Prospective employer recommends a lower initial salary so that expectations are not too high

Question

When interviewing for a consultancy job, the recruiting manager at the company asked me about my expectations concerning the salary. Since I did not want to be lowballed I gave a fairly large salary range around the mean value for people with my qualifications in my city. Later on in the process, after discussing benefits, we started to talk about the initial salary again. The employer made a point that if I started with a high initial salary, I would also be expected to deliver on that salary level. If I started on a lower level, the salary could increase more over time than if I started on a higher level.

If I start on a lower level, I will lose my negotiating position later. But it also seems a bit odd that the employer assumes my future performance in the job depends on the salary I get, although it might be reasonable. In such situations, I assumed that the employer and prospective employee negotiate for a single performance level.

How should I interpret their argument?

EDIT:

1. I said at the beginning of the process the salary range and thought that they would end the process at that time if the range were unrealistic for them. After stating the salary range, I have had two more interviews.

Answer 1

Their argument is bulls**t, to put it bluntly. They're just trying to pay you less money.

Up to you whether you stick to your guns and try and get the higher salary or regard this as a big enough red flag that you don't want to work for them.

Answer 2

That is perhaps the most brazen lie I've ever heard.

It's VERY UNLIKELY that you will see your pay rise significantly 'over time' while working in the same role - if you look back amongst the history here, you will see, again and again, people asking about how to get more than 1-5% annual increases, how to get to the value they're actually worth when underpaid, and the answer is always to leave and job hop.

This guy is lying to you to get you to back down to a smaller number.... Not only should you say no, but you should ask yourself why they thought they could get away with this... I would personally recommend recording your interviews, listen back to them, and think... Did I sound confident? What did I do well with / miss in the interview? etc. I can only imagine, someone pulling out a gold nugget like this must have thought you were naive or wouldn't stick up for yourself or something.

You're going to be expected to 'deliver' on any salary level you take for this position. The job and it's responsibilities is not going to change based on the pay! You're interviewing for the same job regardless!

For reference... when negotiating salary... you will almost always have to give them a number (I'd recommend one slightly higher than the number you want), and they will often push back on it a bit. Personally, with 10 years of experience, I know exactly what the budget is for the roles I take on, and a trend I've noticed is that specifically the recruiters I get calls from that are in India. They always undercut by $5/hr on the salary. It's magic, whatever number you throw out, they will say can you do [x-5].

I say this to illustrate... you might have someone say "ah ok", they write down your salary requirement, and forward it off... you might have someone try to back you down a bit on the salary expectation... I once was lucky enough to have someone say I was too low, and that the company had a minimum salary band for a role and that they were going higher than I'd asked.

You never know... so pick a number you think you can justify, and don't back down... btw like the other guy said if you give them a range, they will assume bottom number of that range is the number you gave

Answer 3

Been there, done that.

When being hired for an expat position they tried some bullshit on me "paying less now, being evaluated for the first 6 months". I did not accept it, and was hired nonetheless.

Later on found through the grapevine, they did it almost to anybody there, and those who fell for it, never saw a salary increase ever.

Shady negotiation tactics...red flag indeed. They seem to be penny pinchers who only worry about their rates. They are also are scumbags who already are telling you they never raise anybody...don't fall for that.

(in my case, they were very direct and a very demeaning talk: "if we pay all what you are asking, you are taking from us the opportunity for raising you" ...yeah, it is a shame pal )

Answer 4

Their argument might make some sense:

• interviewing for a consultancy job
• The employer made a point that if I started with a high initial salary, I would also be expected to deliver on that salary level

It appears you are interviewing for a job where they will be selling your services to customers. In order to pay for your salary, vacation, sick, other benefits, overhead, and profit; they need to be able to charge about twice your salary. It is possible that they know the customers they are dealing with and they know at the higher salary that you have to perform at a senior level instead of a mid-level; or a mid-level instead of a junior level. If they can't justify your rates then they will find it hard to place you on a contract, or keep you on a contract.

Starting lower, may give them more flexibility. Then they can promote you in a few years.

In these types of jobs it is possible to demand a higher price then their base of contracts can support.

It depends on if you can trust them to promote you in a few years.

Note: "Since I did not want to be lowballed I gave a fairly large salary range around the mean value for people with my qualifications in my city."

In reality you didn't give them a range. You gave them a single number. They always look at the lowest number on the range, and ignore the top of the range.

Answer 5

I work as a manager in a larger company and the quote could have easily been from me, though not the conclusion.

It is true that in our company, the average person receives a relatively mediocre yearly increase. We do try to handle "hard" cases sensibly to avoid fluctuations which are solely based on severely underpaid employees, but the fact of the matter is that it is incredibly rare to receive a 20+% increase or more in a company. Also, we do have public target salaries for comparable levels of employees, and the actual salaries are roughly on a Gauss curve around those targets (both for historic reasons, and because we try to reduce outliers). This definitely means that someone who is good but not so much that he can progress to the next level on the job scale, and who already is in one of the upper quantiles of the curve, has a good chance to receive relatively little increases in the future.

This is, as far as I can tell, the same for many other companies of the same size; we do have occasional problems with people being underpaid for whatever reason, or getting huge offers from other companies which we cannot or do not want to match, but overall it seems to be fair and better than just leaving it up to every employee duking it out with their boss all the time.

That said. It makes zero sense for an employee to themselves go in with a low salary, just to get a high increase. That's ludicrous. Imagine these scenarios, assuming that the lower person starts with 50.000 and eventually develops to 62.000, while the other starts out with 62.000 and never gets any raise at all:

• 50.000 + 53.000 + 56.000 + 59.000 + 62.000 = 280.000 over 5 years
• 62.000 + 62.000 + 62.000 + 62.000 + 62.000 = 310.000 over 5 years

Obviously it's psychologically nice to get a yearly increase, but it is objectively much nicer to receive an overall 10% larger salary over a span of a few years. Or to receive 24% more in the first year.

We do sometimes send applicants away if they ask for too high of a salary, even without making a counter-offer, if it is just abundantly clear that their opinion of themselves does not match with ours, but that's a different story.

Answer 6

The magic word here is the "bill rate"!

Chances are high that this agency has a few set numbers (tiers) for bill rates with the client company per each skill level and job title.

If you want more money, it may be challenging for the agency to get the client to bump you to a higher-paid tier, which would mean those funds would have to come out of whatever the profit margin is for the agency instead. The recruiter knows this. The account manager (who deals with the client) also knows this.

It's easier to feed you a story to pacify your concerns and go on the hopes that you won't bother them again about it in the future once you're making some money. But in my experience, it's going to be more challenging for you to get your rate bumped up later as a contract employee.

Don't settle for empty promises. If they want to make such a promise, ask for it in writing and observe how much stuttering the recruiter does to tell you that it's not going to happen. That said, get your desired rate up front!

Answer 7

As Philip Kendall's answer points out it's likely a specious argument aimed to save money by paying you a lower value for a period of time.

The employer made a point that if I started with a high initial salary, I would also be expected to deliver on that salary level. If I started on a lower level, the salary could increase more over time than if I started on a higher level.

Easily enough responded to by saying that you're confident of delivering at higher level X.

If I start on a lower level, I will lose my negotiating position later. But it also seems a bit odd that the employer assumes my future performance in the job depends on the salary I get, although it might be reasonable. In such situations, I assumed that the employer and prospective employee negotiate for a single performance level.

It can be sort of true - some people will "perform" at a level commensurate to their current wage. And there's nothing wrong with that in the slightest, indeed unless you're in a poor negotiating position for starting salary (such as an entry-level or first job) and intend to pursue a rapid series of raises then this is pretty much the sensible approach, perhaps with a certain level of exceeding expectations in order to leverage for your next salary negotiation.

I've known people who have smartly chosen to move to lower paid jobs because they didn't need the money and as a result didn't want to take on the stress and hassle that comes with the higher paid roles. But this doesn't really apply where your negotiating the range for a specific position (as you are) - the duties and workload they're talking about aren't changing, just how much they are going to pay you for doing it. So negotiating for what you think you're worth in that role is still the best plan. Remember; if you're getting paid 50k but doing a 100k level of work then you're giving the company that extra 50k worth of value for nothing, which is pretty sweet for them but not so much for you.

To put it in to some numbers.. say you want 55k and they say take 50k now and you can grow it later. Even if they upped your wage by 10k after the first year (to 60k) it'll be another 7 months at the higher wage before you over take the total earnings of the 55k start even if you don't get any increases to it!

Answer 8

This is a low paying company and I would guess that they also have a relatively high turnover in staff. Walk away.

If I started on a lower level, the salary could increase more over time than if I started on a higher level.

Their objective (IMO) is to get you to sign on for low pay wth a distant promise of more later. You'll find they actually make low increases as time progresses (if any) and will happily dump you down the road for someone cheaper.

They value paying you less more than getting your talent.

I said at the beginning of the process the salary range and thought that they would end the process at that time if the range were unrealistic for them. After stating the salary range, I have had two more interviews.

You are getting more interviews because you did not reject the low balling offer. They are likely practiced at spotting potential staffers who will accept their low offers and concentrate on selling them the dream of a high future salary.

It's like any bait and switch con. First you're made feel your initial salary range is on the table. Then you're encouraged to "Invest" in the fantasy of a low initial payout but magic increases later. The objective of each interview is to get you more and more involved in the fantasy and start believing this nonsense.

They probably are interested in your ability and talent. They're just not wiling to pay for it.

Someone else will.

Walk away.

Answer 9

How does the employer handle raises? Do they have clear levels of performance (KPIs) assigned to different pay rates and so virtual or real promotions to bump up a level?

If that is the case, this could be a fair warning that if you are hired at e.g. level 5 you will be evaluated against the performance requirements of a level 5. Look at those criteria and see whether you are comfortable with the output expected. I was hired to a position that had about 12 levels available. I would have likely failed probation at the top levels and if I did keep the job would have been constantly flagged as under performing.

There is no financial benefit to you in taking a lower pay now so you can get more pay rises in future (although you might feel better about it). You end up with less money in the end. Understanding you are at the top of a pay scale is useful information to evaluate so you don't plan for pay rises that won't eventuate.

Answer 10

It does depend how badly you want the job, and how badly they want you. As mentioned in other answers, it's a negotiating tactic.

There's an obvious response to this though.

If you think I might not be suited for this role, I'd accept $(lower) for a 3-month probation period. At the end of my probation period, you can either pay me $(higher) or let me go. This doesn't count as a raise, because it's you putting me on the correct salary for my role, so normal annual raises will continue from $(higher). We'll write all that into the contract.

If you really want this job and accepting a lower initial rate would get your foot in the door, then that's a perfectly reasonable tactic.

The crucial parts though are the last two sentences, which prevent you getting stiffed over this. Your increased rate must be a contractual obligation on the company, not something they can give you if they "think you deserve it". If they don't think you deserve it - well, that's what a probation period is for, and then you find another job and no harm done on both sides. And the other part is making sure that you don't get passed over for raises in the future because "hey, you got that raise to $(higher) last year, you should be happy with that".

Some companies are honest and respectful to their employees when it comes to raises. Some aren't though. The problem you have here is that you don't know which one you're joining, but the fact they're lowballing you before you join suggests a risk they might be the latter. A solid contract protects you against that.