is a valid reason. However, beware of how you present your case. Companies will know about other companies more that you might expect. Company names in your resume and your current salary will hint to what your performance has been. Question marks will fly if you have been with a well-recognized organization for the past few years, and your salary is below market. Regardless of how well the interview process goes and how good an organization may be when evaluating potential employees there is never a guarantee that a new hire will perform as expected. So if you are below market do not expect an immediate significant increase to bring you to market level. Companies will typically provide an increase to bring you on board, but it will be up to you to bring yourself to market level by performing. Worry about positioning yourself in an organization that will FACILITATE getting back to the market level within a certain amount of time. Avoid trying to find a sponsor that will immediately take you there because they feel for you and believe your story.
It is also important to consider that most companies understand that money is important, but they will seek a candidate’s decision based on the challenge, expected career path and professional development. Many hiring managers are suspicious of candidates seeking a job for an immediate boost in pay. For that reason, most organizations will shy away from providing sharp increases when presenting an offer. The average increase, assuming that the increase does no put you outside the hiring company’s range for the position, is between 15-35%. The higher the salary, the lower the percentage tends to be. In very few instances do we see organizations that are willing to increase an executive’s salary by more than 25% when they bring them on board. So once again, worry about positioning yourself in an organization that will provide a level of responsibility, training and experience that will allow you to increase your maket value progressively and consequently your salary. Chase responsibility and experience that can be marketed and the money will come.
Their internal pay structure
You would think that the pay structure in most companies would match current market data. Unfortunately, it is not always the case and not because organizations would not want it that way. External events can change the market quick and create temporary spikes based on talent demand. Many organizations will be disciplined and not react to those changes. When we see a mismatch, it is typically a temporary supply and demand issue for specific industries and disciplines. In most instances, companies will be willing to take more time to fill a job opening and even lose a few employees to a hot job market to not turn their cost structure upside down or generate disgruntled employees. They are aware of the consequences of increasing the salary range for specific positions while keeping other similar ones the same.
About Alder Koten
Alder Koten helps shape organizations through a combination of research, executive search, cultural & leadership assessment, and other talent advisory services. Our recruiters and executive search consultants bring to the recruiting process an in-depth understanding of the market conditions and strategic talent issues faced by clients within their particular industry. Our leadership consultants provide advisory services that are crafted to be collaborative, responsive, pragmatic, and results oriented. Focused on expanding the capabilities of the organization through talent.
