Candidates Adapt to Shrinking Pay

Downward pressure on compensation is adding a new wrinkle in the interview process, both before and after a candidate receives an offer.

A Wall Street journal story early in December illustrated how several candidates handled the dilemma between accepting a lowball offer or taking the risk of remaining unemployed still longer. But finance parts company with other industries in that individual production drives compensation for most front-office workers, reflected in a usually large, discretionary year-end bonus.

In today's employer-driven market, the most visible change is the death of the bonus guarantee. "People are willing to work for less because the idea of a guarantee has largely gone away," says Richard Lipstein, managing director at Boyden Global Executive Search. "Now you basically eat what you kill."

Earlier in 2008, Lipstein says, he had trouble getting candidates to accept guarantees for amounts less than they were paid last year. Now that resistance is mostly gone, he says. Because banks are taking in much less revenue than in the recent past, candidates are recognizing that near-term compensation won't be at the same levels as before.

A growing number of candidates are applying for jobs that pay a lower base salary than their previous job. For instance, many of today's openings for bankers are in boutique firms, where base generally is less than at bulge brackets.

Don't Lowball Yourself

But touting yourself as a bargain based on low compensation needs remains taboo, headhunters warn.

"If someone advertises they'll take a job for less, they're ultimately weakening their position by expressing weakness upfront," observes Jay Gaines, chief executive of Jay Gaines & Co. It's okay for a candidate to signal "openness," Gaines says, but not to show insecurity by bringing up compensation early in the process.

He says a candidate who places pricing on the table is taking a risk, whether their requirements are relatively high or relatively low. Stressing a desire for "the right opportunity" regardless of compensation maximizes the potential to get the job, but takes away some negotiating leverage and might signal weakness. At the opposite extreme, a candidate with high requirements will turn off some hiring managers.

Lipstein agrees that employers won't want to hire a candidate who shows "desperation," by being willing to earn significantly less than they have in the past, or less than their competition. "That could call into question the confidence they have in their abilities," he explains.