While research shows and some politicians feel that most workers, particularly women and federal employees, have been underpaid for far too long, some have been blessed to be very well paid. If this is you, I hope that you are taking full advantage of it and, rather than increasing your standard of living, are using the money to pay off debts and saving for the future. Experience has proven that being paid above market value puts you on the chopping block if your company ever decides that the money is better spent elsewhere.
To boot, if you are separated from your company it can be that much harder to find a job above market pay or even to convince employers that you are willing to take a pay cut.
Employers have justifiable concerns hiring somebody above market range. You could be asking for more than your boss is earning, which usually does not produce strong rapport to build a good relationship.
As with most situations, this poses a challenge, but is not necessarily an obstacle. There are ways that you can conduct your search and mitigate any potential perceived risk you pose by being someone paid above market.
- Know your numbers
If you are someone who excels at managing personal finances, you probably have strong accounts of what your monthly expenses are, and you also probably have very clear-cut savings goals for retirement. Evaluate whether there are areas of your living expenses or entertainment expenses that can be downsized.
If you have not been keeping very clear records of your monthly expenses and do not have clear-cut retirement, or other savings goals, now is the time to meet with a financial advisor. (I know a few great ones, if you need a referral!)
If this task seems daunting to you, I can relate, and it can be tempting to guesstimate, but this is potentially very dangerous for you. If there is something you do not account for, like if you own a home and you are not accounting for an emergency fund for all the unexpected, very expensive repairs that come along with owning a home, you could be underinsured for some acts of God. Another example could be that you need to increase in your life insurance coverage if your standard of living has increased over the years. If you had a 401(k) with your previous company, a financial advisor will help you determine the best way to reinvest that to match your desired level of growth, risk, and future life needs. This is something you want to expert help on. Even if you are an expert at these things, it is wise to obtain a second opinion. Just make sure that, whatever decisions are made and whoever makes them, you are fully educated on the options and apprised of the ongoing status. Always maintain control and awareness.
If you genuinely are able to take a pay cut because you are earning above your means, coming in with specific substantiation of that will show an employer that you are fully prepared, and not guessing. Many employers have personal experience with this that they will trust over your word. You can convince them that you are not a flight risk by taking a salary cut if you write or say something specific, such as, “My house is paid off, my kids’ college is paid for, I have no debt, and I can afford to take a $43,000 pay cut.” You can do this from the get-go in an approach or cover letter, you can empower your recruiter to negotiate this on your behalf, or you can state it upfront in conversation when you have a chance to speak one-on-one with your next potential boss.
By the way, just because you are willing to take a pay cut does not mean you should not try to negotiate your package, especially if in your role you are expected to be a strong negotiator. Focus on some of the perks of a package, like a corporate car or car expenses. Perhaps you already have health care through your spouse. You can either negotiate for them to replace some of the perks they would have offered you with compensation, or where they cannot provide you with compensation, ask for perks. Come in knowing which perks have a monetary value to you.
- Know the market
Indeed, Glassdoor, and Salary.com are all places that will give you some good numbers around what the market is paying for particular roles in particular geographies. However, you may bring with you some niche skills or experience that has additional value in the market. A niche recruiter can be a very good resource in these situations. If you are going to ask for a higher salary than what the market seems to be paying generally, you need to bring with you some substantiation of your requests, and know that even if you are able to educate an employer on why you are worth more than the average candidate and are offered what you ask, ultimately if they have not budgeted for such things, you risk the chance of being the first to go should the financial constraints of hiring you prohibit their strategic plans to invest or spend in other areas. You are also going to be held to a higher standard and had better not only deliver the goods, but continue your campaign to promote that you are delivering the goods; do not assume it will be acknowledged. People are usually very skeptical of an “overpaid suit.” You will have the stigma to combat until you earn people’s trust.
- Have a Plan B
If you really cannot afford to take a pay cut, or you really do not want to lower your standards of living, you can find other ways to make up the difference in your salary, such as investing in real estate, businesses or other financial products. You could do some consulting or coaching on the side, pending it will not be a conflict of interest with your employer. You could write a book or develop an online course. You could become a paid speaker. Let’s face it: you have managed to earn more than your professional counterparts, others will want to learn how you did it – you have something very valuable to teach.
You might not have thought being well-paid was such a detriment until you find yourself justifying it, defending it, or even wanting to hide your pay. (I do not recommend hiding your pay. People have their ways of finding out and you pose an even bigger risk as someone who is not forthcoming or even deceitful.) Keep in mind the employer’s perspective. Chances are if you have been on the hiring side you can completely empathize with their concerns, and, if this is so, definitely express that.
You may have to address your salary upfront, which is contrary to other negotiation advice, to get the chance to interview and establish your value, and then, once you have them interested in your value, you will have to address it again when it comes time to design a compensation package that works for all parties. Keep in mind that most employers want you to be a creative problem solver, so think of this as one of the things that you can creatively resolve in partnership with your employer to further demonstrate that you are exactly who they want.