June 21, 2018

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A 25% Bump in Salary?

You found the perfect candidate, but the person wants a 25% bump in salary. Is this some sort of joke?

Not necessarily. A huge salary increase is sometimes justified. But unless you can intelligently discuss the issue of money with your candidates, you'll run the risk of flying blind whenever an offer is on the table.

To educate your candidates -- and avoid surprises -- here are a few basic salary guidelines that apply to job seekers:

  1. Normal economy. If a candidate is currently employed at about the market rate, he can expect a salary increase at the new company to be one to three times the overall rate of inflation.

    In other words, if the candidate is currently earning $100,000, and the inflation rate is three percent, a qualified candidate can reasonably expect an offer somewhere in the range of three to nine percent, or between $103,000 and $109,000 per year.

  2. Soft economy. In a slow job market, it's not unusual for a candidate to take a lateral in terms of pay, either because the new job is more challenging or offers future growth potential; or as a hedge against being laid off. If the candidate is unemployed, most of the leverage is lost. So it's not uncommon for an employer to offer and unemployed candidate the same salary as when he was last employed, or even slightly less.

  3. Gold rushes and nose dives. In a super-heated job market, all bets are off, and candidates can ratchet up their salaries to meet the demand. I've seen a couple of boom and bust employment cycles, and it's interesting to watch marginal candidates feel empowered and command wages that are way beyond their normal-economy worth. But of course, the employment coin also has a flip side. When the economy changes gears, the high flyers' wings often get singed off, and they crash back to earth -- or back to the unemployment office -- armed with an impressive salary history, but a not-so-impressive history of accomplishments.

  4. Special circumstances. Candidates who wish to relocate, spend more time with their families, change careers or seek greater job fulfillment will usually do so at the expense of their earnings.

If you find yourself working with a candidate whose expectations are unrealistic or uninformed, you should try to educate the person, by letting him know what the current market will bear, and what's reasonable and customary with respect to his circumstances.

However, you can't automatically categorize a candidate who wants a 25% increase as being unrealistic. If his current salary is way below market rate, or his value has risen dramatically -- say he just finished his master's degree or obtained a special certification -- then the increase could very well be justified.

-Bill Radin

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