We have received many a comment regarding the post “Past performance is no guarantee of future results“. All have been pointed with some being rather heated, from both sides of the equation. In the spirit of an ongoing dialogue, please allow us to address this sensitive topic in a touch more detail.
Clarifying Statement: Past performance does indicate future results for compensation, at least once it comes to offers. When one moves from the interview phase into the offer phase, there is a fundamental shift in how compensation is viewed, discussed, and the role it plays in the overall process. Simply put, your past earnings certainly do play a role in the coming offer. Again, to clarify we are speaking in the offer phase not the interview phase.
What you have made in the past tends to act as both a floor and relative ceiling on what sort of offer you will receive. Clearly this is not always the case, but there is a degree of pressure on the offering firm to keep you in the neighborhood of what you have historically become accustomed. However, the converse of that statement is also true. There is a degree of resistance to providing the you “too much of a jump” when first joining a new team. Leveraging the former while being sensitive to the later is they key to successful offer negotiation.
Compensation is an inheriently sensitive area, but one where the onus is on you to be a good custodian of your situation. At no other time will you have as much leverage as you have during the offer phase. Compensation today has a very long term impact upon you, your family, and frankly your future financial picture. Upward is critical
With all of the above said, we still hold to the ideal as outlined in the posting “Past performance is no guarantee of future results“. Entitlement attitudes and expectation can certainly limit ones success in the interview phase. Recognizing this is critical to winning the interview phase and entering into the offer phase. In the front end too much emphasis/reliance on past compensation can be a detriment, but it certainly will matter once you enter into the offer phase. Recognizing this upfront, managing the process and avoiding the typical pitfalls when it comes to compensation is critical to win the interview. The offer phase is when the balance shifts – not before.