FINANCIAL FRIDAYS: What’s The Worst Mistakes You Can Make In A Salary Negotiation
I’ve been an employer. And I’ve been an employee. And I’ve been on the board of a staffing agency and advised dozens of other companies on hires. I’ve seen every salary negotiation possible.
99.9% of hires make mistakes in the salary negotiations.
That’s perfectly fine. They have a bigger vision for their careers and they are excited about the job so the tendency is to just agree and get to work. I get it.
But nobody is offended by a good negotiation. If a company is motivated to hire you and you are motivated to work at a company, then a good discussion about the job makes everyone happier.
VERY IMPORTANT: A good salary negotiation is win-win. Both sides get more motivated. The pie gets larger.
MISTAKE #1: Having a smaller list.
It’s not just about the money. The side with the bigger list of terms wins. Because then you can give up the nickels in exchange for the dimes.
Things to be negotiated: vacation time, medical leaves, bonuses, what requirements are in place for promotions, what’s the non-compete, employee ownership (in some cases), potential profit participation, moving expenses, etc.
Again, the bigger list wins.
MISTAKE #2: Negotiating at the wrong time of day.
This is a secret weapon nobody uses.
Carl Icahn, one of the greatest negotiators in business history, has a trick. Let’s borrow his trick from him.
He schedules negotiations late in the day. Then he sleeps all day.
Every human experiences “willpower depletion”. They have the willpower to avoid cake in the morning, but they run out by evening.
If you are offered a job in the morning, say, “This is great. Let me go over it and figure out logistics and family issues and call you back later.” Then SLEEP. Then call back as late in the day as possible to negotiate.
MISTAKE #3: Thinking too short-term.
You’re not going to be there for two weeks and then quit. Ask about the long-term.
What is the potential for the company? What is the potential for someone in your division to rise up in the company? Is the company doing well?
Have a vision for your career path. This directly motivates how much money and other things you might need up front.
MISTAKE #4: Saying Yes too fast
The best negotiation I ever had was when I said, “let me think about it”. And then waiting.
And really thinking about it. Making my list. Doing due diligence. Really thinking if there are other offers. Or potential offers.
Your value on the job market works like value on every other market: supply and demand. Really determine what the supply is for your services and if you can potentially be in demand.
When you first get interest in being made an offer, you have to determine immediately what the supply is. If supply is zero, you put yourself in a bad position.
But regardless, you can act like supply is great by being patient and saying first, “Let me go over all of this. It’s a lot to take in. I’m really grateful for the offer. How about we talk in a day or so.”
Trust me: this is a scary thing to say but it has worked for me at least three different times and I was scared to death each time.
[ RELATED: Using the 5/25 Rule to Learn to Say “No” ]
MISTAKE #5: Bad Math
What are people with comparable skills making in the industry?
What monetary value do you bring to the company (really your salary should be a function of that).
If you were a freelancer or a company doing the work, what would you charge? Your salary + perks should be in the ballpark.
Prepare by doing all the math.
MISTAKE #6: Pretending to be smart
Always ask for advice first. “If you were me being offered this job, what would you ask for?”
Or, “You guys are the experts on how one can grow and flourish and bring the most value to your company. What should I ask for and how do you see me growing in the company? Can we outline that out?”
You can say, “Because I like this company a lot and want to accept this, I trust that you will help me figure out the right things to ask for here. Is there anything I’m missing?”
This gives them the chance to negotiate against themselves.
MISTAKE #7: People don’t ask “How”?
If they offer too little or no moving expenses or no vacation or no path to promotion, simply ask: “How?”
For instance: Other people in the industry are making $X. I know that I offer $Y in value. Can you walk me through how I can accept $Z that you are offering?”
They will keep talking and the numbers will change. Trust me on this.
MISTAKE #8: Don’t take advantage if they show weakness
Many people are powerless. But they don’t want to be. Particularly when you tell them.
If you ask for something and they say, “We can’t. This is HR guidelines”. Say, “Hmmm, are you guys powerless to do anything about this?”
Nobody wants to feel powerless [this is a good trick picked up from my Chris Voss podcast]. They will make changes or work this through HR.
MISTAKE #9: Many people don’t mirror.
If they say, “We will offer $100,000 but can’t go a penny higher” repeat back to them, “you can’t go a penny higher.”
They will continue talking. If they don’t then…..
MISTAKE #10: Too much talking.
Be silent until they talk. Nobody likes an uncomfortable silence. Be silent for as long as it takes for them to talk again. Let it be uncomfortable. DO NOT TALK.
MISTAKE #11: Using round numbers.
Assuming you’ve done your homework on what industry standards are and what value you bring and how much you think you should be making, it’s ok to start with a salary number.
But don’t say $100,000.
Something specific. This shows you’ve done the work. Make sure you can back it up to get to that number. Round numbers are negotiated. Specific numbers, backed up by evidence, are not negotiated.
AND DO THIS:
Use Your Late Night FM DJ Voice.
Practice it right now. Pretend you’re a late night FM DJ. “And now we’re going to listen to some slooowww jazz.”
“Listen. I’d like to talk about the salary of $103,500 but also we need to talk about the path to bonuses and my potential promotion path within the company.” Late night FM DJ voice.
Do the preparation, have the bigger list, be patient, be silent, think long-term, get them to negotiate against themselves in the various ways described here, and use your late night FM DJ voice.
I promise you the pie will get larger for everyone.
Finally, and most important: getting fired is a negotiation also. If you are ever terminated, say “No”. The negotiations begin there.
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