During a recent conversation about a job opening at a New York-based menswear start-up, a recruiter asked Todré Land for his “preliminary compensation target.”
“I randomly blurted out ‘a minimum of $125,000,’” said Land, who currently works as a business manager for a major retailer in New York. “I don’t even know where that … number came from.”
It’s been roughly a decade since Land earned a bachelor’s degree in retail merchandising and landed his first gig working in the buying office at a prominent American department store. But he finds that talking about money with employers and recruiters is more complicated than ever.
In some ways, it’s the perfect time to ask for a raise or bargain with a new employer for higher starting pay. A tight labour market, high inflation and news headlines documenting companies’ willingness to pay top dollar to fill vacancies and head off resignations have all put employees in the driver’s seat in salary negotiations.
But the window of opportunity may already be closing. Recession fears are gaining traction, and some large employers are already retrenching as production costs rise and the outlook for consumer demand looks hazy. Between April and June, US clothing retailers and department stores shed about 13,000 jobs, even as employers in other sectors added to payrolls, according to the Bureau of Labor Statistics.
It’s a tricky question for those assessing their current compensation packages or mulling their next career move: Take advantage of the current labour market and pursue the highest possible salary or, in anticipation of a recession, tread lightly in hopes of greater job security in an economic downturn?
“We are in a market right now where there is a huge lack of talent at all levels … and it’s easy to take advantage of that,” said Janou Pakter, founder of New York-based executive search firm Janou LLC. “[But] the first ones hired are the first to be fired in a recession and the ones who make the most money or too much money are [also among the first] to be fired.”
Preparing for the Negotiation
Whether evaluating your current compensation package or considering a job offer, start with a self-appraisal. Examine your professional skills and experience, education, values, personal and financial needs and future career goals, Pakter said.
Then, rather than respond to every economic or cultural shift, try to pin down the broader salary ranges relative to your career level.
“No matter how many years you have, the title of manager is within a certain salary range, it doesn’t go over [a certain amount],” said Pakter. “There are bands such as manager, senior manager, director, executive or VP — know which one you fall into and the salary range.”
Corporate staffers — and most people required to have a bachelor’s degree or higher for their jobs — can look to other industries like finance and technology for guidance on pay, so long as those companies have “similar profits, size and are in similar geographies” to your current employer, said Frank Steemers, a senior economist at The Conference Board.
Inflation should be taken into account, but so far pay isn’t keeping up with the overall rise in consumer prices, which reached a four-decade peak of 9.1 percent in the US last month. In retail, many companies are attempting to hold down pay as other expenses rise, fearing consumers will baulk if those costs are passed along in the form of higher prices.
Employees and job candidates can gauge how their salaries will move with inflation by asking companies about cost-of-living salary bumps and raises tied to performance, and seeing how those line up with inflation rates, said Damian Chiam, Pakter’s business partner and chief operating officer at Janou.
When negotiating pay, the company should offer a salary range first, said Shannon Warner, partner in the consumer practise at management consultancy Kearney.
“Know what you want to do [in your career] and what [amount of money] you need to live on,” she said. “But never, ever tell the employer ‘this is what I expect to get paid.’ Let them make the offer then negotiate.”
Hidden Costs
As companies look to hire more diverse employees, candidates from underrepresented groups and women — who have historically earned less than their male counterparts — should feel empowered to demand fair wages, experts say.
But these candidates should be wary of “tokenisation” — or the practice of hiring a minority person to symbolise inclusion with no real plan or resources to support them. What’s more, if an employer intends for an employee to contribute to the company’s inclusion strategy, they should compensate for that additional work, Chiam said.
“You can interrogate the [company] and ask how they invest in [diversity],” he said. “Then [tell them] you’re passionate about helping them grow this part of their business and show your value.”
Then you’ve given the company “justification to go back and increase the ask,” Chiam said.
Money Isn’t Everything
Employees should be careful not to trade off softer benefits like paid time off, health insurance and child-care subsidies, or the personal fulfilment of working for a company that shares their values, for a higher salary alone.
Vivian Roach, a recent college graduate with a bachelor’s degree in journalism and public relations from Baylor University, moved to New York in May on the hunt for a job in fashion PR. She expects her first gig will pay about $45,000 to $50,000 a year — which she’s figured is enough to take care of her living expenses with a bit left over.
But, if she could work at a company where “I’m respected and people trust me to do a good job and recognize me for my hard work … and they’re not just talking about diversity but they really value everyone’s perspective … I’d take $38,000,” she said.
The best compensation packages demonstrate a well-rounded “employee value proposition,” said Warner, that includes “interesting and engaging” work, a clear career progression, flexibility and pay that is (at least) in line with the market expectations.
“Wages and benefits are one of the biggest drivers and they’ll continue to be, but … they’re not the biggest thing to retain employees,” said Warner. “Having a mission and values, making investments in a supportive culture, flexibility around work-life integration and modern digital tools to support [employees’] work are all important.”
