What is a Competitive Salary?

A competitive salary is one that stacks up well when compared with similar jobs from other employers – the implication is that the available salary ‘competes’ and while that’s open to some interpretation, it should at least mean that the rate of pay is in the right ballpark. However, there are a few different ways to think about the definition of ‘competitive salary’ and what it means to you:

• A salary that compares well with the average rate of pay for your discipline.
• A salary that compares well with the highest rates of pay for your discipline.
• A salary that pays you well based on your personal experience and expertise.

There are slight differences between each of the above, and in practice the definition of ‘competitive salary’ is likely to combine all of them together to create a rate of pay based on your unique characteristics, and pitched slightly towards the higher end of the scale. It’s important to know your own value. In an industry where all job listings just mention a ‘competitive salary’ with no exact values, this can be challenging, but by learning the going rate for a person of your abilities, you can negotiate more strongly in interviews. We’ll look in more detail below at how you can work out your market value, but first let’s take a deeper dive into the meaning of ‘competitive salary’ and why companies use it in job advertisements.

It’s common to see the term ‘competitive salary’ used on job advertisements. In fact, this is by far the most likely place you’ll see the phrase. It’s one of a variety of different ways to refer to the amount of money available for a given position, without stating an actual numerical value. Other terms you might see used instead of ‘competitive salary’ include:

• Average salary
• Base salary
• FTE salary (Full-Time Equivalent, an annualised rate for part-time roles)
• Gross salary
• Market rate
• Minimum salary
• Negotiable rate of pay

All of these have slightly different meanings and can relate to the least amount of money you can expect to be paid, the average rate for someone working in an equivalent role, or the option to agree a specific salary as part of the hiring process. In some disciplines, it’s common to see a stated hourly, monthly or annual rate of pay, whereas in others – especially where your personal experience and knowledge level matters more – you’re more likely to see one of the above terms as a way in to negotiating a bespoke rate of pay. This also means that in some sectors, it’s much more difficult to find an advertised hourly rate, so you may need to try harder to work out your own market value ahead of any salary negotiations. We’ll look at ways to calculate your market value in a moment.

So why is ‘competitive salary’ used, along with the other phrases listed above? In some cases it’s a deliberate attempt to obfuscate the amount of money available. The hiring manager might want to attract the most talented applicants without having to advertise a top-rate salary upfront. It can also be recognition of the fact that different candidates deserve different rates of pay. Your competitive salary after 20 years in your career will differ from that of a recent graduate, and while it’s unlikely you’ll both be applying for the same vacancy, it’s not impossible. The hiring manager might also be sending a deliberate message that the salary is negotiable. Although many people perceive ‘competitive salary’ to mean the lowest rate of pay the employer can get away with, this is not always the case. In some job searches, the recruitment manager is genuinely interested in attracting the most capable candidate, even if it means paying a higher price to secure them. This is especially true at the top end of the market, for example in executive interim roles and board-level recruitment, where life experience outweighs academic credentials. Ultimately it’s not always possible to know exactly why a job advertisement uses ‘competitive salary’ instead of stating a fixed rate per hour, month or year. But you can still embrace the opportunity to negotiate your own salary, by making sure you know your market rate and agreeing a package that suits your capabilities.

Everybody has a market value, and knowing your worth is a strong first step when negotiating a salary – so whatever role you are applying for, take the time to sit down and work out what you believe you should be paid for the work you do. It helps to think like an employer instead of an employee. Of course you want to be paid as much as possible, but as a starting point, consider what a hiring manager might be willing to offer you, and whether that’s close to the amount you want to be paid. Use our handy Know Your Worth Salary Calculator to get an accurate and custom salary estimate based on your title, company, location and experience.

Personal Market Value

Your market value is unique to yourself, so try to look at yourself critically and think about what you bring to each job you apply for. If you’ve been invited to interview for a role, you should be doing this anyway as part of your interview technique and preparation. A variety of different personal characteristics can affect your market value:

• Academic qualifications (if relevant to the role)
• Career history and past success
• Previous roles and job titles
• Workplace training and certifications
• Years in the industry

In general, a negotiable salary will be higher if you can offer experience, expertise and seniority – both in the sense of your track record in equivalent roles, and in the sense of leading others as part of a team or department. Roles that include leadership responsibilities, high demand and expectations, or an unlimited amount of unpaid overtime, will all often carry a higher rate of pay. These kinds of positions don’t suit everybody, but if you thrive under pressure, you deserve recompense for that.

Situational Market Value

As we discussed earlier, a ‘competitive salary’ by definition is one that competes against equivalent jobs in your chosen industry and geographical location. Regardless of your individual abilities, there are always certain limits that will apply to how much you can get for a day’s work. Some more situational and environmental influences on your market value include:

• Availability of jobs vs. unemployment in the community
• Cost of living in your location (town/city or wider region)
• How much other employers are paying for similar roles
• Number of candidates vs. number of vacancies
• Strength of the economy as a whole

You can think of these as the influences that frame your negotiation, whereas your personal attributes are the variables that you can use to try and drive your final salary higher. For example, if there are very few applicants for a very specific role, you’re much more likely to secure a higher rate of pay than you are as one of 100+ candidates for an entry-level position. This can be difficult to accept at times when unemployment is high and the economy is in a slump, as you can find your value has dropped through no fault of your own; however, it’s crucial to be realistic about the wider circumstances so you approach negotiations in the right context.

So, assuming you make it through to the interview stages for a job that offers a ‘competitive salary’, how do you broach the subject with a hiring manager, and how do you get the best rate of pay possible? If a job listing advertises a competitive salary, then in most cases one of two things is true:

1. The hiring manager wants to attract talented candidates on a shoestring budget.
2. The hiring manager wants to allow candidates to negotiate their salary.

The first of these is the perception many people have when they see the term, and assume that it means the available salary is the absolute bare minimum the employer can get away with paying. In some cases this is unfortunately true, and you should soon learn in the interview stage if the available salary is fixed at a relatively low rate. In the second instance, however, you’re being given an open door to try and agree a salary that you’re happy with. By this point, hopefully you have a good idea of your personal market value, and the condition of the market as a whole, so you know:

1. How much the average candidate of your approximate capabilities is paid.
2. How flexible the market is to allow you to drive this value higher in negotiations.

A stronger economy offers greater flexibility to negotiate a higher rate of pay. In contrast, when the economy, industry or local area is weak, you’re likely to struggle to persuade any employer to increase their offer from the bare minimum.

Evidence Your Value

In any negotiations, provide good support for your estimate of your value. Your CV is a good way to do this as part of an initial job interview, as it should already detail many of the attributes that make you worth more to an employer. Be pragmatic. Hiring managers have a good understanding of what human capital is worth to their business, and should not be offended by a talented candidate trying to get the best salary for their time, especially in a demanding role. Recognise that your basic salary is not the only recompense you receive for working in a given role. Look for anything else on offer:

• Paid overtime, performance-related pay and quarterly bonuses.
• Promotion opportunities with associated salary increases.
• Financial benefits e.g. affiliations with insurers and other service providers.
• Tangible benefits e.g. company car, mobile phone with free tariff.
• Pensions, paid holidays and generous offers on sickness absence and compassionate leave.

The ‘value’ of a job goes far beyond the basic salary on offer. In some cases a job listing that mentions a competitive package, rather than a competitive salary, might be basing this claim on bonuses and benefits – so be ready to negotiate those as well.

What’s It Worth to You?

Finally, have an idea not only of what you are worth to the employer, but also of what the job is worth to you. That doesn’t just mean salary and benefits, but can include personal considerations that aren’t part of the negotiations. Some of these might include:

• Shorter working hours than your current job.
• Less time spent commuting or on other job-related travel.
• More flexibility e.g. to work from home when you want.
• Opportunity to work with an ethical, trusted employer.
• Chance to break into a new discipline with little experience.

For all of these reasons and more, you might choose to accept a lower rate of pay in order to get your foot in the door of a job you really want – and that’s totally fine. As long as it pays the bills, it’s your personal choice whether you insist on a job paying you a competitive rate.