Play Leapfrog, Not Catchup
A candidate's present compensation can hurt their chances if it's too high, but won't help if it's low. So beware of sticking with the same employer over a string of single-digit annual raises which could eventually leave your pay below the market average.
That's one message of a Wall Street Journal column that explains how employers decide what to offer and explores what it takes to get an above-average package in today's tough market.
Although writer Sarah E. Needleman ranges over a number of industries, much of the column's advice can apply to finance.
A few key points:
- If you're underpaid, you'll probably need to job-hop two or more times to catch up with the market average. That's because a candidate's current compensation is the most important determinant of a new employer's offer. And it gets worse: being cheap labor won't even make you a more attractive candidate, according to Chicago recruiter Rick Slayton, president of Slayton Search Partners.
- A 10 percent pay boost is currently the upper end of the premium a candidate should expect for making a lateral move. If jumping to a higher level of responsibility, the premium is 15 - 20 percent.
- Even in today's soft labor market, employers will pay up for people with particular skills that are "in short supply and are critical to a business's bottom line." Those candidates can also obtain perks like flexible schedules and work-from-home arrangements that were once limited to established employees.
- If you have a unique background, "Make it easy for an employer to spot" by highlighting it in your résumé and cover letter.
- Because responsibility and title aren't necessarily synonymous, be sure you know the details of a position's responsibilities when evaluating its pay. "You have to make the job bigger through something you bring to the table in order to justify a larger pay package," David Wise, senior consultant at Hay Group, told Needleman.
- Many employers are more willing to grant a one-time signing bonus than raise their initial salary offer. Sign-on bonus arrangements tied to performance, with a clawback provision if agreed goals aren't met, are increasingly popular.