Does Your First Salary Matter?

Your starting salary matters, a lot.

Salary negotiation is not an “always” or “never” type of situation as no two scenarios are the same. My approach as a recruiter was to have an honest dialogue and to pre-close the candidate. However, usually you can, and almost always should, negotiate that first offer.

Here’s why:

1.) Employers typically give raises annually from your start date, or on a designated period for the entire company. Sometimes, depending on their salary cycle, you may not be eligible until the next year, so you could wait 12-18 months for a raise. Often, too, your first year's increase is pro-rated based on the amount you worked.

2.) Your current salary is the basis for your raise (if you get one)! If you start at $35,000 and exceed performance standards, you will typically receive a 3-5% raise. At that pace, it would take over three years of being a top performer to break $40,000. Remember, the cost of living tends to go up about 2-3% a year. At best, you will gain a little over your expenses!

3.) Continuing with this example, let's say after three years, your manager gives you a promotion to a new title. Now it's your big break right? At least a $10-20K increase? Probably not, because now you have no experience in that role. Depending on the compensation philosophy and other factors, human resources may approve an addition to the bottom of the new salary grade. But other times you will have you prove you can do the job for six months, maybe even a year! Rarely do you see that bump in your check right away.

4.) Salaries and raises, as well as variable pay, are based on budgets made in the previous year. While you might be planning on how to spend that colossal raise you deserve, managers don’t typically include that money in their budget! They usually budget 3-5%, figuring that they can give a poor performer nothing and top performers a little more. They are not anticipating that you are going to be a game-changer...and they are not planning to pay you for it right away if by some chance you are!

5.) Often it is the case that finding a job with a different company is the best way to get your pay up to market.

However, potential employers often ask for your current salary on the application. Sometimes they verify it or ask you to provide proof. Not that you would exaggerate this number of course! Lying on an application is a defensible reason to terminate the hiring process or offer. At some point, it became the norm to give up to a 10% increase in base salary to entice passive candidates. You can see that if you start out underpaid, that can impact you your whole career. Note: In some states, asking for current compensation is now illegal.

6.) When interviewing for a new job, you will be on the defensive to explain why you took a low salary, why your employer doesn't feel you deserve a raise, and why you didn't (or haven't) negotiated. These can be tricky questions to answer. Managers tend to believe that a candidate is paid less because he/she is not as talented or skilled. They may shy away from an offer or will want to throw out a lower number.

If you are underpaid, here’s a few things you can do:

  • Raise your hand for projects and committees that give you an opportunity to showcase your talents and position you for the next step.

  • Look for training, seminars, certifications, etc. to raise your skill level. Talk to your manager or human resources to see if the company will pay for them. It doesn't hurt to ask.

  • Document all of your accomplishments, no matter how insignificant they may seem. Sometimes we overlook small tasks, which when done well and consistently are pretty big feats.

  • Join cross-functional teams and use your networking skills. Companies can be very siloed, but to stand out, you need people talking about you and your work from different areas of the company.

  • Set goals, even if your department doesn't. These justify paying you more and avoid getting your performance categorized as "average."

  • Give yourself a performance review, even if your manager skips it. Track your progress monthly and then when your manager is strapped for time and tells you your awesome, give him/her the evidence to prove it!

  • Use social media to document and to celebrate. It's okay to pat yourself on the back. Put your new certification on LinkedIn, announce meeting a tight deadline. Recruiters use search terms for these things. Be ultra professional and be very careful not to divulge confidential information about the company or others.

  • Immediately become a passive candidate. I warn hiring managers about this when they get a "deal" on an entry-level (or any level) candidate: They will take this offer, but they won't stop their job search. Is that what you want? Trust is a two-way street. They were not sure about you and gave you a low offer; you have no reason to feel confident they are going to come through for you!

  • Keep an updated resume & LinkedIn profile. Always! If you are not sure how to create a personal brand and optimize your resume and profile, find a professional to help.

  • Get to know the human resources department. Ask about your salary grade, the next salary grade, career paths to get there, etc. Show your interest in professional growth and finding ways that your skills and talents can best benefit the company. Don't make it only about you or solely regarding money!

The decisions made early in your career can limit your potential or propel you forward. Investing in a career coach can help you accelerate at any stage, but is especially critical as you begin your employment journey!

Up next: Why finding your first job can be difficult, even in a "strong" economy.

About the Author

Amy Cooney is a Recruiter, Career Coach, Talent Consultant, and CEO of AC Talent Consulting. With over 10 years of recruiting experience, she knows talent. Because Amy believes in people first, she listens to both clients and candidates to become a trusted partner. As a Career Coach, she helps people of all levels accelerate their careers through the Accelerate You! custom coaching program, resume writing, and group sessions. Amy also provides consulting and training to corporate talent acquisition departments in the areas of recruitment strategy, process improvement and operations, and employer branding. She is available for public speaking, seminars and facilitating career-related events.

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