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gjm comments on Open thread for December 17-23, 2013 - Less Wrong
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I'm not ready for my current employer to know about this, so I've created a throwaway account to ask about it.
A week ago I interviewed with Google, and I just got the feedback: they're very happy and want to move forward. They've sent me an email asking for various details, including my current salary.
Now it seems to me very much as if I don't want to tell them my current salary - I suspect I'd do much better if they worked out what they felt I was worth to them and offered me that, rather than taking my current salary and adding a bit extra. The Internet is full of advice that you shouldn't tell a prospective employer your current salary when they ask. But I'm suspicious of this advice - it seems like the sort of thing they would say whether it was true or not. What's your guess - in real life, how offputting is it for an employer if a candidate refuses to disclose that kind of detail when you ask for it as part of your process? How likely are Google to be put off by it?
I don't feel qualified to answer your question, though if I were to make a guess, I wouldn't expect them to be put off by refusal. Assuming Google behaves at least somewhat rationally, they should at this point have an estimate of your value as an employee and it doesn't seem like your current salary would provide much additional information on that.
So, the question is, to what extent Google behaves rationally. This ties to something that I always wonder whenever I read salary negotiation advice. What is the specific mechanism by which disclosing current salary can hurt you? Yes, anchoring, obviously. But who does it? Is the danger that the potential employer isn't behaving rationally after all and will anchor to the current salary, lowering the upper bound on what they're willing to offer? Or is the danger primarily that anchoring will undermine your confidence and willingness to demand more (and if you felt sufficiently entitled, it wouldn't hurt you at all)?
The mechanism that seems most important to me doesn't really involve any sort of cognitive bias much. It goes like this. You are on (say) $50k/year. You are good enough that you'd be good value at $150/year, but you'd be willing to move if offered $60k/year, if that were all you could get. You apply for a new job and have to disclose your current salary to every prospective employer. So you get offers in (say) the $60k-80k range because everyone knows, or at least guesses, that that's enough to tempt you and that no one else will be offering much more. You might get a lot more if you successfully start a bidding war, but otherwise you're going to end up paid way less than you could be.
Note that everyone in this scenario acts rationally, arguably at least. Your prospective employer offers you (say) $75k. This would be irrational if you'd turn that down but accept a higher offer. But actually you'll take it. This would be irrational if you could get more elsewhere. But actually you can't because no one else will offer you much more than your current salary.
(You could try telling them that you have a strict policy of not taking offers that are way below what you think you're worth, in the hope that it'll stop them thinking you'd accept an offer of $75k. But you might not like the inference they'd draw from that and your current salary.)
Obvious note: Of course people care about lots of other things besides money, your value to one employer isn't the same as your value to another, etc. This has only limited effect on the considerations above.
I was recently in a similar position, but I nonetheless managed to negotiate a large salary increase by taking a job in a different city, quoting the salary level that I wanted, and pleading cost-of-living increases when I was asked to justify it. They did negotiate me down by about $5000, and I wouldn't say I'm quite at market rates yet for my level of experience, but it did seem to successfully anchor the negotiations on my asking price rather than my previous salary.
The new city actually did have a higher cost of living than the old one, but I get the impression that the hiring manager didn't care about the actual rate so much as he cared about having a rationale that looked good on paper.
Well, assuming your example numbers, if my work would bring $150k+$x/year and the company didn't hire me because I refused to take $60k/year, instead demanding, say, $120k/year (over twice the current salary, how greedy), then they just let $30k+$something/year walk out the door. Would they really do that (assuming rational behavior blah blah)?
I don't see how they would benefit from playing the game of salary-negotiating chicken to the bitter end. Having a reputation for not offering market salaries for people with unfortunate work history? That actually sounds like it could be harmful.
The company doesn't really know your true value. If you are really worth $150k it raises the question why you can't get your present employeer to pay you that wage. Your present employeer has a lot more information about your skills then they do.