Answering the Salary question

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Answering the Salary question
I recently met with an executive recruiter and she asked me “what is your current salary and what are your compensation expectations?”  I am uncomfortable with those questions.  How should I have answered them?
You are not alone in disliking questions related to salary – I hear it often from people in my network.  The main concerns seem to be that individuals don’t want to undersell themselves relative to market nor do they want to price themselves out of a role if it offers a significant benefit to them (e.g. better benefits, worklife balance, change in skill set, etc).  
My overall advice is to share your current salary and benefits information and to have a well-researched reply to any questions regarding your expectations. 
I’ve read lots of articles over the years giving people the advice of how to artfully dodge compensation questions.  Suggestions from these articles advise individuals not to share any specific information and to reply using statements such as “I’d like to be fairly compensated if I take the job” or “I’m sure we can come up with an agreement on salary if we both agree that I’m right for the role.”  I don’t agree with dodging the question and, quite frankly, it is a potential non-starter for me if you are unwilling to share the information.
As a recruiter, there are 2 main reasons I need your current salary and expectations:
I want to determine if there are any knock-outs for considering you for my client roles, and 
my clients require that I obtain that information on their behalf.
There are other reasons why I want your information, such as I collect a lot of salary data and I want to understand any market trends, and your current salary may give me some insight into your performance and career trajectory at your current company.  But those are benefits primarily to me and not to my clients.
My main objective in asking the question is to figure out if compensation may be a deal-breaker if we successfully complete a comprehensive recruiting process and get to the offer phase.  At the front end of the process, I want to assess if the candidate’s expectations on compensation are in line what the company can offer.  This may seem like we are jumping too far ahead of the process and allowing compensation to overshadow the higher priority concern of fit between individual and opportunity. But what I am really trying to determine is the likelihood of getting agreement on an offer if we reach that stage.
At the onset of the process, if we identify that there is too large of a gap between the company’s salary range and the individual’s expectations, it will prompt me to immediately discuss the discrepancy with both sides to see if there is potential for a compromise.  If we conclude that the expectations can’t be met (or we can’t close the gap to a level acceptable to both sides), then it makes sense to be respectful of everyone’s time and not proceed to any next steps.
Of course actual situations are never this straightforward.  When we have gaps, candidates will often state their willingness to take less if the opportunity is exceptional.  Clients may find a bit more “powder in the keg” if they find the star candidate.  Again, the exercise at the front end is to assess the likelihood of forging the match if the recruitment process is highly positive for both sides.  
Ultimately your sharing the salary information is helping me to manage both your and the client’s expectations.
On the rare, past occasions where we ended the process because we were too far apart on salary terms, both sides were appreciative of identifying it early and not wasting each others time in the process.
Two final thoughts
1) on the question of current salary, you should include the following:
base + bonus target + LTI/equity + perks (e.g. company car, SERP, etc).   On bonus target, you should include review cycle, payment date, last year achievement and breakdown of percentages.  Also include vacation days, holidays, healthcare costs & benefits, etc.  
2) regarding salary expectations
you should research market data to understand the ranges of the role you are considering. If you have specific requirements, you should share those with your recruiter.  The requirements can range from needing a base of X, won’t leave for less than X% increase, looking for total targeted cash of X, in 5 years expecting to be at X comp level, etc.  I’m not suggesting that you put those stakes in the ground but am suggesting that you share anything that may be a potential show-stopper.