Contributed by Caroline Ceniza-Levine of SixFigureStart
I am planning to accept a job that pays below market because everything else about it is ideal, and I expect to move in two to three years anyway. How much impact will the lower salary have on my future negotiations?
This was a question from one of our last coaching telecalls. I commend the caller for considering other factors than salary in her job decision (she had really done her research but I didn’t include all the details for space reasons and to preserve her confidentiality). At the same time, salary history carries a lot of weight in future salary negotiations so the decision to take a lower salary now will require extra work in the future:
Better negotiation skills. Your past salary is a very strong anchor in the minds of prospective employers. I once conducted a search for a leading Fortune 500 company who finally found their ideal candidate after almost two years into the search. Their prospective hire had been grossly underpaid so to bring him to market, the company would effectively have doubled his salary. But in their minds that 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.
Better positioning. 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?”
Better personal financial management. 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 bad markets like this one.
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 (women especially!) to explore as many other creative solutions as possible to get what you want without having to “pay for it” in a lower salary.
Caroline Ceniza-Levine is co-founder of SixFigureStart, a career coaching firm comprised exclusively of former Fortune 500 recruiters. Prior to launching SixFigureStart, Caroline recruited for Accenture, Booz Allen, Citigroup, Time Inc, TV Guide and others. Email Caroline at firstname.lastname@example.org and ask how you can attend a free SixFigureStart group coaching teleclass.