How to negotiate salary

How to negotiate salary

Despite the best efforts of HR departments, I’m often surprised by the wide variance in the salaries people earn in similar positions and at similar companies. The higher you go up in the corporate ranks, the wider that variance seems to become. I think there is a misconception among job seekers that salary ranges for common positions are tighter than they really are. I’ve seen it so frequently I felt compelled to write a blog on how to negotiate salary.

How to negotiate salary – common mistakes

Salary negotiation can be daunting. It doesn’t come naturally for most of us, and its especially stressful when we really want to land the job. In the heat of the moment, when the job offer or promotion seems to hang in the balance, the desire to avoid risk and capitulate on salary is strong. So strong in fact, I’d say less than 30% of candidates even negotiate salary at all.

There is also a common misconception that there is some uniformity in salaries across positions. There really isn’t. Even though HR departments try to normalize roles and salaries, there are always outliers and exceptions. We need to take personal responsibility for negotiating the best deal we can – in the case of salaries negotiation, a little fortitude and a thoughtful approach goes a long way.

I frequently see candidates for the same job e.g. Director of Product Management, with nearly identical qualifications and backgrounds, demanding salaries that are separated by 30% or more. To me, this underscores the importance of solid research and negotiation at the offer stage. 

How to negotiate salary – 3 practical strategies

When done correctly, there is actually very little risk in negotiating salary. I understand that in the moment, it can feel differently. You’re often thrilled to have received an offer or raise in the first place. It can be easy to start fretting that they could pull the offer if you cause too much trouble by negotiating. Our minds can spin until we take the path of least resistance and sign the deal. 

The truth is, we can negotiate salary in a manner that presents no added risk. If we do it with the right tone and approach, you will actually reaffirm why you were offered the position the first place. 

Here are 3 practical strategies for how to negotiate salary. Follow them and they will help you get the best deal possible without introducing any risk.

1.  Don’t let your personal value of money cost you

Too often, candidates settle for a lower than optimal salary because they assign value to money as an individual instead of as a corporation. Yes, ten thousand dollars is a lot of extra money to you. But it’s not a lot of money to a company. Companies think much more in terms of value for money vs. absolute dollars. Remember that when you’re afraid to ask for a little more.

When managers assemble offers, they almost always build in some buffer for negotiation. If they haven’t explicitly stated is their “best and final offer”, you can feel confident in negotiating. Generally speaking you can get an additional 5% just by asking for it.

Check out my script for asking for more.

2.  Be the first one to ask about the budgeted salary range for the position

When you’re interviewing for a job, or talking about a new role at work, there is a race for who will ask about salary expectations first. You must win this race – otherwise you’re at a huge negotiating disadvantage. If you allow them to ask you for your salary expectations before you can ask for the budgeted salary range, you’re already at a disadvantage. In this case you have to give a number without any information. God forbid you say a number that is lower than they’re budgeted amount. The goal is to ask for the budgeted salary range in the basic information gathering part of the process i.e. when you’re talking to a recruiter or HR person.

Just make sure when you ask, you do it tactfully. Ask the HR person or recruiter vs. the hiring manager whenever possible. If you are forced to go first, give a wide range. Say something like, I’m looking for a total compensation package between 50K and 70K depending on the mix of base, bonus and equity components. This approach gives you the best chance of getting the maximum amount the company is willing to pay.

Learn more about negotiating job offers here.

3. Do your homework and adjust upwards

It’s pretty easy to find salary ranges for most companies and most positions on the web. Glassdoor and others make it really easy. My recommendation is to research the salaries for positions similar to yours at various companies similar to the one you’re going to work at. Then add 10% – 20%. This gives you the best chance of getting the best deal without pricing yourself out of contention. Even if you’re a little high, hiring managers generally won’t rule you out.

There are only three mistakes you can make here. The first is to ask for too little – the advice above will help with that. The second is to ask for a wildly high salary, completely out of line with the role – remember the goal is to get the most you can, not to waste people’s time. The last mistake is use an aggressive or combative tone. The best negotiation is done with a smile on your face.

Check out my blog on negotiating hard without being a jerk.

How to negotiate salary – final thoughts

You really only get one shot at negotiating your salary. Sure, you can go back later and ask your boss for a raise, but at that point you’ve locked yourself into a range that is difficult to get out of. Your best opportunity to negotiate is when they’re offering you the job in the first place – they like you, you’ve done no wrong – strike while the iron is hot! As long as you use a friendly tone, and stay within reason, there is very little risk to asking for a bit more.

If you enjoyed this blog, you might also like these related posts:

4 Rules for Negotiating a Job Offer

How to negotiate hard without being a jerk

The only 3 things I look for on a resume

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