Salary Negotiation Guide
by Susan Ireland
Almost everybody feels like they're in a pressure cooker when it comes to bargaining, and salary negotiation is no exception. But it doesn't have to be that way—a little knowledge can turn the heat down and give you the confidence to be a strong partner in a business transaction!
This guide is about sharpening your negotiating skills with some insider tips on how employers think about money and how you can ask for what you want.
Here's what you'll find in this guide:
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When to Talk Salary
There are two schools of thought on when to bring up salary. One approach is to steer clear of salary talk until after you have a job offer. The other way is to find out up front what the salary range is so you don’t waste your time on something you don’t want. Both ways have worked for lots and lots of people. Talking about money is a very individual thing, and you have to figure out which approach is a good one for you. See if this helps:
If you’re pretty new to your career, or you're struggling in a really competitive job market, it might be better to put off salary talk until after the job offer. Once you’ve sold the employer on your qualifications, you’ll be in a better position to talk money.
On the other hand, if you’re accomplished in your field, you know your minimum worth, and you don’t want to waste your time applying for an under-paying job, doesn’t it make sense to find out if the salary is at least in the ballpark before going through the whole application process? Maybe you don’t want to pin down the exact figure, but knowing what the range is could save you and the employer a lot of time.
Whenever you decide to talk money, you want to have your bargaining hat on straight. To help develop a strategy, fill out the following two "thinksheets."
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Preparing for Negotiations
Your perfect job won’t be so perfect unless it pays enough to support your lifestyle... or at least pay the rent. Before you start looking for one, you should know how much money you need to live on, and how much you’d like to live on—there is a difference! Use the following "thinksheet" to figure those two amounts.
Your Salary Range Thinksheet
| EXPENSES |
AMOUNT YOU NEED |
AMOUNT YOU WANT |
| Home (mortgage / rent) |
$ |
$ |
| Food |
$ |
$ |
| Clothing |
$ |
$ |
| Telephone / Internet |
$ |
$ |
| Utilities |
$ |
$ |
| Household items (e.g., light bulbs, paper towels) |
$ |
$ |
| Home maintenance / repairs |
$ |
$ |
| Pet (e.g., vet, food) |
$ |
$ |
| Car (e.g., gas, maintenance, registration) |
$ |
$ |
| Entertainment (e.g., movies, cable TV, eating out) |
$ |
$ |
| Education (e.g., workshops, books, periodicals) |
$ |
$ |
| Alimony / child support |
$ |
$ |
| Debt (e.g., loan and credit card payments) |
$ |
$ |
| Medical (in addition to insurance premiums) |
$ |
$ |
| Professional services (e.g., accountant, lawyer) |
$ |
$ |
| Career development (e.g., counseling, workshops) |
$ |
$ |
| Insurance premiums (e.g., home, car, disability) |
$ |
$ |
| Retirement contributions |
$ |
$ |
| Property taxes |
$ |
$ |
| Bank fees |
$ |
$ |
| Charitable donations |
$ |
$ |
| Vacation |
$ |
$ |
| Other |
$ |
$ |
| TOTAL |
$ |
$ |
| SALARY RANGE (Totals x 2)* |
$ |
$ |
*Multiply your totals by 2 to roughly allow for social security, federal and state income taxes, and unpredictable expenses. For an accurate calculation, consult your accountant who will take into consideration your income tax bracket and status.
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Salary Surveys
Because the salary climate is constantly changing, you need to know where to find the latest data. Here's a list of the top compensation resources:
- Bureau of Labor Statistics
- Securities and Exchange Commission
- JobStar (www.jobstar.org)
- The American Almanac of Jobs and Salaries
- Professional trade journals and business magazines
- Newspaper and online job listings
- A career coach
Research these salary surveys and get a feel for what salary is typical for the type of work you are seeking, in your part of the country. Does the dollar figure fit with the Salary Thinksheet you created? If not, you may be looking for the wrong job or need to adjust your Needs column in the thinksheet.
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The Interviewer's Values
Hopefully, when you were doing your employer research you were able to dig up your interviewer’s salary. If you can't find out the employer's exact salary, go through the research steps in mentioned above to find the average salary for someone in her position, industry, and part of the country. Even a ballpark figure will give you the psychological advantage of sensing how she values a dollar and if she’ll feel personally threatened by your salary request.
Put yourself in her shoes: You'd probably want your subordinate to make at least 10% less than you do, right? Keep that sensitive issue in mind when you set your salary request figure.
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Interviewing with a Small Company
In small companies and nonprofits, salary policies are not usually set in stone (or may be non-existent). In fact, many managers of small organizations say they find themselves in a quandary when it comes to setting appropriate salary. They want to offer competitive pay in order to attract good workers but they're afraid of inflating their already-fat overheads. The problem is, they don't have time to keep up with the job market to know what the going rates are.
Knowing the small business manager's predicament can give you a leg up in your negotiations: Provide the employer with salary stats for your profession that will educate him and support your compensation request.
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Let the Bargaining Begin
You've got your figures all lined up, your briefcase is packed, and you're ready to go face Ms. Employer and tell her what you want. Before you take the big step, glance over the following guidelines to be sure you get all you deserve from the transaction.
1. Deal with the real boss.
As early as possible in your interview process, find out who the final decision-maker is with regard to hiring, determining your job title, and authorizing your compensation agreement. Knowing who has the final say will help you develop a negotiating strategy for that manager; and hopefully you'll be able to speak directly with her in the final stages of your negotiation, if not before.
2. Go cherry picking.
When your salary negotiations start, remember this terrific bargaining technique called "cherry picking": Imagine that you and the employer are under a cherry tree. You’ve loaded lots of bargaining “cherries” on the tree, knowing that not all of them will get picked. The manager, feeling pretty smart about his bargaining skills, will likely pick a few of your "cherries" and leave the rest. Likewise, you can pick and choose from what he has to offer. In the ideal salary negotiation, you and the employer walk away smiling, feeling that you both got a good deal.
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3. Schedule annual reviews.
It's in your interest to have an agreed-upon schedule for your annual reviews. Try to negotiate something like this: an initial salary review after your first six months on the job and annually thereafter. That way you'll squeeze in more pay raises during your tenure. Once your schedule is fixed, mark your calendar so you can remind your boss it's review time, if he lets it slide. Prompt reviews are important since every day on the job should be bringing you closer to a raise.
4. Figure out the negotiation psychology.
Having a few job offers on the table at once can increase your bargaining confidence. Try to market yourself to more than one employer so that you can compare offers and career opportunities. It will also give you an added confidence that could give you the upper hand in the salary negotiations.
Before going into salary negotiations, ask yourself the following questions to understand where your psychological strengths lie.
- How much do you want the job you're interviewing for?
- Aside from money, does this job fulfill your other requirements, such as career growth, social commitments, or educational advancement?
- Do you have other job opportunities (even offers) available to you?
- How do your other job opportunities measure up to this one?
- At what point are you willing to walk away from this negotiation?
To get inside the employer's head, ask yourself the following:
- How desperate is the employer to fill this position?
- How many other candidates are in the line-up for the job?
- How do you measure up against the other candidates?
- Does this employer know about your other job opportunities/offers?
- Does the employer know how much compensation you've been offered by other employers?
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Talking Money
Here's a simple rundown on how to talk money:
- Get the employer to state a salary range before you mention yours. It’s a well-known poker maxim that the first player to tip his hand is likely to lose.
- Don’t say "yes" or "no" to the offer until you’ve had time to think about it. Best thing is to call a time-out to crunch your numbers—even a day or two. Say something like: ”I’m glad we’re both enthusiastic about my working here. I’d like to take your offer home and think about it. Could we meet tomorrow to talk more?”
- Consider all the elements of your compensation package (insurance, retirement plan, and all that good stuff) before settling on a salary.
When all is agreed upon, get it in writing.
Counter Offers
Things might not fall into place immediately in your bargaining efforts. The employer may not readily agree to all your requests (remember, for an employer, cherries are never in season). Instead of signing a deal right away, he may make a counter-offer. If that happens, take some more time out, assess the situation, then return to the bargaining table with your response.
Take your time to be sure you're making the right decision with regard to your long- and short-term goals. Maybe there's a way to compromise on one of your points and compensate with another request. If you find yourself wanting to make a counter-counter-offer, put together a package that feels like a win-win for both of you. Then, take a deep breath and go back into the ring with confidence.
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The Power of Print
When the negotiating is completed, get your agreements in print. After all, if an issue comes up later, the lady who promised you that you'll get a new Olympic-sized swimming pool when you reached your quota may conveniently forget that she ever discussed it. Or, she may be long gone from the company by then. If your negotiated points are in writing (either a letter of agreement or an employment contract), there shouldn't be any problem.
Agreeing to Agree
A letter of agreement is sufficient for most new hires who aren't headed for executive or key positions. The letter should be written by the employer, and counter-signed by you.
Even though the letter seems simple and straightforward, it might warrant a quick review by an employment attorney just to make sure it protects you sufficiently. Here's what a letter of agreement should contain:
- The terms and conditions of employment, salary, benefits, etc.
- A clause that clarifies how an employment dispute (should one arise) will be settled (either arbitration or litigation), and who will pay the legal fees involved. It's almost always preferable for you (the employee) to maintain the option to resolve an issue in court rather than be forced to settle through arbitration.
- A clear description of the reporting structure and your job duties. (This is especially important for those holding management level positions.)
- Any "gentlemen's agreements" that you've made with the employer that aren't in line with company policy (e.g., you will get more than the policy-allowed number of paid days off).
Be sure that your letter of agreement is signed by someone high enough in the organization to authorize your agreed-upon points, especially if any of those items go against standard company policy.
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The Contract
If you're going to be a key figure in the organization, it's to your advantage to have everything spelled out in an employment contract. Before signing on the dotted line, hire an employment lawyer to review it. Although a few hours with an attorney isn't cheap, imagine how much his good counsel could save you in grief and litigation fees, should an employment dispute arise down the road.
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8 Salary Negotiation Tips
- Some employers and recruiters won't let you pass "Go" in your job search without stating your salary range. Be prepared before contacting one of these employment folks, by figuring out your salary strategy.
- Here's an easy, yet impressive way to support your salary request: Provide written materials. You could bring salary stats for comparable work in your field, your previous performance evaluations, and your letters of recommendation.
- Never lie to a prospective employer about your previous salary. It can be grounds for termination after you're hired.
- Increase your perceived value by telling the employer of another job offer you've received (if, in fact, you've received one).
- Wear your salary range: Dress the part, and let your body language speak to your professionalism. These outer trimmings will have an influence on how valuable you appear to your potential employer.
- While negotiating your employment arrangements, be sure to nail down the reporting structure for your new job. Once you're on board, you don't want any surprises about where you fit into the hierarchy.
- Ask your interviewer about the company's policy for awarding raises. That way you'll be able to calculate what starting pay will work for you in the long run.
- Hire a coach or lean on a business-savvy friend to get objective support throughout the bargaining process. There may be times when you'll need to brainstorm about your strategy, or get a boost for your self-esteem.
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