There are few things in life that are as awful as losing a job. In addition to the loss of financial security and the independence that comes with having a job, there is a tremendous amount of stress that comes with the loss.
When a new job is finally attainable, some individuals are surprised to learn that their next employer cannot or simply does not want to pay as much as their former employer. In this circumstance, job seekers are forced to make a sacrifice — or push on without employment.
Which is the better path to take?
“It depends on the type of industry that you are in and when you got that job,” David Couper, a career coach and author of Outsiders on the Inside: How to Create a Winning Career…Even When You Don’t Fit In!, told StreetID. “There may be someone who used to be a VP and is being asked to be a manager, but really they’re being asked to do a director’s job. Then it’s kind of, are you going to hold out for that money? Is it realistic?”
Instead of taking a straight pay cut, Couper sometimes recommends that senior employees choose to consult as an alternative.
For example, if an individual made $1.1 million at his former job and is being offered $900,000 at a new company, Couper suggests that he asks to consult for three months first.
“The consulting gig could be less money, but you kind of get to know the company and could still be looking for something,” Couper explained. “Consulting work actually looks okay on a resume. It used to look terrible. Now it looks okay. If you take a job at a lower figure, it is hard to get back up to that higher number because you’re stuck with how the corporation works and its HR policy. You’re going to have to go into completely new grades to get the money, which is hard.”
If you go somewhere else, employers may want to know what you are making, Couper warned. And if you are making less, why should they give you more?
However, if a job seeker is marketable and the economy is doing well for his or her particular sector, “You might want to hold out,” Couper added. “Or say, ‘Okay, I’ll come in for three months, and if I do these things for you, I want you to raise it to this amount, and I want it in writing.’ Startups will do that, and smaller companies will do that. Larger companies can’t always do that.”
How to Answer The Money Question
In addition to the immediate challenges involved in taking a pay cut, the long-term consequence is that it may be difficult or impossible to regain the desired salary.
Part of the problem comes from employers who ask how much money a job seeker is currently being paid. If he or she took a pay cut before, the employer may use that as an excuse to lower its offer.
Thus, Couper recommends that job seekers avoid the question altogether “because you’re in a much better negotiation place if they love you and they want to give you the job.”
“If you’re just talking to somebody, and they say, ‘Well what did you previously make before?’ then suddenly, if you made $200,000 now and they’re looking to pay $150,000, they’re probably just gonna stop talking to you,” said Couper. “It’s better to be able to open it up.”
While Couper said that it is best to avoid the question, he recommends that job seekers have a range in mind, just in case. “Not to say, ‘I used to make this,’ but to say, ‘I’m willing to be working in this kind of range.’ And make sure that the range is within what the job is offering.”
“The range is the better thing to say than the number,” said Couper. “You kind of know where you’re going if they say $50,000 to $75,000, you know that $60,000 is where they probably want to be. But if they say $60,000, you don’t know what the wiggle room is.”
Couper said that he gets “suspicious” when employers won’t say how much they are willing to pay. “You want to be clear about what it’s likely to be even if they haven’t told you,” he said. “Hopefully, and I tell everybody, the more networking you do and the more you know about a company, then you’re [more likely to know] what you’re gonna be paid. That stuff you have to really network to find out.
“If you have no clue and then you wait until you’re offered the job, you may have wasted a bunch of time. But I think it’s better to have gone through the process, and they really like you, and they want to pay $60,000 and you really wanted $70,000, even though they may not want to pay you $60,000 they may go to $65,000. And after six months [they may] go higher — if they really like you, if they really think you’re unique. If you’re really different and you have things that they want, people may offer more.”
Couper said that if an employer “really wants to know what you used to make, then you have to have really good reasons why you would take less.” For example, if it is a new industry (one the job seeker had never worked in before). Or maybe the job seeker had worked in the industry before but he or she lacks some of the necessary experience.
“It’s hard to say that,” Couper warned. “It doesn’t fly very well.”
Get Hired Now
These days, job seekers have a million options, but we know where they should turn: StreetID. We built StreetID (a financial career matchmaking website) from the ground up to accommodate Wall Street’s growing community of financial professionals. In good times and in bad, current job seekers and those looking to move on in the future can turn to StreetID and sign up for a free account and make a direct connection with relevant candidates and employers.