Love this article from Lee Miller on Monster.com about dealing with recruiters and salary negotiation:
“Once a prospective employer starts talking money — as in how much you currently earn — it’s hard not to panic. And while it may seem like the only option is to simply answer the question, this is the time to choose your words carefully. In fact, how you respond to those initial salary questions plays a crucial role in determining whether your final pay package is excellent or just enough.
Employers use salary information to decide how much they need to offer to get you to consider the job. By providing salary information to a potential employer, you limit your ability to negotiate a compensation package that reflects your true market value. If you are currently underpaid, providing that information will ensure that you remain so.
The best way to deal with the salary issue is to avoid it. However, you need to do that tactfully and in a way that will not upset your prospective employer. At the same time, if you handle it correctly, an employer trying to recruit you will not want to press the issue for fear of angering you.
If you can delay discussions about salary, or keep them vague, until an employer wants to hire you, you can often get an offer without providing detailed salary information at all. If hiring managers do not have that information, they will be forced to base their offer on your market value rather than your current salary.
The following are various scenarios when your salary history may be requested and possible ways you can respond:
Salary Information Requested on the Application
The issue of what you are earning is likely to arise before you even start the interview process, when you are asked to fill out an application. Most applications have a section that asks for salary history. Many online job postings and ads in newspapers also ask for this information. Some even warn that you won’t be considered if you don’t provide salary information. Sometimes you can get away by simply ignoring the request. Another way to deal with this question is to state that you “will discuss it in person.” Occasionally, you will not be considered for a job if you do not provide this information; more often than not, though, if you have marketed yourself well, you will be able to get an interview without disclosing your current salary.
Questions About Salary from the Interviewer
When the interviewer asks you about your salary, your goal remains the same — delay talking about it or keep the discussions vague. You might try saying something like, “It is not about the salary; it is about the job. If it’s the right job for me and I am the right person for it, salary won’t be an issue.” Then you can turn it around and ask what the employer has budgeted for the position. If you have to talk about compensation, be general and talk about your total compensation. For example, if your salary, potential bonus and stock options are worth $46,000, maximize it by saying something like, “My total annual compensation is in the mid-five figures.”
When the Recruiter Asks
Recruiters generally seek salary information for a different purpose. Since they usually are paid based on a percentage of your first year’s compensation, it is in their interest for the offer to be higher. They want to know your salary to avoid recommending a candidate, only to find out later that the company and the candidate cannot agree on salary. Therefore, the tactics that work with companies to avoid discussing salary will not work with most recruiters. They will insist on having salary information. Providing the information to the recruiter, though, will hurt your ability to negotiate. Remember the recruiter works for the company and whatever you tell the recruiter will usually be passed on to the company.
Even though a company generally has a salary range for a position, it is never set in stone. Once a hiring manager has decided you are the best candidate, he will find ways to pay more, if necessary. The goal is to get all the key players to really want to hire you before talking about salary.”