“Understanding the Game” is the first installment of a two-part series on mastering the art of salary negotiation. See the second installment, "Winning the Game: 12 Tips in Salary Negotiation", here.
Salary and benefits negotiations are a crucial and necessary part of the employment process. These types of negotiations have a bad reputation for being stressful and demanding and as such, many people never learn what a powerful a tool they can be or how important they are to career satisfaction. Negotiating salary and benefits is the prospective employee’s opportunity to champion their own value and because the process can sometimes be challenging to master, we’ve brought together some insights, strategies, and tips to help raise your confidence and put you in control to maximize your career potential and earnings.
Know your value:
Start by identifying your skills, accomplishments, and past job performance which can help you to demonstrate the worth you bring to the company. Although these are useful talking points, it’s easy to forget how impressive or desirable your qualifications are. Based on your position and abilities, research comparable compensation rates, adjusting for company size and location.
Once you have a solid idea of your value, stick to it!
According to Indeed.com, “not discussing your salary and benefits can negatively affect your lifelong earning potential. For example, if the average U.S. annual salary increase is 3% and you accept a starting salary that is 10% below your expectations, it could take over two years just to regain those earnings.” [1] After completing your research, organize the information into a one-page synopsis or “brag sheet” to help you remember and celebrate your value.
Understand the employer:
If the person across the table is an HR manager in a large company with very structured hiring and pay scale guidelines, they aren’t likely to have a lot of flexibility to meet your requests, no matter how skillfully you handle the negotiation process. However, you may be able to secure nonmonetary options like a flexible start date, paid time off, or better job title. Alternatively, if you’re speaking to the owner of a smaller company, there’s a much greater chance that they’d be willing to discuss your salary and overall compensation.
Don’t forget that part of the negotiation process is being willing to walk away.
If the employer cannot or will not provide the compensation and benefits that you believe you are worth, it is perfectly acceptable to seek out another company that can better match your needs.
Nail the technical details:
Salary and benefits negotiation is an interview in and of itself. As with any interview, you must establish a date and time and make sure you are physically and mentally prepared for it. Check out our interview success post for more tips on that. In negotiations, you’ll want to make sure you walk into the meeting strong. Review your “brag sheet” and think about ways you can positively present your achievements and qualifications. If you’re nervous, breathing exercises can help reduce stress and feeling calm before and during the meeting is a surefire way to show confidence as well. For other stress management tips, be sure to read our post on managing workplace stress.
Additionally, the value of practice here is paramount.
Find a friend or family member to practice with, ideally someone who can be honest about your proposal and performance. It’s far better to address and iron out any weaknesses or concerns you haven’t thought of beforehand, rather than being forced to improvise on the spot.
Plan ahead and prioritize:
Beyond the technical details of an interview and its preparation, salary and benefits negotiation profit greatly from thinking ahead and staying focused on the outcome. Most employers have a limited amount of time to discuss salary and benefits.
Concentrating on the items that are the most important to you increases the likelihood of successfully negotiating them.
By prioritizing, getting to the point, and being realistic, you will also show employers that you are well thought out and professional; two things that increase your value further.
Start at the top:
Remember that negotiating your salary and benefits is in support of your goal of building a sound and strong relationship with the employer.
Plan to lead with the top end of the salary range you researched and expect to be talked down to a lower number.
It is unlikely that you will get the first number that you ask for so remember that while you may have a number in mind, so does the employer. Both sides will have to make concessions so prepare for this by reviewing your list of priorities and deciding which items you are comfortable giving up in order to move forward. By conceding the less critical items, you increase your chance of securing the most important ones. Once again, remember not to sell yourself short by accepting an offer that doesn’t match the value you deserve.
Develop your end game:
In addition to knowing when to walk away, always consider alternatives. Money is obviously a key element, but it only represents about 64% of your total compensation package on average. Healthcare, insurance, paid-time-off, bonus opportunities, stock options (if a public company), vacation time, retirement plans and associated company contributions, job title, working from home, flex time, and parking space allotment are just some of the other job perks to consider. Make sure to protect yourself by deciding what the minimum you can accept is in advance and sticking to it.
Your prospective employer may have a Human Resources department to ensure that they are getting what they need out of the working relationship, but you must be your own best advocate.
That said, don’t forget that renegotiating is also on the table. Even if you have to make some concessions at the onset, if the employer is a good fit, you can always come back to the negotiating table in the future.
Salary and job offer negotiations are a challenging but critical part of your career success. There has never been a better time to negotiate a job offer; research shows that hiring managers are becoming more and more amenable to negotiations. While there are innumerable strategies for success, these simple tips can help you capitalize on and build skills while getting you the compensation package you deserve.