The fine art of salary negotiation
How you address the whole salary negotiation process is arguably one of the most challenging part of the job search. Let’s be honest – no one really likes to talk about money. It’s, well, awkward.
Plus, you probably have a bunch of questions running through your head, like:
When’s the best time to bring up the subject of money? It depends.
Should I avoid bringing up the topic of money at all costs and let the employer take the lead? It depends.
Is there ever a time to take the “strike first” approach and address money with the employer? It depends.
You’re probably also stressing out about how you’re going to answer questions like:
“What are you currently earning?”
“What salary are you looking for?”
“What did you earn at your last 3 positions?”
At some point, the subject of money will have to be discussed
You certainly don’t want to waste time taking time off from your current position (and risking your job) to interview for an opportunity that doesn’t pay anywhere near what you want. Right?
How you broach the discussion of money will largely depend on you and your situation.
You need to know what you’re going to say and how you’re going to say it so that you don’t blurt out something lame during an interview that you later regret and can’t take back.
So, what do you?
Don’t start talking about money until you’ve done these 4 things FIRST!
#1: Research salaries
Just because you earn $X at your current job doesn’t mean it’s what you “should” be earning at your next position or – more importantly – what you will get.
Maybe it should be more. Maybe it should be less. It depends.
If your current salary is less than the industry standard, then you might be in a good position to negotiate for more.
Alternatively, if your current salary is higher than the industry standard (or even on par), then you have to come up with compelling reasons why you are asking for more. If you can’t, this might be a situation where your move will have to be for reasons other than money.
The reality of salary increases
In the perfect world, we would all get a substantial pay raise when making a job change, but in most cases, there is an acceptable increase which you need to determine before you launch a job search.
In my professional experience, the average salary bump was 5% to 10% which is in line with what was reported by the Workforce Vitality Report from ADP. This report cited full-time workers who switched jobs in Q1 2017 saw a 5.2% increase in salary (compared to 4.3% bump for those who stayed put).
The point I’m trying to get at is, don’t expect a huge pay bump by switching jobs, especially if it’s more of a lateral move or in a field in which you have little to no previous experience.
It is possible to ask for more than the average increase in certain situations like, if you are in a high demand position, or are transitioning into a higher level position (and have the credentials) or are grossly underpaid. Otherwise, a 5% to 10% increase would be a reasonable expectation.
It’s important that you align your expectations with reality otherwise you could actually harm your job search. If you look like you’re “stuck” on a number, you could be perceived as “unrealistic” and “unreasonable” which could hurt your credibility – plus you probably won’t be offered the job.
Where to find salary information
I recommend you do some research online to find out what your target job’s salary range is in your market. The popular ones are glassdoor.com, payscale.com, salary.com, and salaryexpert.com but there are others you can check out.
If you know someone in the organization you are targeting, see if they’re willing to tell you what a reasonable salary range is for the position you’re going after. If you don’t know anyone, maybe there is someone in the industry you could reach out to who might have this information.
If you are working with a reputable third party recruiter, they might be willing to divulge what the employer’s top dollar is which usually falls in the middle of their quoted salary range.
Knowledge is power. The more you can find out about what the employer will pay (what their top dollar is), the more you are in a good bargaining position.
#2: Be honest
What are you really worth? Are you under-valuing or over-valuing your worth? Or are you 100% bang on?
Be brutally honest about what you could realistically demand in your market.
Do a thorough inventory of all your skills, experience, education, knowledge, attributes, other credentials, and accomplishments and determine how they match up with what the employer wants and needs.
The closer a match you are, the more you might be able to demand. The farther off you are, the less you can demand.
#3: Establish a number
After you’ve uncovered the industry standard salary range and the employer’s top dollar and you’ve completed your “inventory”, the next step is to decide what is the LOWEST base salary you are willing to accept.
You need a bottom number for two reasons:
A): to help you determine at what point you will walk away from an offer. It won’t be too far below your bottom number
B): to give you a good starting point from where to negotiate UP
Your bottom line number should be based on NOT having any benefits or add-ons because those things are NOT guaranteed and will vary from company to company.
Obviously, the goal is to negotiate something that’s above your lowest acceptable base salary without going beyond what would be considered “reasonable” given the industry, the market, your credentials, the value you bring to the table, and other factors.
If the employer offers incentives, you could be a bit flexible on our bottom line number if that’s what it’s going to take to close the deal for a position you really want.
Ideally, you would have created enough wiggle room in the event that you have to come down a bit on the base. What you want to avoid at all costs is having to ask for more salary after the fact which usually doesn’t go over very well.
As you can probably tell, this is not a perfect science and does require a lot of thought and exploring all the “what if” scenarios.
#4: Be flexible
While you want to establish your acceptable “low” number, you should avoid being too stuck on that number (which is why you need some wiggle room).
Employers prefer candidates who display flexibility since this is a desired quality that they often look for in an employee.
For instance, let’s say the employer comes back with a salary that’s less than your “low” number.
Instead of walking away immediately, it would be advisable to review the entire package to see if there are components that compensate for the lower salary, like stock options, retirement savings contributions, or other things that translate to money in your pocket.
But remember, it’s usually the base salary that’s the only guaranteed part of the compensation package.
If you’re not sure how to talk about money during the interview process, I highly recommend you get some help so you can avoid the pitfalls that can really screw up how much of a salary increase you can get.
See below for how to get some help or click here to set up a free discovery call.
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