Negotiation is an information-trading game. The more useful information you have, the more easily you can negotiate successfully.
Imagine that you're house-hunting.
You mention to your friend Angie, "So, I saw there's a really nice house on the market, not far from you. I'm going to look at it tomorrow."
Angie says "Is it a ranch house with a really cute landscaped backyard, near Maple and Fourth Streets?"
"Yes!" you say. "That's the one."
"Oh," says Angie, "that's a fantastic house. I've been in there a few times. I used to know the lady who owned it -- my daughter took ballet lessons with her daughter. She's a really nice person. Her name is Kara.
"She moved to Kansas City to take a new job, and her father-in-law bought the house when she and her husband moved away, but now he's moving to Kansas City also to be close to his grandchildren. He was the owner of Grey Plumbing -- you've seen their trucks around town, right? He just sold that business. He's retiring. Kara and her husband are having a new baby in three months and he wants to be living there then."
Angie was just giving you some background on the nice people who own the house you're going to be looking at tomorrow. She gave you a lot more than that, though -- she gave you the backstory on why the house is on the market and why the people who own it want to get rid of it.
The seller is trying to get to Kansas City to be with his new grandbaby! Anybody could relate to that. Your brain clicks in. "He wants to sell pretty badly," you think. You're not about to take advantage of the kindly grandfather, but you're also not stupid. You realize that:
- The seller of the house on Maple and Fourth Streets has some urgency to make the sale.
- The seller also has money -- he just sold his business. Is he going to quibble about a few thousand dollars less or more on the house sale? Probably not.
- The seller bought the house he's in from his own kids. He might have warm feelings toward the house. It would be nice for him to sell it to a friend of a friend, and a person with kids (that's you!).
Information is the key to negotiation. When you're on a job hunt, the more information you can get or extrapolate about your hiring manager's pain points, the better. At the same time, the employer is trying to get information about you.
That's why employers ask job-seekers 'What were you earning before?' They want to know, because they don't want to offer you a starting salary that is more than about ten percent over what you're earning now. They're trying to save money.
God bless them for trying to save money, but you're trying to make money, and negotiation is a grown-up sport. Everybody is trying to get new information from the person on the other side of the table, and hang on to the information that would help the other party.
Is the HR person who asks you "What's your current salary?" or "What was your salary at your last job?" going to tell you what they paid the last person in the position you're interviewing for? Of course not! That's confidential.
Your past and present salary information is confidential, too. That's nobody's business except yours and your financial advisor's. Keep it to yourself!
When you get into a recruiting pipeline, they're going to ask you what you were earning before or what you're earning now. Here's what you will tell them.
Have you ever noticed that when you say "I was earning fifty-eight, six" they magically produce a job offer for sixty-one thousand dollars? The bump in pay between your last job and your new job is always modest. That's because they peg your job offer to your last job. That's not fair to you.
What you got paid in a completely different company for a different job has no bearing on what you deserve to be paid in your new job.
Don't give up your past salary to anyone. That's a negotiating chip you don't want to give away -- and you don't have to!
If you're completing an online job application and the form requires you to report your past salaries, use this technique.
If you keep in mind that the only reason anybody asks you what you earned before is so that they can pay you just a few dollars more than that, you'll find it easier to clamp your lips shut when the "salary history" topic comes up.
Even very sweet and pleasant people will tell you that they must have the critical information about your previous salary. It's essential, they say. They need your salary history in order to understand your career path.
Yeah, right!
Here's what my husband, born and raised on the southwest side of Chicago, has to say about that:
"They need it, huh? I understand people in Hell need ice water."
Keep your salary history to yourself, and give your interviewer your salary target, instead!
