It’s finally the moment you have been waiting for…the company is interested in you and they are going to make you a salary offer – what should you expect as your starting salary?

Assortment of American CoinsThis question comes up often and it is important to know the facts about how companies come up with that magical number. You might think that they have a secret dartboard in the back room (which may be true for very small companies) and hope you are lucky someone knows how to hit the bull’s eye. The truth is it is much more complicated than that.

The secret to knowing what is a good starting salary is finding the intersection between what the company is willing to pay and what you are worth.

If you are going after a position that is below what you have performed, be prepared to lower your expectations. That same advice may also hold true if you have been in a position for a long time because your salary has probably crept up over the years and companies may not be looking for someone with as much experience (also translated as someone with a higher salary).

From a company perspective, starting salaries are a combination of several factors.

The Position or Job

The position or job you are applying for will have a specific wage or salary range associated with it. That specific wage or salary range is based on a number of factors:

  • Scope of Job. How much responsibility is there in this job? Does it deal with a single task or complex tasks? Other factors impacting scope include – sales, number of direct reports, profit/loss responsibilities, matrix relationships, size of company, etc.
  • Level of job. Where does it fit in the organizational structure? While a job title may be descriptive, some companies have adopted generic titles and it is more difficult to decide where the level of the job is unless you see the organizational structure. Is this position over one or several departments, functions, divisions, or locations?
  • Market Competitiveness. Savvy companies will survey the local or national market to make sure their pay is competitive. It is important to note that when organizations do this type of analysis they account for all pay types — salary, bonus, stock options, benefits etc.

The Human Resources Department or Compensation Specialist in an organization is responsible for establishing and reviewing salary structures periodically to stay competitive and to aid in retention activities. There is some flexibility in the starting salary in large companies and how flexible they are depends on how badly they want you.

What Are You Worth (to the Company)?

This is a tough question because our ego gets in the way! The most common way to evaluate what you are worth is to look at your last salary.

While that may be a great first step, consider if you are making significant changes in the type of work you will be doing (scope) or if you are moving to a lower cost of living location. Many of these factors go into what you are worth (at least from the company’s perspective).

Try thinking about this question with a different angle if you are having trouble getting the pay you believe you deserve. Here are some questions to think about.

  • What specific skills are you bringing to the job?
  • Are those skills rare or different from other people applying for the job?
  • Are you able to articulate them if you have to counter your starting salary offer?
  • Is the company asking you to perform at the level you were performing in your last company?
  • Is the company a mature company or new venture?
  • What is the size the company – how does that company with your last company? Smaller companies have lower starting salaries.

Finally, consider if is salary the most important part of working for this company. These other quality of work  factors have a big influence on overall happiness:

  1. Benefits
  2. Working from home
  3. Flexible work schedule
  4. Great company culture
  5. Great boss
  6. Low stress
  7. Work/life balance

When you factor in these considerations, revisit the question – What is the intersection between what the company is willing to pay as a starting salary vs. what you are worth? Do you have a little more leeway?