The dreaded question. It lingers at the back of every job interview, oftentimes dreaded by hiring manager and candidate alike. Ominously clinging to the whole proceedings until it can no longer be avoided… the question of current compensation.
“How much are you currently making?”
As a candidate, you hesitate to answer. Will disclosing your current compensation tie you to your old salary, regardless of what you’re actually worth? But will declining to answer make you seem confrontational or troublesome?
As an employer, you hesitate to ask. Will asking the question offend the potential candidate you have real interest in? If they do respond, what happens if they’re making more right now than you’re currently willing to offer?
There’s also the legal question… in some states, it isn’t even legal to ask about current compensation!
With all of this in mind, it raises the question: is there any value in discussing salary history?
Why Ban The Salary History Question?
In at least 9 cities and states across the country, it’s actually illegal to ask an employee about their current salary in a job interview. Why is the question banned?
It comes down to an effort to reduce the gender pay gap. Studies have concluded that potential employers react in a negative way when women negotiate for higher pay. The fear is, that by disclosing lower than average salary, low pay may follow professional women around from position to position, regardless of merit.
So the solution: make asking about salary history illegal. After all, if hiring managers have no record of current compensation, they can’t justify paying a female employee less than they are worth.
And, for positions that are primarily operational in nature, this makes a lot of sense. For positions where the company can do research and determine the market value of a particular role, there is a standard by which both parties can negotiate. The only reason to know a candidate’s current compensation in this case is to see if they can get away with paying less than that benchmark salary and improve the company’s bottom line.
With sales, however, the situation is a little different.
Sales Hiring Managers: Why Ask About Current Compensation?
With the bans in limited effect, and growing in popularity, it seems that raising the salary history question may be more trouble than it’s worth.
However, when it comes to sales, the question of compensation isn’t just a matter of bottom line. Asking about current compensation can give you some real insights into whether a potential candidate is a good fit for your organization.
Here’s what we mean:
In sales, salary is not a cut-and-dried number. There is commission involved, and bonuses, and the way that overall compensation is structured can vary wildly from position to position. And a candidate’s previous compensation isn’t just a way for you to shore up your bottom line… it can be a very real indicator of performance.
Let’s say the candidate discloses their previous salary as $40k. If that number was based off a $32k base salary and a limited bonus structure that was maxxed out, that paints the candidate in a much different light than if that income was earned off 100% uncapped commission, where the average performer made $55k per year.
Asking about current compensation also informs you about what conditions the candidate is comfortable working with. Does the candidate with the high base salary and limited bonus structure feel comfortable, or held back? Is the candidate currently earning 100% commission hungry for more opportunity, or feeling like they have their back against the wall?
Using current compensation as a means of understanding a candidate’s ability, performance, and motivations can go a long way to determining whether they are the best fit for your organization, and help you present your company in the best possible way to top talent!
Sales Job Candidates: Why Discuss Your Current Compensation?
There are some benefits to discussing current compensation from the hiring manager side, but what if you’re a candidate in a sales interview? Is there any benefit in discussing current compensation? Or is it just another way to botch an interview?
There is a reason you’re looking for a new job. You’re looking for better pay, or a better fit with the company culture, or to work in an industry that you are passionate about. You’re not just being interviewed… you’re interviewing a company to determine whether their opportunity is a good fit for your professional goals.
As part of this, you’ll want to know how a potential compensation plan is structured. What is the earning potential? Is the commission capped or uncapped, what do bonus structures look like, etc.
By talking about your previous compensation, you can communicate a few things to the hiring manager about why you’re the best candidate for the job.
If you made less than the new compensation plan can offer you, you can show that you are hungry for growth and excited for the new opportunity to perform well.
If you made more than they are offering, you can show that you are humble, that you care about company values, and that you care about more than just money. You can show real interest in the organization beyond your potential paycheck.
If your compensation plan was very similar to what the company is offering, you can communicate that you are familiar with their model and could be a good fit to perform right away.
By wisely discussing your current compensation, you can make yourself an attractive candidate in an interview, and prove that you have what it takes to succeed with their company!
How To Discuss Compensation When You Can’t Ask About Current Salary
Discussing salary history can be useful to determine performance and fit in a sales interview. It can also be misused as a tool to hold people back from earning their true potential, and is becoming frowned upon or even illegal to ask about in interviews.
So how do we talk about current compensation… without actually talking about current compensation?
First off, there are three important things to address when talking about compensation, from a hiring manager’s perspective:
- How much the candidate makes now.
- How much the candidate is looking to make.
- How the candidate would structure their ideal compensation plan.
Note than, out of those questions, only the first one deals directly with the question of salary history. The other two are fair game to ask, and can give you great insight as to the candidate’s confidence, philosophy, and motivation.
The first question is asked mostly to determine track record. After all, salespeople know how to talk a good game and sell themselves- but you can’t fake results. You need to ask about track record.
Luckily, their salary number is only one indicator of previous performance. There’s nothing wrong with using other barometers of success to determine how likely the candidate is to be a good fit for the company. If you can’t ask the question about how much they currently make, get creative and ask about other key performance indicators!
As a potential candidate, don’t be afraid to talk about your previous compensation if you feel comfortable using it as a means of illustrating how well you’d fit in. If you are uncomfortable talking about the specific number you make, that’s okay too! You can talk about sales performance in other capacities, like how well you ranked in your team, how often you maxxed out your bonus structure, or your increased trends of performance and communicate your abilities just as efficiently.
So in your next sales interview, don’t be afraid of the salary question! Realize the opportunity to determine whether this could be a good partnership and learn to discuss compensation openly, honestly, and fairly as possible.
Whether you’re a candidate looking for a great new opportunity or a hiring firm looking for top sales performers, EAM Staffing can help. We partner with companies and top talent every step of the way and build benchmark sales teams by determining the best fit for both parties. Learn more about our recruiting process!