As the employer says, “You got the job,” you mumble some pleasantry as you silently scream YES! As tempting as it is to accept then and there, if you intend to negotiate for any benefits or salary increase I advise you to refrain from that outburst and say, “I’d like to meet with you tomorrow and discuss your offer and all the details.” If they haven’t stated the salary, ask it. Arrange the meeting time. If you are on the phone, end the conversation. If it’s via e-mail, reply by asking to discuss the specifics and offer a day and time. If you are meeting face-to-face, try to meet again the next day if possible. You have a lot of preparation to do, especially if you want the employer to raise the offer. This meeting you just arranged is called the “negotiations interview,” and there is a formula to follow to successfully negotiate a better compensation package.
Men and Women Negotiate Differently
Women still make 23% less than men, according to the Department of Labor. This number has remained constant over the last decade and shows little evidence of changing. Much of this discrepancy is due to the fact that men often try to negotiate their salary, whereas women typically accept the original offer as given. Client after client after client has proven that they can improve the original offer by following the negotiation strategies that follow. What typically happens, though, is that when Lora is offered a new job, she accepts the starting salary of $58,000, but when Jack is offered the exact same job, he negotiates. Jack accepts $70,000—a 21% difference. All future raises are based on the beginning salary, so it will likely take Lora four years of raises to reach Jack’s starting salary. And since bonuses and raises are calculated from the salary figure, Jack’s raises will push him further ahead of Lora faster, since he began at a higher compensation level. Women, therefore, must change their thinking from the sociologically ingrained “be polite, be humble, be grateful, be a pleaser” to acting like a competitive candidate who expects top dollar and benefits in exchange for her talents.
The Biggest Raises Come with a New Job
The biggest salary increases are almost always the result of changing jobs and companies. These raises can range from 15% to 30% above the previous salary. Some clients have seen 40% to 50% increases, and a few actually doubled their salaries. Many people use the new job as an opportunity to move up into a higher-level position and secure more money. Being underpaid is a common reason for leaving a job, and when you pursue an opportunity to move on to a new organization, you should expect it to be a very profitable endeavor.
More Employers Are Negotiating the Whole Compensation Package
Employers are now showing more latitude in negotiating salaries than ever before. It seems as though thousands of dollars and extra perks such as more vacation and signing bonuses are there for the asking. One CEO summed it up this way: “People are more aware of their value these days, and it’s a struggle to find good people. Although many may be looking, few can help us propel forward. We must offer a competitive salary to retain talent to allow our organization to thrive. What’s a few thousand more if they are the perfect match for the job?” Moral of the story—ASK.
Understanding Pay Scales
Salary negotiations is a game—a sophisticated game but a game nonetheless. You must enter this arena fully equipped with facts, figures, and influential information. Asking for more compensation properly rarely risks an offer being withdrawn, but demanding more can. Therefore, begin by analyzing the employer’s situation.
Step 1: Assess the employer’s compensation style.
Fixed Offer. Some employers simply do not negotiate. They offer a take-it-or-leave-it deal. They have a set limit on how much that job is worth to them. This is particularly true with smaller employers or large companies and entry-level jobs.
Pay Grade System. A predetermined range is set for the job, based on the duties and responsibilities required. Where you fall in this range is determined by your years of experience. This system rarely offers the top salary to anyone. Instead, the top is the level earned in raises over the years. To significantly raise the salary, the employer often has to reclassify the job in a higher pay grade. This has been known to happen, especially when it has been established that the employer underestimated the skills necessary to adequately perform the job.
Negotiable Guidelines. This is the best situation. The employer has more liberty to raise or lower the salary as he sees fit. This allows you the best chance to bargain for your services.
Step 2: Assess the job market’s supply of qualified candidates.
If there are others who are equally qualified and the employer would be happy with any of them, your negotiating power may be reduced. Then again, I’ve seen clients sail through stacks of resumés from 400 potential employees and go right to the top, succeeding, after nine hours of interviewing, in being offered the job. The employer really wanted them and even though some were unemployed at the time, they were able to secure excellent compensation packages in spite of the competition. They argued that they were the best of the lot. The employer agreed and paid dearly to have them join their team.
Step 3: Determine what a fair offer is before you begin the face-to-face negotiations.
Predetermine a fair, reasonable goal for both you and the employer. This is critical if you’ve been overpaid or underpaid. During your salary research, you should have defined what a fair price is. When leaving a large Fortune 500 company for a much smaller organization, the offers might be less. On the other hand, having spent years just getting cost-of-living raises (typically 3% to 6%), you may find that you now earn less than the going market rate. When moving from an underpaid situation, ask yourself how much more is enough, and know the answer before you begin to negotiate.
10 Negotiation Strategies
During the negotiation interview, implement these 10 techniques in your efforts to get the best deal. By using the negotiation strategies that follow, you can get what you want (maybe even much more than you’d hoped for).
1. Confident Approach
Your tone often affects the results of this whole process. Exude enthusiasm for the job. Reconfirm your ability to do the job well. Have a win-win attitude. To begin the conversation, ask about medical benefits, vacations, and travel requirements. Grill them on all these terms. Find out if they offer other perks, such as health club memberships, tuition reimbursement, and daycare subsidies. Ask about overtime policies and what is actually practiced. Oftentimes, the policy is that you receive compensation time for your overtime hours, but the practice is that you are absolutely discouraged from ever using it. Learn about the company rules and practices.
2. Focus on the Employer’s Needs
Continually resell yourself throughout this process. Reaffirm the reasons they want you, the skills you’ll bring, and how you’ll solve their problems. Mention your 60 Second Sell and stress how quickly you will be productive. In other words, give them reasons to pay you more. This is an important strategy since the interviewer may need to go to their boss and the personnel department to obtain the approval to grant a higher salary. By offering them ammunition, such as, “My experience with your systems is an asset and will save a lot of time since I already know the software,” they can better persuade their boss and come back with a higher offer.
Stress the job needs, your abilities to do the job, and what your contributions will be.
3. Use a Negotiation Lead-in Statement
To break into the discussion about salary, say, “I’m really interested in the position. I was a little disappointed since the offer was lower than I expected, especially since I have this experience or these skills (note something specific) and will come up to speed quickly.” Then be quiet and remain quiet while the employer makes the next move. Another approach is to say, “I’m very interested in the job, and we are close to my salary needs, is there a possibility of negotiating here?” Smile and follow the employer’s lead.
4. Negotiate to Get the Money Up Front
Cash shall always remain king. Promised bonuses, raises, stock options, and reviews in a few months all have a way of never happening down the line. Every dollar you negotiate into the salary base is more money you can spend on things you and your family want. Work toward the extra money up front. These negotiations could give you in minutes what would take years to achieve with raises.
5. Try
Most people, especially women and unemployed people, are afraid to try. Women by nature devalue themselves. They don’t recognize their full worth in the workplace and rarely demand it. Salary studies still reveal that women are paid substantially lower than men because women allow it. I encourage every person to expect and seek comparable compensation for the job performed. One client sounded shocked when she called to say that she followed my techniques to the letter and the employer offered her $9,000 more. She was astounded, but she wouldn’t have been if she had more self-confidence about her value as a marketable employee.
The unemployed person typically feels they sit in a difficult spot. They often need the job and the employer knows it. In this situation, first reiterate what you bring to the employer. Try to get fair compensation. Oftentimes, the employer will start with a lowball offer just to see if you will take it. Test the waters to see if there is room for them to pay more. There almost always is. If you’ve been actively interviewing, it doesn’t hurt to mention that there are other companies interested in your talents.
6. Be Specific When it Counts
The employer may ask you what figure you have in mind. Try this: “According to all the salary survey data, someone with my ten years of experience would be in the upper 70s.” They may ask for the number; then reveal what you want: “I was thinking $78,000 is what I’d accept.” Be willing to wait. They may need to go back and ask HR or their boss to get the additional dollars. If they want you, they’ll be your advocate and almost always come back with more than they originally offered.
7. Don’t Forget to Negotiate the Perks
Compensation benefits come in very complex packages, from nothing at all to free daycare services, health-club memberships, and soda and pizza. Consider the extra value a company’s retirement plan adds—some are great and others offer nothing at all. What about vacation time, flexible hours, tuition reimbursement, fewer hours, days off, relocation expenses, stock options, a company car, expense accounts, bonuses? Perhaps the salary cannot be raised, but additional benefits could be added.
Vacations and days off can often be negotiated. Be careful because other staff often resent favoritism to a new employee. And just because you had five weeks vacation at your last company (with ten years of service), it is unlikely the new company will give you five. Be reasonable, but do inquire if there’s anything more they can do. Employers often respond by offering an additional week or two.
Look closely at the medical plan. What kind of coverage is provided? What deductibles does the plan include? Who pays for dependents? If you pay, what will that cost be? Many companies’ health plans offer lousy coverage with $5,000 to $10,000 deductibles every year. My clients have successfully argued for a higher salary to compensate for switching medical plans when their old employer had better insurance or covered the entire family with a tiny co-pay, and the new one covers just the employee. Additionally, if you or a family member has a chronic illness check with the new company’s insurer to be certain your medications and doctors are covered before you accept the job, as these expenses can become exorbitant if you must pay them once you enter the new plan.
Signing bonuses are again popular. Executives and those with sought-after skillsets in high-tech, manufacturing, legal, and healthcare organizations are likely to secure one. Oftentimes, you can ask and secure one no matter what industry or field you are in. Even nonprofits offer this onetime perk. Signing bonuses can range from $3,000 to $25,000, with $5,000 or $10,000 being most common. You almost always have to ask to get this bonus, but employers usually say yes, so inquire.
Stock options are real money if you are granted a block of stock and they trade above your strike price. See stock as a nice extra but don’t accept it in lieu of salary. Cash is, and always will be, king.
Relocation packages come in all prices and sizes—everything from $10,000 up to all moving, real estate, and temporary living expenses. Listen to what’s offered, and find out what your length of employment must be to avoid paying all the money back. There is usually some latitude to cover more costs, so if the employer is being conservative or stingy, this is a good place to ask for more financial assistance.
Predetermine which benefits are important to you and negotiate for them.
8. Practice
Think through the negotiation interview. Visualize a successful outcome. Then ask a friend to role-play the interview with you. Defend why you are worth the money. Listen to the feedback—did you convince them? This preparation will decrease your anxiety and increase your confidence.
9. Know Your Bottomline
Only you can decide when the offer is too low. There will be other offers, but they may be weeks down the road. Never ever bluff the potential employer. Offers can be withdrawn when a job hunter says, “$66,000 is as low as I will accept.” Be prepared to keep looking. Sometimes that is the right move for you. Decide on the lowest figure you can reasonably accept, one that will cover your bills and allow you to concentrate on succeeding in the job and not immediately start looking for another, higher paying one.
10. Get an Employment Letter
Once you have agreed upon all the terms, ask for an employment letter. You can offer to write it or the employer can, but be sure the employer signs it. This letter should outline all the terms of your employment, covering salary, signing bonuses, stock options, starting date, benefits, and particularly noting anything different from the organization’s normal policies. Too many promises are made and quickly forgotten once you start the job. Get the details in writing so there are no misunderstandings later. People who have failed to do so have suffered when the promised extra week of vacation was “forgotten” once they started. A written agreement protects what you’ve negotiated for. These letters are very common, and it’s wise to obtain one.
What to Do with Multiple Offers
Oh, the luxury of choices. Be sure there is another choice. Once a firm offer is made, job hunters become convinced that the other job for which they just interviewed will bring an offer, too. Will it? Employers don’t like to be pushed just because you have “other opportunities.” A straightforward approach works best. Call the other employers with whom you interviewed and tell them you have a firm offer. Explain that you still have a strong interest in their job. Ask them for a status report. Tell them your timeline and wait. If they are going to make you a firm offer, they will contact you within that time limit. Sometimes, you are not their first choice and they will say so. Either way, you will know where you stand. A job in hand is a real job—not a hope, dream, or belief. Make your decision based on facts, not wishful thinking.
When two solid offers stand, create a pros-and-cons chart for each job. Then decide which one you want, and negotiate hard for the best terms they can offer, making them aware that they are bidding against another company for your services.
How It Works
I continually hear from clients, seminar participants, and job hunters who’ve read this book, saying how they’ve successfully negotiated a better compensation package. Many are able to get a signing bonus simply by saying, “What about a signing bonus?”
When Michael was reluctant to accept a promising job offer, he shared his reservations with the hiring manager: “If I stay at my current job, I’ve got a major $30,000 bonus due on January 1. I’m tempted to take your job, but this is a significant stumbling block. Could I maybe get some kind of signing bonus?” The result was a $20,000 signing bonus and $10,000 more in stock on arrival.
Jessica told a potential employer, “Considering my twelve years of expertise in major event planning, I thought your offer was a little on the low side.” She admitted to me that remaining quiet was then the hardest thing she’d ever done. The employer responded: “Oh, I know we can do better. Personnel makes us offer a low-end figure just to see if you’ll take it—many do, you know.” The next morning when the employer called back, Jessica was $6,000 richer.
Sometimes the salary’s acceptable but the benefits, particularly vacation, are not. And although many employers have set vacation benefits, you can usually get more. This happened in Bob’s case, at a large healthcare facility where the salary was what he’d expected but not the vacation. He phrased his concern this way: “Your salary is in the range of what I expected. But after having 25 vacation days these last several years, it’s a long reach to go back to just 10. It seems to me, 10 days is great for a beginner in the field, but as a professional with all the experience and accomplishments I bring to the table, I’d need vacation to rejuvenate and recharge my batteries from the stress these jobs entail, and 10 days seems too much of a slip backward.” They responded: “What do you think is fair?” And Bob replied, “In my mind, 18 to 20 days is fair.”
The employer had a reputation for being bureaucratic and rigid and yet they surprised us both when they came back with 18 days off. Bob took the job and has been a great asset to them since. Incidentally, the salary was a very nice bump up, too.
Sandra graduated from a good college and began looking for a social-work job. She interviewed with a small agency and was thrilled when they offered her the job until she learned how low the salary was. She consulted with me after her best efforts were met with the response, “This is all we can pay for the job.” Sandra really liked the position and the boss, who had a good reputation as an excellent social worker. I pointed out to Sandra that in her first job after college working under a boss who would teach her a lot would be a valuable asset in launching her career. She took the job, and under the boss’s tutelage has become a good social worker herself. Two years later, she has just moved on to a great new job, ahead of her friends, and negotiated a significant salary increase this time around. When making decisions, it’s important to consider what is best for your career and your long-term happiness, and to use that as a decision-making guideline.
Tim was frantic when he lost his job. He did not want to relocate, and he knew it would be very challenging to find a new job in his field since few were available where he lived. He came to me desperate and certain he’d need to take a drop in pay, starting at the bottom in a new field. I proved him wrong. We rewrote his resumé, polished his interview skills, and he landed a new position that was a career change. He very reluctantly tried salary negotiations because the offer was higher than the old job, and he assumed he had little to persuade them with. We worked on the psychological obstacles that stopped him from asking for more salary. He followed the strategy we’d outlined, noting his strengths, planning, and managerial experience. Tim’s move resulted in a $16,000 salary raise! Not bad for ten minutes of conversation.
In summary, your five keys to salary negotiation success are: