How to Win Your Salary Negotiation
Remember the negotiation is a dance, and, like any good dance, there are a number of moves any partner can make.
There are few things as exciting as the conclusion of a job hunt — that period when you’ve jumped through all the hoops and finally have an official offer in hand to show for it. You’re excited about the role and can’t wait to start. But there’s one last thing to do — and it’s crucial to your career success that you do it right: Negotiate.
Do not forget this step. It’s so important (and overlooked) that I have built my business out of it:
As CEO of a coaching company that specializes in empowering professionals to negotiate, I know the barriers are real. Rarely are we formally taught how to negotiate. And I, for one, can relate to how anxiety-provoking this process can be: You’ve just gotten an invitation and fear that making any overt demands for high pay and excellent benefits might alienate your potential, future employer just as you want to seal the deal.
This type of thinking leads many millennials astray, but it couldn’t be further from the truth. Employers actually expect you to negotiate. Still, negotiations can be tense, and, for millennials with no experience in negotiation, they can be downright stressful. That’s why this five-step process can help you negotiate a job offer like a boss. All it takes is a bit of preparation, some trust, and understanding it’s a give-and-take process that requires everyone to leave happy. Here’s how:
1. Do the research.
Salary research can be used as leverage in the negotiation. Realistic, credible data must be used to back up your value proposition, as your future employer will expect you to know what your skills and talents go for in the free market.
- Geographic location
- Years of experience
- Title of the job you’ll be entering
If you’re one of those millennials with a cool new title like “growth Hacker” or “director of happiness” and scant data exists, you might say to yourself: There’s no data to back up my role. It’s too new.
If that’s the case, don’t fret. You can negotiate instead based upon how you answer this question: What is my value and the return on investment I’ll be bringing to the company?
It’s a bit harder to negotiate from here, as it requires trust and transparency with your potential employer, but it can be done. If it’s an early stage startup, most likely they aren’t able to pay you a lot. But as the venture grows, and becomes more successful, hopefully they can. You should write an agreement that reflects that understanding. Sliding scale salaries are nothing new. Given the risk you’ll be taking on, and the low starting salary, you may be able to negotiate for equity of the company. Remember, it’s all based upon the value you’re bringing and, as I like to say, everything is negotiable.
2. Decide on the lowest number you’d be willing to accept.
Your research will define your salary range, which will also tell you the lowest number you’re willing to accept. This will be known as your walk away point.
Your walk-away point anchors your expectations during the negotiation process. And, should an employer quote you a number lower than that, your job is to see if they’ll raise it. If they cannot, you simply walk away — simple as that! Employers have a tactic for figuring out what’s the lowest number they can offer you by asking you what you previously made. The logic is that what someone paid you before for your skills is in the ballpark of what you will accept now. (Usually it’s 10–20 percent of what you previously made.)
Most people believe they have two options when it comes to answering that question in a interview:
Option 1: “I need to give up that information because, I don’t want to disadvantage myself and not get the job. They may even think I’m hiding something.”
Actually, you’re under no obligation to give out that information. It’s your own personal financial history and it should stay that way. While there are some exceptions to this, like if you’re in a commission-based industry, the moment you give up this information you significantly decrease your negotiation leverage.
Option 2: “I should just lie and say I made significantly more than I actually did, right? Because how are they ever going to find out?”
Not only is that unethical, but it can also be illegal and grounds for dismissal from the company if they ever found out. Do you really want to start off your employer-employee relationship with a lie? Trust me, it’s not worth it.
Instead of using either option, reframe the question back to your research and value proposition while staying honest:
“I’m actually not comfortable giving out that information. I will tell you that I have been looking at roles in the $50–60k range, and I believe that is the value I’ll be bringing to the company. So far, it seems like this is a great fit for both of us. If that makes sense to you, I would love to continue the conversation and we can negotiate the particulars of the deal when the time comes. What do you say?”
Basically, you’re punting the salary compensation question to later. Once you’ve received a job offer, and there is no doubt that you want to go forward, the employer will have every incentive to engage in a meaningful conversation regarding your salary requirements and benefits.
3. Know who you’ll be negotiating with.
One of the first things I tell clients is that people make deals, not companies.
The person you’ll be negotiating with, as well as the people you’ve been conversing with throughout the job interview process, will ultimately be the person that says yes or no to a deal.
Take, for instance, Disney’s purchase of Lucasfilm and the behind-the-scenes negotiations that allowed the $4.05 billion deal to go forward: “According to Walt Disney Chairman Robert Iger, a famous negotiator in Hollywood, he and Lucas conducted the negotiations personally, beginning in early 2011. Speaking of Lucas’ decision to hand over his creative legacy to Disney, Iger told the New York Times, “There was a lot of trust there.”
This took about a year and a half to build. For Iger and Lucas to forge the billion-dollar agreement, the people dimension of creating trust and confidence in the relationship was what ultimately helped seal the deal. So what does this have to do with your salary negotiation?
Whether you’re negotiating with an HR representative, your next boss, or a company executive, you have to try and understand their constraints and interests within the negotiation and build trust along the way. A few things to keep in mind:
- HR might not have that much latitude in terms of the salary they can offer you but could be flexible with benefits and perks to sweeten the deal.
- Your potential boss may not want you to nitpick every last detail of the offer, but could be flexible on salary and other perks.
- An executive could offer lucrative perks, equity in the company, and travel benefits but their time is precious and will want a deal sooner rather than later.
Come prepared and build that trust along the way; it might just be what you need to secure an agreement you’ll be happy with.
4. Remember that the negotiation is a dance.
Like any good dance, there are a number of moves either partner can do that can make themselves and the other look good. One person will lead (most likely your future employer) and the other follows (i.e. you). You’ll need to come prepared with different moves that leave your leading partner happy, but that also satisfy you.
Think creatively of the different incentives the employer could offer. These include:
- Flexible start dates
- Increased vacation time
- A one-time signing bonus
- Flexible work hours
- Opportunities for growth/promotion
- Support for continued education
- Gym/lunch perks
If you’re looking to get a starting salary of $65,000, but your boss says that he can only come up to $62,500, cut your losses and take it but look for other ways that they can bridge the gap:
- Perhaps after three months of employment, you can get a one-time signing bonus of $2,500
- A one-time tuition credit of $2,500 for continuing-education classes
- A salary review 6 or 12 months from the start date
When an impasse occurs, think about what incentives to use that leave you satisfied with the deal.
5. Always look at the big picture.
You’ve made it this far in the process. Remember: Your potential employer obviously made you an offer because they want you. What wonderful news! So don’t waste their time or energy haggling over the small stuff if it isn’t that important to you. Show them you mean business. One of the worst mistakes you can make is not letting your potential employer know what is most important to you. Rank your priorities from most important to least, and express that order when you begin negotiations. There are only so many moves that the other side will make in a job offer negotiation. After one or two concessions, they’ll most likely think their work is done and give you a modified offer, so start with the important points to make sure you have a chance to address them.
You also have to go in knowing that you might not get everything you want. And that’s okay! Part of being an adult is learning how to trust when a good deal is presented to you that offers room for growth and opportunity, a great working environment, and other attractive benefits. Learn to gauge for yourself what is important, when to drop an issue, and how to stay firm but respectful with what you want.
Trust me, your potential boss will respect you a lot more if you come in with this attitude and don’t resort to the entitled millennial stereotype that is so vehemently thrown at us.
Most importantly, the end result should leave everyone happy — including you. Happy negotiating!