How Past Salary Determines Future Pay.

How Past Salary Determines Future Pay.
I am still on the issue of Salary. A jobseeker once asked me: I am planning to accept a job that pays below market because everything else about it is ideal, and I expect to move in less than an year anyway. How much impact will the lower salary have on my future negotiations?

I commend the jobseeker for considering other factors than salary in her job decision. At the same time, the decision to take a lower salary now will require extra work in the future because salary history impacts how you will have to manage your future career:

You will need above-average negotiation skills. Your past salary is a very strong anchor in the minds of prospective employers. I once conducted a search for a leading Kenyan company who finally found their ideal candidate after almost two years of searching. Their prospective hire had been grossly underpaid so to bring him to market, the company would effectively have doubled his salary. Even though the new salary was well within what they intended to pay, in their minds doubling his salary suddenly seemed like a lot, so instead, they offered him slightly below market but still an enormous increase over his former salary.

The candidate eventually negotiated for market value, and everything worked out, but the negotiation took much longer than it should have (and the candidate needed to be a much better negotiator than he needed to be) because of his original salary discrepancy.

You will need to position yourself accurately regardless of salary. Your past salary signals to employers your level, title, and responsibilities. Once you accept a lower salary to start, you then have to convince successive employers that you belong at the level/ title/ responsibility that in their minds commands a higher salary. You will need to position yourself so that future employers don’t have to think, “if she’s so good, why isn’t she paid accordingly?”

You will need to manage your money better. Employers aside, your decision to take a lower salary is something that affects your personal bottom line. You will have less money to save, invest, and cushion you from a bad economy. A strong financial foundation enables you to have confidence and take risks, so a lower salary indirectly may influence your ability and willingness to take future risks.

Is there ever a scenario where taking the lower salary makes sense? Of course, there is. Career planning is a highly individualized process, so exceptions abound. However, rather than asking whether to accept a lower salary, I challenge you to explore as many other creative solutions as possible to get what you want without having to “pay for it” in a lower salary.

All the best as you negotiate for a better salary.