Salary Negotiation Tactics: When to Reveal and When to Withhold
Translated & summarized from N12 by baba
Job candidates are often disadvantaged in salary negotiations by being asked for their expectations before the employer reveals the role's budget, potentially anchoring the negotiation to a lower figure. European directives aim to improve transparency by giving candidates access to salary ranges and prohibiting inquiries into salary history. While research on pay transparency shows mixed results, the article suggests that informed preparation and early clarification of salary ranges are crucial for more equitable negotiations.
The story in 6 lines · by baba
- Candidates can be disadvantaged by revealing salary expectations before knowing the job's budget.
- The "anchoring effect" can cause candidates to accept less than their worth in salary negotiations.
- Asking about current salary can perpetuate historical pay disparities, research suggests.
- Europe's new directive grants candidates the right to know salary ranges and prohibits salary history inquiries.
- Studies on pay transparency show varied impacts, with some increasing salaries and others potentially decreasing them.
- Informed preparation and early clarification of salary ranges are key for fair negotiations.
The article discusses the common practice in job interviews where candidates are asked about their salary expectations early in the process, often before the employer reveals the job's budget. This can put candidates at a disadvantage, as the first number mentioned can anchor the negotiation, potentially leading them to accept less than they are worth. The "anchoring effect" suggests that people tend to rely on the first piece of information they receive when making decisions. For example, if a candidate earning NIS 12,000 states they would accept NIS 14,000 for a new role budgeted at NIS 16,000-18,000, they may inadvertently set a low anchor, making a higher offer seem less significant.
Furthermore, employers sometimes ask about a candidate's current salary, which can perpetuate historical pay disparities. Research indicates that revealing a higher previous salary can lead to higher job offers, while withholding salary information can sometimes lead recruiters to draw negative conclusions about a candidate's quality or bargaining power. However, a blanket recommendation to never disclose salary is not always effective.
In response to these issues, Europe has introduced a directive on pay transparency, adopted in 2023, which grants candidates the right to information about the starting salary or salary range for a position. This directive also prohibits employers from inquiring about a candidate's salary history. While these rules are not yet in effect in Israel, they offer an alternative model for salary discussions, shifting the focus to informed and transparent negotiation based on the role's budget rather than past earnings.
Studies on the impact of pay transparency have yielded mixed results. Some research suggests that requiring salary information in job postings can increase advertised salaries by 1.3%-3.6%. Conversely, other studies indicate that laws protecting employees' right to discuss their salaries with colleagues might lead to a decrease in wages, as employers may become more hesitant to grant raises to avoid broader demands. The article emphasizes that the effectiveness of transparency depends on what information is disclosed, to whom, and at what stage of the negotiation.
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