Salary Negotiation Strategies That Actually Work
That’s because studies show that approaching salary negotiation with a “win-win” mindset is more likely to result in a “win-lose”, with the disadvantaged player, the job candidate or employee, as the de facto loser. Negotiations are best viewed as friendly competitions, the key word being “friendly.” If you meet pushback you should be prepared to forgo some of your polite northerly niceties, but going in like a Trump in a china shop is not the answer either.
Finding the right balance at the very start pays long-term dividends, both in terms of your career prospects and wages and benefits. Every negotiation occurs in a specific context. Know which factors have the potential to affect your success or failure and then focus on the ones you can control.
Know Your Levers
There are 4 main factors that affect salary negotiations:
- Business Climate: health of economy and specific industry; unemployment rate, both general and specific to the industry; demand for your skills within your industry.
- Company: health of the company; stage of business cycle, e.g. start-up, turnaround, growing, mature, dying.
- Hiring Manager: urgency of hire; degree of authority over hiring decision and budget
- You: skills, experience, expertise, financial and social capital, career goals.
Obviously, you can’t do anything about the general economy or the health of your industry sector. The financial upside is limited in a weak economy with a high unemployment rate, or if you work in an industry that’s mature, in a turnaround state, or is being disrupted. The opposite applies if you’re fortunate to work in a hot industry that’s awash in excess capital. (ICOs anyone?)
What about #3, the hiring manager? To know how much leverage you’ve got, it pays to do some research. Find out what the urgency is around hiring for your position and how much discretionary power the person you’re negotiating with has in terms of greenlighting financial bumps or perks. If you don’t already know someone on the inside who can inform you, then check the company’s social media feeds or sites like Glassdoor for hints.
On an individual level, be prepared to justify why you deserve more money. Do an inventory of your top skills and attributes from the perspective of your employer or potential employer. In today’s knowledge-based economy, the right person can add immeasurable value to a company. Also, be wise about your other assets. If you have a wide network of contacts and/or you have deep financial resources, you can afford to negotiate harder since, unless this is the job of your dreams, you’ll create other opportunities for yourself.
That was a good warmup. Now let’s get specific, roll up our sleeves, and pull some levers.
Negotiations are best viewed as friendly competitions, the key word being ‘friendly.’ Going in like a Trump in a china shop is not the answer.
Research. Strategize. Prep.
Know Your Worth
Plan ahead and research your value in the marketplace. Check out professional associations, alumni groups, as well as salary reports online. Public sector or union jobs make salary information available, but these groups have more rigid pay structures. Money silence is pervasive. Asking, point-blank, what someone makes is a faux pas, and, even if they do answer, how do you know it’s the truth? Instead, opt for the “wisdom of crowds” by posting your query on LinkedIn or Quora, as well as industry online bulletin boards. Once you have a ballpark, try to get confirmation from friends and colleagues in similar positions with a casual, “Hey, I’ve heard this job pays around $50,000, does that sound about right?”
There are differing opinions on who should be the first to name the number. Studies show that when the candidate states a specific number, (not $70,000 but $70,560, for example), it “anchors” the negotiation around that amount, pushing the salary higher than it would otherwise be. Most hiring managers are trained to push the candidate to state her/his desired salary or raise. Don’t lowball yourself or you could be stuck below what was budgeted and your future income and benefits will forever be tied to your initial salary.
Pep It Up
Psyching yourself up for the negotiation actually works. Drink some coffee, (within reason Canada), and listen to a song that revs you up—this will help you project an aura of confidence and also make it more likely that you’ll advocate for yourself instead of accommodating. “Stone Cold Sober” by British singer Paloma Faith has a high-energy mix of sass and quirk, that works for me. If the negotiation is face-to-face, take a strong body posture, called a “power pose.”
Make it Personal
Face-to-face or telephone negotiations are stronger than those via email. If you have trouble making eye contact, you’re viewed as less trustworthy, so stick to phone conversations, if possible. Revealing something personal helps to build trust, doubly so if your negotiation partner does the same. Don’t be afraid to show your passion for a hobby or a cause but avoid polarizing ones unless you’re certain your interviewer shares your views. Safer bets are sports, TV shows, films, books, etc.
What do you do when they won’t meet your price? Don’t bail, the negotiation isn’t over. Be prepared with a list of things you value: some might be financial, others more lifestyle-oriented. Most companies set funds aside for employee education, professional association membership fees, club fees, health initiatives, etc. Even when you’re at the top of your salary grade, there may be other ways to get a “raise.” If possible, aim for those that are non-taxable benefits.
Here are some key factors to consider:
- Accelerated salary review. (Get this in writing or it will never happen.)
- A salary review if you meet certain agreed upon targets. (see above)
- Hiring bonus for leaving your other job and its accrued benefits. Try to get this in a non-taxable form, if possible, because a temporary bump in salary could put you in a higher tax bracket.
- Bonus pay or incentives.
- Extended health which could include access to executive medical services, personal fitness/diet coach, etc.
- Additional insurance such as critical illness, long-term care, as well as top-ups to short-and long-term disability payments.
- Private retirement arrangements. Most large companies offer group RRSPs to which both employer and employee contribute. However, these are subject to annual contribution limits. RCAs (Retirement Compensation Arrangement) permit your employer to make additional contributions to supplement your retirement income.
- Expenses (transportation, parking, dining, moving, housing, education…)
- Airline upgrades
- Flexible work schedule
- Club membership
- Expense account
- Company car
Read the Fine Print
Once you’ve received a formal, written offer, read it, or better still, have an employment lawyer review it. Most offers are usually boilerplates that may include a 3-month probationary period, minimum severance, and a waiting period for health benefits for yourself and/or spouse. Ask to have all of these conditions removed.
You’ll never have more leverage than you do now. Once you’re employed, these will be impossible to remove or amend. What if you leave your job to take this new one and are terminated within three months? This can happen for a variety of reasons, such as if the company is acquired and your position is made redundant. Most employers are willing to waive these clauses, if you ask. They’ve already invested a lot of time and should be convinced that you’re the right hire.
Never enter into a negotiation as a bloodsport. If your demands are not met, you can walk away. But, remember, it’s much easier to find a new job from an existing one.