Negotiating your salary in a new job, or your rate as a freelancer, is very important. Yet, this process can be a black box.
What is the right way to approach it? How much should I ask for? When should I back down?
These questions can cause anxiety, especially if you shy away from confrontation.
However, avoiding negotiation can hurt you. Your employer or your client can take advantage of you. You could spend years being paid less than you are worth, if your company calculates annual increment as a percentage of your current pay.
To take control of your compensation, you need to negotiate. You need to advocate for yourself with confidence.
Know the market. Do your research!
Glass Door is an established resource to research pay scales for people in your industry with similar experience. Before asking for more money, you need to know what the market pays.
If you ask for too little, you demonstrate lack of preparation and a lack of awareness of your own worth. If you ask for too much, you risk coming off as arrogant and out-of-touch with an inflated idea of your own capabilities.
Another way to research is to ask others. It may not be appropriate to ask others in your company how much they are getting paid. However, you can always meet with people in similar roles at your company’s competitors. While they may not be comfortable sharing their salary, they could probably give you a range. Make sure you ask several people in order to get a more accurate, unbiased picture.
Know who the key decision makers are.
In many large companies, HR determines the salary range for the role. However, where you fall on the spectrum may depend on the hiring manager. Smaller companies may take more of an ad-hoc approach.
Before walking into a salary negotiation, try to find out who makes the ultimate decision. At my company, I (the hiring manager) set salary for my employees. However, I am strongly guided by HR’s recommendations. HR helps me benchmark my hire against others in the company in similar roles.
You may be referred to HR after your interview with the hiring manager. Or HR may pre-screen you first. Regardless, ask about compensation in your first interview. If HR suggests that you talk to the hiring manager, chances are that is where the decision-making authority lies. Similarly, if a hiring manager defers to HR, you know the converse is true.
Sometimes you may get a vague — I will get back to you on that — response. This tells you that the person in front of you is likely open to being convinced. They may need to benchmark you internally. They may need to get approval from their own boss.
This is your trigger to reiterate why you deserve what you are asking for. The person sitting across from you needs to advocate for you internally. Make it easy for them.
Talk about your accomplishments.
Focus on successes you have had, not activities you have performed. For example, when a Commercial Banker talks about managing a large book of clients, it doesn’t tell me much.
Sure, you managed a large book of clients — but did you manage it well?
Talk about the growth you achieved and the cost savings you helped your clients realize. Speak to your accomplishments, not to the role mandate. Anyone can fulfill the mandate. It’s how you fulfilled it that matters.
What’s in it for the recruiter?
Frame your accomplishments as transferable skills you bring to your new role. As a hiring manager, this is my incentive to pay you more. It’s not enough to have a strong resume. You need to show me how you will use your skills and qualifications to benefit my business.
How will your certifications and past experiences enable you to do an exceptional job in the role that you are applying for?
What else is the company offering you?
Salary is usually only one piece of the package. At my company, we offer ‘total rewards’. In addition to salary and year-end bonus, this includes the value of medical benefits, company contribution towards retirement savings, a wellness account that employees can use towards their gym membership, and others.
Think about training and development opportunities. At my company, every employee has a development plan with a formal course curriculum to continually grow their skills. To train employees, we hire premier trainers from top business schools and consulting firms. The value of this is tangible and measurable, and should be a factor in your decision.
How badly do you want the job?
Think about intrinsic benefits besides money. For example, the job description may be really interesting or it may allow you to stretch your capability in a new direction. It may be a stepping stone to something else.
If you really want the job, you may need to make concessions. Are you willing to walk away from the opportunity if you cannot come to terms?
Remember — there is a downside to negotiating too hard. You may unwittingly sour relationships. A negotiation is only successful if both parties walk away happy. If you push too hard, even if you get the job, you may leave an impression of being difficult, confrontational, and argumentative. This doesn’t bode well for future opportunities in the company.
Salary negotiations can be uncomfortable. However, if done respectfully, and with full preparation, these negotiations can lead to better outcomes for both the candidate and the hiring manager.
As a manager, if someone is unhappy with their compensation, I would much rather hear it early on. If an employee feels that the organization has screwed them over, they will not be motivated to help the company succeed.
I will end with a personal story. As a fresh graduate applying for jobs, I had no sense of the salary negotiation process. At one company, I had a fantastic interview with a hiring manager, followed by an interview with HR to talk about salary. HR asked me point blank how much I expected to get. I offered a low-ball number, wanting to show my eagerness to take on the role.
I thought, Of course, they will offer me more than that embarrassing number. My interview with the hiring manager was fantastic. I knew he wanted me.
However, when it comes to salary negotiation, what you ask for is what you get. I got an offer letter the next day, the low-ball number staring cheekily at me.
I couldn’t get it out of my head. I worked at that company for a month, but my heart was never in it. After a month, I got a better offer elsewhere and tendered my resignation.
My manager was surprised and a little furious. When I explained to him that HR had given me a paltry sum that didn’t even justify my daily commute to the office, he only asked me this — If you were unhappy with what we were paying you, why didn’t you come to me?
My employment with that company ended on an awkward note. But it taught me a valuable lesson.
If you don’t ask, you will not get.
If you ask, you could get what you want. Or, you will find out, with no room for argument, exactly what you are worth to them. In either case, you win.