Quick post today on a potential interview question that doesn't often get covered on WSO.
It's not one you'll hear during on-campus interviews for your first gig out of college, but it's something you'll likely encounter somewhere down the line. Namely, you'll come across it when you're looking to move into a new position with a new firm. So, what's the question I have in mind?
What's your current compensation?
A good friend of mine has recently been going on a lot of interviews. He's got a banking background but is actually quite eager to leave for a different role. Now, for as tough as it is to break into a good PE shop or hedge fund after completing an Analyst stint, it's in some ways seemingly and surprisingly more difficult to break off the path and into something completely different.
What he's finding is that he lands a ton of interviews and often gets call-backs and additional rounds. But, it seems that he gets tripped up when the question of compensation comes up. Now, it might seem like an obvious faux pas to ask what one makes during an interview, but it comes up often when you're looking to switch into a new industry.
For one, people outside of traditional banking and PE roles tend to vastly overestimate what people within finance make. Regardless, they still know that it's likely a reasonable amount more than what they'll pay you in the role you're interviewing for.
So, how do you handle this question? You could be completely forthcoming and tell them it's "not about the money" for you going forward. But, that might scare them off, even if you're being sincere. Companies don't want to go down a road with someone if they think they'll never be able to afford them.
An alternate approach, and one that I think is superior, is to be as cryptic as possible. Let the firm you're interviewing with show their hand first. If they really insist on a range, then give them a ballpark figure. But, again, you ideally want them to show their cards before you make a move. Otherwise, all the power is in their hands.
And to be clear, this is much less of an issue if you're moving about between banks, PE shops, and hedge funds. But, if you've got a real interest in something different after finance, like a stint at a Fortune 500 company, then you very well might find yourself facing this dilemma.
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Has anyone else faced this question in an interview process? If so, how did you go about handling it? Any tips you'd like to share?
I always hate this question and it has come up in every interview I have ever been on (excluding my first job). Don't want to give a salary thats low and wind up leaving money on the table. Don't want to come in high and price yourself out of a job. Should you inflate your salary? by how much?
I've tried to give a ballpark figure or a range before and they have always come back to me asking for a specific amount. Usually this has been with HR but a few times with MD's I have met with.
Regardless of it you are moving into a totally different role or simply switching shops your first step is to always do your own research and at least know the range of expected salary you can expect peers to make. This is a great starting point as it will not only allow you to tweak your response but will keep you from inflating any number to the point of brow raising.
If you are going for a job where you know the salary will be less and don't want to scare yourself out of an offer then it is very reasonable to say that while the industry salaries aren't comparable you can confidently exress what you know the current range for the position is. This both shows that you know what to expect in an offer, compensation wise, and that you are not expecting something matching your old banking/finance salary.
Now if you are switching firms or moving into a comparable role you can also express a range going from base to all-in comp which should keep prospective offers fairly competitive and leave HR scratching their heads. To help avoid leaving money on the table you can and should express how much you would be projected to make in the coming year if you were to not take the new comparable role. All this being said, you should know what peers make in the role prior to the discussion as to get a sense of how hard to push any figures you pass on to HR/potential superiors.
In the end, screw HR, if the MD/group likes you a few grand won't make or break your chances.
The best thing to do is go to Glassdoor and see what that position is or if its a small firm use salary estimate websites. I hate this question as well, you don't want to over-inflate, but keep something in mind, no self respecting firm will simply opt to match your current salary. If some firm wants you, they will obviously pay more and if they come back with an offer that matches your current salary, well then this is a firm you don't want to work for because chances are they are skimping on compensation.
The WSO Company Database also has thousands of compensation datapoints that can help you in this negotiation.
We expect this # to accelerate rapidly this year for several reasons which we will reveal in a few weeks...
Cliffhanger!
for serious guys this is my #1 tool for the job search. Its like glassdoor but specific to finance. glassdoor is good but it covers too many industries and isnt very organized. actually now that i think about it, glassdoor sucks. the salary ranges are annoying. "this job will pay anywhere from 40k to 190k" thanks glassdoor, that really helped
Tease
Hahaa sweet
Do your research and try to anchor high while stating that what is most important to you is being appreciated and enjoying your work. Best thing would be to have options and play them off against each other. Your first job will haunt you if you don't do this well as all pay raises are based on that initial base
It's definitely a delicate balance. Much of how you approach it will come from your ability to sell yourself. So, if you're going to be taking a pay cut, you need to emphasize what is important to you in your next role and be sincere about it. If you're going to a place where you're afraid of being low-balled, you need to try and do some research ahead of time and do your best to not undercut yourself.
Patrick - the database sounds like it would come in handy, big time. Looking forward to seeing the acceleration.
Do they pull your W-2 if you go into public finance?
Can't comment on that but a friend went to work for a large asset management firm and they requested a copy of his W2
I would at all costs avoid the topic entirely... I would try upselling some form of performance based bonus to show that you can prove you are worth a premium. Something to the effect of starting at the low end of the range then asking for a review after 6 months to evaluate your progress for a raise...
This is all based on them being quality dudes and wanted to pay you fairly
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