Strong résumé? – Tick!
Top notch interview performance? – Yep!
SALARY NEGOTIATION SKILLS? – GULP!
Rightly or wrongly, many Executives think they have the basic tool kit of applying for jobs down pat.
Salary Negotiation, however, is another kettle of fish. When delivering my Executive career coaching, I haven’t met many Executives who are confident about their ability to get a fair salary. And, as I work through strategies with them, I equally haven’t met anyone who’s said: ‘You didn’t need to tell me that – I already knew.’
It’s critical for an Executive to convey confidence and negotiating skill in the workplace. Over 70% of managers that have been surveyed said they agree that candidates should negotiate their salaries and benefits.
The number of Executives who have told me that they just accepted the first offer laid on the table is quite disturbing. What sort of impression does this make?
Show me the money
The situation is particularly bleak with younger professionals where there’s an awful lot of fear around.
Apparently, 22.6% of Millennials don’t know how to negotiate their salary and Millennials currently make 20% less than the Baby Boomer generation did at the same age. Quite logically, because of this lack of knowledge, almost 58% of Millennials have never negotiated their salary and 8. 4 out of 10 are scared of the consequences they may incur when they try to negotiate their salary.
What a disaster! According to a recent study in the Journal of Organizational Behavior, failing to negotiate on an initial job offer could mean missing out on over $800,000 in salary during a typical career. We’re talking about serious stuff here.
The last time I was an employee, pay rises were in the order of 5-10%, with 5% generally being reserved to mediocre performers. Those days are well and truly gone.
I also used to think that the starting salary wasn’t important. I thought that if I performed well, my results would be rewarded at the next salary review.
Whatever you do, don’t imitate me. It’s critical to set your base salary correctly. All future pay rises will be a percentage of this amount, so if you set it too low, you will suffer for many years into the future.
It’s not for the likes of me…
One of my friends, Rachel, was offered an internal promotion a few years ago. She was shifting from State to National IT Manager. At the time, I made the idle comment: ‘That would have to be worth at least $300,000’.
Rachel was quite surprised and went off to investigate. She found that, indeed, the roles generally were paying more than $300,000.
When Rachel negotiated with her organisation, they were aghast. They commented that to give her what she wanted would be a 70% salary increase, that they’d never awarded such an increase to an internal applicant and that they couldn’t do it.
Rachel held firm and she was successful!
Immediately afterwards, her organisation prepared itself for an international IPO, which resulted in a world-wide salary freeze for two years. If Rachel had given in, not only would she NEVER have caught up with her desired salary, she would have effectively gone backwards, as did most of her colleagues.
Master the 4 P’s
For you to master salary negotiation, involves the 4 P’s: patience, persuasiveness, poise and persistence. Here are 5 tips for you to consider.
Tip #1: Ignore your current salary
Your starting point is the market rate for your skill set.
As you prepare to negotiate with your prospective employer, you might be focusing on ensuring you’re not going to be underpaid. Don’t ignore the dangers in being overpaid.
Your new employer will quickly assess your true worth once you settle into the role. If they believe that you are not worth your salary, it generally leads to trouble. Often, your role will be the first to go in a restructure.
It can be very difficult to come to terms with adjusting your salary requirements downwards. However, it is critical that you do so at the start of your hunt for a new role.
If you’ve previously been paid above market rates yet insist on matching your previous salary, you risk missing out on good roles. Moreover, it can be very difficult to regroup and maintain your confidence if you have to start your job search again several months later at a new, lower salary level.
I can remember working with employees of a multi-national company, who would cheerfully announce that they knew they were paid 20% more than market rates and that they would never get that money again. They easily moved into new roles, with such a realistic attitude.
Tip #2: Research market rates
Salaries vary greatly depending on industry, experience and location, so it can be difficult to know if your salary is consistently aligning with your career progression.
The best place to start is job postings for similar roles in your area so you can establish a ballpark salary range.
Investigate job sites like Seek.com.au or Indeed.com to get a feel for the going rate for someone with your experience, knowledge and skillset in your location. Talk to recruiters who work within your industry, as they usually have a good grasp of what a realistic expectation would be.
More and more recruitment websites like global job site Glassdoor for example, have tools that provide a personalised estimated market value based on their available and previous job listings within your industry.
In this post-Covid age, salary tied to geography is also changing as more companies move toward remote-first and remote-friendly cultures. Some companies work out pay based on the location of Head Office while others vary it according to your location.
Finally, take into account the size and sophistication of your target organisation.
Tip #3: Keep your salary under wraps
Often prospective employers ask for your current salary details. Apart from this information being none of their business, do you really want to prejudice an employer’s judgment about you by divulging what someone else paid you?
There is no law that says you have to divulge your past salary or that you must allow your future income to be limited by your past income. There’s also no law that says you have to help an employer negotiate against you.
Your value depends on the needs and judgment of the particular buyer, and on the buyer’s ability to pay. The minute you expose your salary, any negotiating leverage you have disappears. The employer now has the edge. The employer’s ability to pay you what you’re worth isn’t the key issue now. In fact, the employer will usually forego real negotiations.
So, gather your courage and decline to provide salary history. State politely and firmly that you think it’s more useful to focus on this role and what it is worth in the current market place.
If you decide to provide your salary history, consider making a very firm statement of your required salary range. Then, add that the employer won’t want to waste her time or yours if she can’t make an offer in that range.
Tip #4: Prepare a strong and strategic salary negotiation approach
Defer talking salary as long as possible. The longer you wait, the more power you have.
The ideal time for talking salary is when you are the final candidate standing and you get the job offer. Asking at any point earlier in the process can be perceived as you being too focused on money and can also lead to you having to reveal what you would be willing to accept.
The single most important ingredient for negotiating effectively is to set the right attitude about the process and people you are dealing with.
I suggest to my clients that they identify three distinct elements well before they talk turkey with the employer:
- A elements – their ‘must haves’, which have to be met if they are to accept the job
- B elements – their ‘wanna haves’ which they’d like to achieve but which are not deal breakers
- C elements – their ‘throw aways’ which they use as bargaining chips so that they can achieve their A’s and B’s
While every situation is different, there are some basic tenets to keep in mind when you begin to develop your negotiating strategy.
1. Use your value, skills and experience to negotiate.
Negotiate from a reasonable position and link each negotiable item to the job itself. There must be a rationale for your proposal. Paint a clear picture of how performance results will be enhanced by granting your request.
Do not use your need for the job to negotiate. Negotiations should never become emotional or hostile.
It’s about managing some inevitable tensions in negotiation, such as asking for what you deserve without seeming greedy, pointing out deficiencies in the offer without seeming petty, and being persistent without being a nuisance.
Keep in mind the inherent tension between being likable and explaining why you deserve more: Suggesting that you’re especially valuable can make you sound arrogant if you haven’t thought through how best to communicate the message. You may need to refine your communication style.
2. Set all your negotiation points and objections out at one time.
Otherwise, you create the suspicion that there will always be one more item about to be disclosed. The other party will lose faith in you and you will lose their goodwill.
Make sure that you highlight the relative importance of each item to you. Otherwise, she may pick the two things you value least, because they’re pretty easy to give you, and feel she’s met you halfway. Then you’ll have an offer that’s not much better and a negotiating partner who thinks her job is done.
If you’re legitimately concerned about parts of the offer, talk about all your changes at once. If you ask for only one thing initially, she may assume that getting it will make you ready to accept the offer. If you keep saying ‘and one more thing…,’ you’re likely to alienate her. Note that 87% of American professionals aged 25 to 35 who countered on salary and other compensation and benefits got what they asked for.
3. Be willing to make concessions. Aim for win-win.
Negotiations are two-way and it is important to show you’re willing to compromise. Otherwise, even if you’re the only candidate, the employer might just sit it out and wait for someone else. Here is where your C’s come in handy.
4. Set the agenda to control the discussion.
Develop an agenda for the negotiation and prioritise the items on your wish list, either starting with the particular item that is most important to you or building up to it at the end. It’s important to avoid impromptu decisions during a negotiation. You must know your bottom line and decide the limits of your flexibility before you begin negotiation. We’re talking about your A’s here.
Don’t assume the first offer is fixed. Even if the interviewer tells you it is, it rarely is. If the same figure is offered a couple days later, it probably is the last offer.
Tip #5: Balance salary, bonus and benefits
In most negotiations, base salary is the most important item for both parties. For you, it is probably the key tangible factor; for the employing organisation, it is the cost factor. To many, salary is also the scorecard of value and progress, which gives it symbolic importance, too.
1. Avoid an early deadlock.
If the salary you want is outside the norm or the salary issue is difficult to resolve for other reasons, explore how your skill can positively impact the organisation or how the job scope might be enlarged to justify more salary.
2. Explore the bonus structure.
Enquire how it will be determined and what range of magnitude is likely, based on history and current profit trends.
3. Consider non-salary rewards.
There are many other remuneration factors that can be traded off in the package e.g. benefits, stock options, equity and profit share. And there are other non-financial perks to negotiate such as additional leave or study allowances.
R…E…S…P…E…C…T (as the song goes)
Salary Negotiation is not about greed. It’s about respect. It’s about you ascertaining your worth in the market place and being a good enough negotiator to obtain it. Done with the requisite skill, it starts your relationship with your new employer off on the right note – you present as someone who is strong, who expects to be and is treated with respect.
Negotiations are a process, not an event. A successful negotiation is one where both you and the organisation think as well or better about each other after the negotiation ends as you did before it began.
You are no longer operating in an economy where you work for 30 years and retire with a gold watch. In fact, you are likely to switch jobs every four to five years on average. This means that being able to negotiate your salary is a critical skill.
Any situation that involves asking for more money can be awkward and unpleasant. But when it comes to salary negotiation, you should consider it one of life’s necessary evils (like dentist trips or insurance payments) that you just have to endure to prevent future regrets.
Getting it right brings immense benefits. I can remember one of my clients, to whom I was delivering Executive career coaching, announcing to me after his salary negotiation, ‘Catherine, you have no idea! They gave me my A’s, B’s and C’s’. He was certainly what I call a happy chappy.
So start today. Next time you’re at the table, gather your courage and do it! Negotiate your salary for your future.
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