Why do recruiters ask how much is your current pay?

Question

I have been through 2 recruitment processes. The first recruiter said "May I know what your current pay is, for my purpose?" during a interview over lunch. He told me that would be my current pay too. I didn't negotiate since I needed a job badly that didn't suck.

He later called and said my pay is a figure 60% more than that unannounced.

Fast forward a year, I was again looking for another job and this time after a LOT of interviews, the recruiter asked for my current pay. He then went on to say "this wasn't a function in deciding my future pay". I feel like I should have with held the figure and generally just made it clear that that figure is unavailable to them.

I feel like I shot myself in the foot there. I think asking for pay does indicate that they will just give like a 30% raise even though they are able to go as much as 100% higher.

Why DO recruiters ask for pay?

Answer 1

They do that for several reasons:

• Market research. Knowing what a certain position pays, across a large number of people that hold that title gives them an idea of what the realistic range of salaries for that position is. It gives them an idea of when either an employer or candidate have unrealistic expectations.

• It also lets them know what you are likely to settle for. This gives them more information when bargaining with a client. If they know that you are currently on a lower wage than the employer is willing to offer, they first know that you will of course be happy to get more, but they can also make the deal sweeter for the employer by telling them that you will indeed settle for less.

Note that this last point is about them being able to "close the deal" as they normally only get commission on those they place and that it is in their interest to get you a higher wage, as their commission tends to be based on that figure.

Answer 2

I feel like I shot myself in the foot there. I think asking for pay does indicate that they will just give like a 30% raise even though they are able to go as much as 100% higher.

The number one rule of negotiation is never give a number first. You can find dozens of resources on this topic on the internet. One is this lengthy article. I suggest reading this if you have a chance.

Asking for current pay means that you give the other company a perfect window of what is likely the minimum you are interested in accepting is.

If you give them a number:

• Say you currently make $50k and tell them this, they know they can probably get you interested for $50k + $5k or some similar range, and this does not necessarily reflect your actual market value. It gives companies a safe zone for the first offer - they can easily think, "well, he is currently working for $50k, so we can assume any offer above that will not be insulting."
• You effectively make the first offer by inadvertently stating your expectations

If you don't give a number:

• They have no idea what they should offer initially and are almost assuredly going to give a higher offer, because you haven't told them the ballpark for what you would look to accept.
• The company has a much higher chance of either offering market value or a higher figure to ensure you are interested

Keep in mind much of this is only applicable if you can impress your interviewers. You want them to leave the interview and think "we really want this person, how can we make it happen."

Recruiters however want you to get hired - it is their full-time job, after all!

Knowing your current salary gives them a ton of information to help get you hired as current salary information allows them to find jobs which you will be likely to take, regardless of whether or not it is the pay you are currently capable of getting.

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Some ways to respond to "what is your salary/expectations" questions

• “I’m more concerned at the moment with talking to you about discovering whether we’re a mutual fit. If we’re a great fit, then I can be flexible on the numbers with you and you can be flexible on the numbers with me. If we’re not a great fit, then the numbers are ultimately irrelevant, because your company only hires A players and I only work at roles I would be an A player at.”
• “It’s so important to me that this is a good mutual fit for us. Let’s talk about why I’m a great fit for this position: I know you’re concerned about $FILL_IN_THE_BLANK. In addition to my previous successes doing it, I have some great ideas for what I’d do about that if I was working at your company. Would you like to drill into those or is there another job area you’re more concerned about to start with?”

Note: this entire answer applies equally to "what are your salary expectations?" and quotes are taken from linked article

Answer 3

My response to that question is:

I have a confidentiality agreement with my employer that I will not discuss my pay rate. I am sure you can respect that. However what I am looking for going forward for the perfect position is $XXXK/year with these benefits: ...

This leaves you with room to negotiate up for any position that is not exactly what you are looking for and sets the minimum bar for them to come to you. When you set that bar do not accept anything less.

If the recruiter is with a third party company they generally get commission based on your placed rate of pay. If the recruiter works for the company you are going to work for then the recruiter often gets bonuses for bringing you in for less. It is important to understand the role of the recruiter to the company you will be working with. In some cases that recruiter is in your camp. In others they are just another HR type with a specialized role.

Answer 4

It is always humorous to see answers like "they want you to get the lowest salary you'll settle for" etc. when people talk about Recruiters. I am a Recruiter, and it is always in my best interest to place a candidate in a position making AS MUCH as the client will pay. Why? Because I am commissioned based on the candidate's first year's salary. As well, contrary to popular belief, this isn't 'taken out' of the incumbent's pay - rather, it is a 'finder's fee' charged to the client for providing the candidate. For example, I recently placed a professional in a position where their first year's salary was 120k...the initial range given to me by the client was 90-110k based on experience. However, because I knew that the candidate was making 100k plus a bonus in their current role (because I asked them and they told me), I could use that as leverage to push the client for a higher salary...and it worked. At the end of the day, the job seeker got a higher salary, and I got a higher commission.

Also, many companies will verify past compensation by contacting previous employers, because they base their offers on past compensation. Therefore, it is a question I need to ask in order to make sure I'm not wasting the client's time.

Bottom line: the more a job seeker gets paid, the more I get paid. The amount of misinformation out there regarding working with recruiters baffles me!

Answer 5

They ask because they know you'll walk away if you're currently making $150k and they tell you it pays up to $90k. They also don't want to offer you $150k if you are making $65k. I usually just say "this is what i'm after: $xxx/year". If they push, then I'll just say I'm making close to that. Really, it's none of their business.

Answer 6

"I only deal with principals" is the first thing you should say after picking up the phone and finding out its a recruiter. While this doesn't answer the OP's question it is the best piece of advice on this page.

Now to answer the OP's question... don't answer a question like "what is your current/past salary"... simply state what you want today. They don't need to know and you want to find out if they will pay that or not. If pressed smile and say "that's what I'm after based on my experience and qualifications, no less". NEVER EVER give in under pressure. Go into an interview knowing what you are worth and what you are after. Stick with it! Recruiters are constantly trying to get you to accept less because they make the difference.

How to Negotiate

You should always know what a position should pay and try to push the salary upwards (within reason). Start with what you would really like to get paid (eg. the high end). You deserve it since you are the one that is going to be doing the work. You went to school to get the qualifications and you will be working long hours. Not the recruiter. So it pays to know what you are worth and confidently stick to your guns. Also, don't accept a salary or hourly rate until you have met the manager you will be working for. The recruiter will try to nail down a low hourly rate in their favour before you meet the manager... this is suicide. You need to wait until you are in a position where the manager WANTS you. When the manager WANTS you, he tells the recruiter he/she WANTS YOU. When you are WANTED your negotiating power is at a MAXIMUM level. The recruiter also wants to close the deal to make commission... this is where you strike and push for as much as possible. Don't be afraid to make the recruiter wait if you think they are holding out. Tell them you will "think about it and call them back". Recruiters like negotiating face to face because its easier to get someone to accept. You should always tell them "you want to think about the offer and get back to them in a day or two". This gives you control again. It also makes the recruiter think you might have other offers. Call them back after a couple days and tell them the offer is too low and you want X$, then stop and let them deal with that. If they say no. Just say you appreciate having met with them and hang up.

By sticking to you guns you will gain more respect and get paid what you are worth. There are thousands of recruiters out there because the potential to make money is enormous for recruiters if they simply low ball everyone. Sticking to your guns ensures money goes into the pockets of the person that deserves it. That's you!

Rapid Fire Questioning

Recruiters use the rapid fire questioning method to try to trip you up. Be prepared. Think about each question and answer intelligently and confidently. You are a professional after all. If you give an answer like 70k-90k and they follow up quickly with "What is the lowest salary you will accept".. just say "I just gave it to you as part of my range". Done. You told them your range was 70k-90k.. that means the minimum you'll accept is 70k. They know that. They are just purposely trying to trick you into giving a lower figure. Get it.

Answer 7

Two reasons:

1) So they can figure out what to pay you.

2) To help them estimate how 'valuable' you are based on your pay. Generally more skilled and experienced workers are at higher pay levels so your current pay level basically becomes a (poor) proxy for how good/skilled/valuable you are.

Answer 8

Never give them a salary number unless you explain the entire compensation package. Giving a base salary only for private industry is a mistake. Someone being paid $100k a year can actually be paid $150k-$200k a year. It is better to say, "I am looking for $200k a year". Then give the details. This all assumes you are already at that level.

If you are not at that level, for example, you are in a lower paying job making $25k a year and going after a $60k a year job, don't tell them you were making $25k a year. Say you are looking for $60k a year. If pressed what you are making now, don't give an answer saying it isn't relevant.

The bottom line, is that just because you are asked a question, doesn't mean you have to answer it. Why do they ask this question of what you are making now, well, it's a very old traditional management belief that if you are being paid X now, then you are only worth X regardless of your qualifications, and supply and demand for your skills.

Another piece of advise, don't deal with "head hunters" at all. Recruiters for a company you will work at, that's different, but those who are paid to find people for jobs have a hidden agenda of pumping you up for the job, and then pulling out the rug from under you with a lower salary. "Head hunters" are on commission and they don't care if your are happy with your job or not, so any time a "head hunter" contacts me, I say "I only deal with principals" and don't give them any information.

Answer 9

In my experience, there are a few reasons why recruiters ask for a current salary.

Firstly, as others have noted, it's a good gauge of your career goals and your estimation of your skills. A candidate with a rare or valuable skill or attribute (cloud computing experience, security clearance, etc.) can expect a higher salary than someone fresh out of school or with an outmoded specialty.

Secondly, and this is more relevant for positions "on contract" (where you, as an employee of a company, perform work for another company or organization), there is usually a specific range of what a your prospective employer can afford to pay you. Say ACMECORP enters into an agreement with JoeCo that JoeCo will pay ACMECORP $50 an hour for twelve months to design a new website. ACMECORP will have "overhead" employees, who work at headquarters or branch offices, performing administrative and management work. Since these people allow the company to function, they cannot go on project, and the cost of their pay has to come out of the profit of work done. Depending on how many overhead employees work for the company, how many contract employees are available, and the overall value of the contract, among other things, the amount that employee can be paid has to go down to cover costs.

Thirdly, companies today are (in the US, at least) required to adhere to employment laws like EEO (Equal Employment Opportunity), which means keeping fairly detailed records on all candidates considered for a position. Because positions can receive hundreds of applicants for a single position, companies have to eliminate candidates from consideration, and many do so by screening out those with higher salary expectations. As a side note, technology (keyword searches, applicant tracking systems, etc.) is also frequently used for this, so putting things like "Negotiable" on your online profile can remove you from consideration, along the thought process of "If you have to ask, it's too expensive."

It's important in the interview process to be honest, both with your recruiter and yourself. If you feel, based on your qualifications, that you deserve a higher pay rate, tell your recruiter that. But remember that this is a "buyer's market" in many cases. If you are asking for a higher salary, I'd suggest backing it up with market research (i.e., salary.com). Be very clear when answering that kind of question - "I'm currently paid $x, but since I just got my [third-party certification], I'm looking more in the range of $x++." will go over a lot better than "My current employer pays me half of what I'm worth" or "I won't answer that question 'til I see an offer, bub!".

Answer 10

In my experience some recruiters will use this information to call your former manager to encourage them to use the same recruiting agency to fill their (now-open) position. I have had this happen several times and as a result suggest not giving away too much information unless you know you can trust the recruiter, otherwise they may be more interested in gathering your information to reach out to the employer rather than actually helping you.

A London Recruitment agency taught me how they use the recruitment process to collect information from initial phone screenings and CVs. Many of them may not follow-up with finding you a job in many cases because they don't know enough about the industry (they only know what you've told them) and so it isn't easy to find you a job.

I recommend saying:

I will give references just to principal manager not to agencies.

Good luck.

Answer 11

Assuming the recruiter is working on commission and gets a certain % of your first salary, it's in his best interest to get you as much money as possible, so they make more. Quite obvious, right?

But also wrong.

Think on who compensates recruiters - it's the companies who have open positions. The job of the recruiter is not to find you a dream job, but to fill in a position. You don't pay, you are not a customer - you are a product sold to companies.

The recruiters work on volume. Think about the effort to take you few extra $$$. Is extra back-and-forth worth it to get from $80k to $85k? For you - of course! But for recruiter? They'd put in extra work and only get a couple of hundred more $ in commission. It's way more effective for them to just settle you for $80k or even $75k, convince you it's good and move on. See relevant Freakonomics episode.

Why do they ask?

1. Because they want to low-ball you to leave some wiggle room for the hiring company - precisely to have less work and lower chance of rejection. Also to get repeated business for turning in quality and (relatively) cheap candidates.

2. There are companies that pay relatively low wages. They may (or may not) be genuinely fantastic places to work. Those positions also needs to be filled. If agent hears you are relatively senior, but currently underpaid, she sees this as opportunity to fill in the position - so you continue to be underpaid (maybe slightly less, as they need to throw a couple of $k extra).

Of course, this view is cynical. The recruiters need to act within reason not to get bad fame and partially to get repeated employee business - although it's secondary to them - how often do you change jobs and go to the same agent? The individual agents could be genuinely interested in your well-being, but that's optional.