The Ethics of Salary Negotiations

Fudging your your salary might be ethical. It shouldn’t mater.

Salary negotiations are a contentious and emotional process within organisations and professionals. This stress can be removed by treating the salary negotiation process like any other best-practice, principled business negotiation where both parties respect a relative equality. The process is process is frustrating because organisations and professionals enter into the process expecting to be treated unfairly by the other side.

During the lead up to and the ongoing interview and hiring process a massive amount of “compromised” information is exchanged by both parties. Companies and professionals try to bend the truth to make themselves more appealing to the other party. This mostly is harmless and doesn’t result in a falsehood severe enough to require correction.

This exchange of “inflated information is often expected by many people involved in the interview process.

In this environment of bent truths, it is easy to go too far on both sides. The company could think it’s best to offer something early in the process which later on becomes impossible. Professionals may think providing inflated salary figures early in the process benefits them. And there are always honest mistakes and misspeaks.

Like with any other negotiation, when the potential issue is identified, bring it up in a neutral and factual way. You can also ignore it and see what happens. In any negotiation there is a trade off between the potential repercussions of bringing up a piece of information now and the repercussions when the other party discovers that information later on.

We treat lying about pay differently from negotiations for any other product or service. In a sales process (without fixed pricing), if a potential customer asks you ‘how much do you normally charge?’, your answer is almost always an inflation of the reality or a range incorporating an inflated breaking point and ideal target number. Yet when we negotiate pay, the social ethics often expect that the professional will be completely truthful while the company is allowed not to be. This best parallels the power style in negotiations where one party has power over the other and uses that power to force or coerce a result. Power based negotiations are simple and leave the “losing” party with discomfort with the result.

From a social expectations standpoint, leveraging and manipulating information about your pay is not acceptable. When compared to other negotiation behaviors, it is normal.

What is “right” depends on the accepted standard practice in your country or even the company that you are applying to. Your relative power and position in the negotiations also influences this dynamic. If you have a position of leverage, you can likely insist that you will not provide salary information or details. In such a negotiation, you can simply walk away.

I have worked in companies where any slight error was deemed sufficient for immediate termination or rejection from the hiring process. In my early years as a manager, I often used minor mistakes as easy ways to disqualify professionals. In retrospect, this was childish and a sign of insecurity with my ability to evaluate, select and communicate with people.

There is an inherent contradiction in organisations that say: “we pay fairly according to market rate, your skills and internal benchmarks” and then ask for verification of you pay before giving an offer. Especially when after the fact, the offer is magically 10 to 20% higher than your last package.

This obvious contradiction is why in many countries it’s slowly becoming illegal to make verification of pay a condition of offer. It still happens because it is often difficult to prove that you were disqualified simply because you didn’t provide pay verification.

Whenever possible, I recommend to professionals and companies to only deal with compensation related verification after an offer has been made and accepted. Ideally, discuss ranges that both parties are considering early in the process. This ensures that everyone enters into the process with eyes open and it makes resulting offers and concerns easier to discuss.

We are all people. We are all professionals. Let’s approach salary negotiations in a principled, professional way.

Review and comment on the google docs version of this article.
A modified version of this was posted on Quora on 11/04/2017.