Why do I need to tell recruiters and employers my last-drawn salary when making a career move?

Having worked in the recruitment field for close to 10 years, one of the common questions I get from candidates is, “Why do I need to disclose my last drawn salary?”

Candidates wonder why their latest salaries should be a benchmark for potential offers, rather than employers offering a salary based on market rate or initial budget.  

Whenever I come across this question, I feel for the candidates. Some of them will think that if they are underpaid currently, they will be underpaid forever, with their current salary as the (always low) base. Indeed, some candidates are underpaid compared to the market average (and of course, there will always be a small portion that simply thinks they are underpaid!)

Related: 5 steps to creating your career plan

Regardless of perception, this is still one of the critical questions that we need to ask candidates at advanced stages of the interview process (if not right at the beginning) for the following reasons: 

1. Justification of proposed salary

Whether working with an MNC or local company, many employers request the last drawn salary before getting approval for the hire. This will justify the proposed offer and is often a set part of the administration process. 

2. At the minimum, matching your last-drawn pay

The “market rate” can be pretty subjective. It can be tough to have an absolutely accurate indicator of the right rate, even with salary surveys by recruitment firms or HR consultancies in the market.

Knowing your latest pay package makes the employer aware of what you are earning. If their offer (even ones they think are market rate), cannot match your latest salary, it is mutually beneficial to all parties to stop the recruitment process sooner, rather than later.  

3. A job title does not always reflect the salary

Titles and organizational structure differ significantly among different organizations. Some companies may have a flat structure with seemingly humble titles that carry a great deal of responsibility.

In contrast, other companies may have job titles that are inflated. Judging only from the CV or resume, a job title may not reflect true seniority, so salary can add to the complete picture of your responsibilities and knowledge.

Related: 6 performance and career progression secrets they don’t teach you at school

What is an appropriate salary increase to ask for?

Usually, when making a career move, recruitment consultants would advise candidates to aim for a salary increment of 10-20%. However, if you’re one of those candidates who really are underpaid, or you simply expect a big jump in salary for your next move, we advise adopting the below approach to reach the salary you want. 

Be upfront with your salary expectations from day one that you apply for the job. Some candidates try to meet the company first, impress them, and then negotiate hard on the salary when they feel the ball is in their court. This can work, but many times it does not work well and instead has a detrimental effect on your overall impression as a candidate.

Justify the larger percentage that you are asking for. Ensure you have solid reasons for asking for a certain amount, and the experience to back it up.

Perhaps you held equity or stock in the previous company on top of your paycheck. Perhaps it is because a large portion of your last salary was a variable bonus/commission. If this is the case, try to present data points that show you are entitled to this portion of the variable bonus for the past few years or quarters.

Keep in mind that it might be challenging for your future employer to factor your variable bonus into guaranteed basic salaries because bonuses are, after all, variable. However, it helps to have the numbers ready.

Related: How to make the most out of your relationship with your headhunter

Have a fair and honest assessment of your own profile

You can expect a more considerable increment if you have a stable CV with steady experience. Alternatively, if you are in a hot, niche and up-and-coming function with a talent pool that is highly sought after (for example, a digital role), it may also be easier to secure a higher increment percentage. 

We all work hard to look for reasonable rewards, and so it is natural for all job seekers to hope for a competitive package whenever possible. However, it is equally important to learn about the market landscape, market practice and the timing and techniques of negotiation to get to the salary that is fair and reflective of your skills and experience.

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