6 Top Ways to Create Leverage in a Compensation Negotiation

Michael Solomon
Jul 10 · 5 min read

Entering a compensation negotiation can be intimidating, even for those who have done it many times before. It’s simply human nature to avoid conflict and for most, the concept of negotiating evokes strong images of conflict (though it doesn’t need to, but that’s a topic for another article).

But even worse than avoiding conflict is getting less than what you deserve, which is why we’ve pulled together some time-tested ways to create leverage in a compensation negotiation.

At 10x Ascend, our team negotiates on behalf of the world’s best tech talent. Through decades of experience, we’ve learned that one thing remains consistent: No matter your title, industry, negotiation skills, etc., you probably have more leverage than even you realize. Sometimes it just takes a little perspective to see it.

How to Use Leverage in Negotiation

We’ve identified 6 effective points to make in a compensation negotiation in order to gain leverage. Depending on your situation, some of these tips may or may not apply to you. Nonetheless, consider how leverage can be created from any number of angles.

1. Multiple Offers

The scarcity principle suggests the perceived value of an object increases when availability decreases. Making it known that you’ve spoken with more than one interested party is a great way to take advantage of this principle. But beyond showing that you’re a hot commodity, discussing other offers in your negotiation can serve a couple purposes.

For example, if you’ve already turned down an offer with a compensation package of similar value, why would you accept the one on the table now? Previously declining an offer is proof that you’re not just bluffing; you deserve more and if you don’t get it, you’ll walk away like you already did once before.

Existing offers on the table can also help create leverage. Maybe you’re speaking with another company that offered a higher salary and better benefits. Until this new company can at least match that offer, it will be difficult for you to want to move forward.

2. Leaving a Situation Where You’re Happy

Social Exchange Theory is a communication theory that takes an economic approach to how two parties approach a relationship. The theory suggests that we exchange “goods” in our relationships as a form of social currency. Goods can be any number of things, like status, attention, information, etc.

When entering a compensation negotiation, never forget that happiness is a good. And it’s one that should not be taken for granted. If you gain happiness from your current work arrangement, you’re taking on a big risk that your new employer will not deliver an adequate amount of this good.

To accommodate a potential loss of happiness, it is not unreasonable to request that your compensation package reflects such risk.

3. Willingness to Walk Away

Your ultimate asset in any negotiation is your willingness to walk away from the table. Employment is a two-way street, and you’re not the only one with something to lose if the negotiation falls through the cracks.

Employers have a vested interest in successfully reaching a deal, especially if they think you’re the right person for the job. And the stakes often raise as the recruitment process drags on, as the overhead costs of recruiting, interviewing, and engaging with new candidates adds up over time.

Don’t let a potential employer bully you into thinking you need them more than they need you. The scale is often more balanced than you realize or even tipped in your favor, and the willingness to walk away is a nice reminder of this fact. That said, don’t threaten it if you are not prepared to follow through.

4. Relocation

This is perhaps the most obvious addition to the list. There’s not much more a potential employer could ask of you than to uproot your life for the job–and that’s exactly what is expected in a relocation offer.

This point often speaks for itself in a compensation negotiation. By relocating, you’re potentially moving away from friends, family, safety, stability, and more. Or maybe you simply like where you currently live!

Don’t just accept the fact that a job offer would require you to move. Explain how disruptive this could be to your life and general well-being. If the company really wants you, they’ll compensate you fairly for what they’re asking of you.

Compensation talk aside, there are a lot of moving parts to any employment package. In this example particularly, there may be other ways to sweeten the deal. Maybe you request to split time between two locations. Or maybe you accept the offer on the table, contingent upon the freedom to work remotely. In this instance, don’t let the relocation budget be the risk mitigation. That is there just to cover the hard costs.

5. Previous Accomplishments

Take pride in what you’ve achieved prior to the negotiation in front of you. Maybe you refactored the entire code base of a previous company’s software which will have a lasting impact for years to come. Or maybe you optimized a previous company’s cloud infrastructure, saving them thousands of dollars each month. Sold a start up, built something that millions of people use, you get the idea.

Sometimes we forget to map our accomplishments to the monetary or societal impact they have or will continue to have in the future. Of course, some accomplishments are difficult to quantify, and some may speak for themselves without the need to talk numbers. Either way, don’t be afraid to toot your own horn (or have someone else do it for you), as conveying your accolades might help an employer truly understand why you deserve a better compensation package.

6. Leaving Behind a Client Base

For freelancers or consultants being wooed by a company and willing to shift focus to a more traditional full-time work arrangement, giving up an existing client base is a big risk.

Freelancers know how much of a grind it can be to develop a stable and consistent set of clients. It’s hard work. And once you make the decision to move on from those clients, there’s no guarantee that they’ll want to re-engage in the future. Even if they loved your work, chances are they’ll start working with other contractors the moment you leave.

To leave your client base behind is to put a lot of faith in the idea that your new arrangement will work out. For those in this situation, a compensation package should clearly account for the fact that you’re playing a zero sum game–you’re winning in one area and losing in another.

Closing Thoughts on Compensation Negotiations

Even though it may be awkward and/or uncomfortable, you really have no reason not to negotiate a job offer. As you hopefully realized while reading this post, something about your situation gives you leverage.

And if that’s not enough to get you motivated, consider this: Research shows that the lifetime cost of not negotiating your job offers can exceed $1 million.

So next time you enter talks with an employer, remember that reaching an agreement is no small matter, and it will affect the way you live for the foreseeable future. By negotiating a better offer now, you’ll thank yourself down the line.

10x Ascend is dedicated to helping talented people negotiate better deals. Click here to get in touch and learn more about our negotiation services.


Originally published at www.10xascend.com on July 10, 2019.

Michael Solomon

Written by

Michael Solomon is the co-Founder of 10x Management, 10x Ascend, Brick Wall Management and Musicians On Call.

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