A Ten-Step Plan for Negotiating Your Salary

Adapted from moneygeek.com.  Source: Get Paid What You Are Worth (Robyn L. Pinkley and Gregory B. Northcraft)

1  Adopt a Positive Frame of Mind

In the U.S. and some other developed nations, negotiating is perceived by some as being pushy and even insensitive – as you probably know if you’ve ever cringed at negotiating with locals for souvenirs while traveling abroad. This reticence infuses our view of negotiating for ourselves: how dare we ask more than someone else? Here’s a healthier way to think of negotiating: It’s simply a way to solve a problem. In the case of a salary negotiation, the problem involves two parties with conflicting goals. You want to make as much as you can; your employer wants to pay you as little as possible. But you also share similar goals. You want to keep your employer happy so that you can continue to receive a paycheck, and your boss wants you to feel motivated and fairly compensated. Be reasonable and polite, and your negotiations won’t damage your relationship – and could even win your boss’s respect.

2  Identify Your Leverage

Assess the supply-and-demand balance to determine if you have room to negotiate a better deal. In general, the 2019 economy favors workers. At the end of 2018, there were 7.3 million job openings in the U.S. labor market, up over a million from the previous year. Of course, the trends vary by industry. The oil industry has been shrinking, so petroleum engineers might lack leverage at the moment. But demand for some types of workers – including physical therapists, statisticians, and audiologists – could soar in the coming years. The more competitive the labor market, and the more unique your skills, the more leverage you will have to negotiate. If you’re negotiating a salary as part of a hiring process, congratulations – by definition, the leverage is in your favor. If you’re seeking a raise from your existing employer, the calculus is a bit trickier. If your employer is struggling to keep pace with demand, or if workers in your position have recently left, the moment might be right to negotiate.

3  Know Your Worth

Private-sector salary information tends to be a secret, so employers have that advantage. You can level the field a bit with research. How much do workers in your field make? To determine the salary range for your position, start with online sites that gather salary information for various jobs, professions, and industries. Among the places to look are the Bureau of Labor Statistics’ Occupational Outlook Handbook, Salary.com, SalaryExpert.com, JobStar.org, Glassdoor.com, PayScale.com, and MoneyGeek’s salary calculator. Nonprofit organizations disclose salaries for some workers on the IRS Form 990; those tax returns are available for free at Guidestar.org. And publicly traded companies disclose salaries for top executives to the Securities and Exchange Commission. In the public sector, pay is far more transparent; salaries for federal, state and local workers are a matter of public record. Florida, for instance, posts paychecks for all state government and state university workers online. Internet research is just the start; the most valuable information comes from talking to your coworkers, or to people at the company where you’re interviewing. The more confidential information you can gather, the better informed you will be about actual market rates.

4  Have a Plan for the Dreaded Question

Career coaches are unanimous in this bit of advice: Disclosing your salary too early in the hiring process kills your negotiating leverage. Employers ask because they want to know if you’re a realistic candidate. But answering with a number that’s too low can put a cap on the salary you ultimately negotiate. So how do you respond when the first interview includes a query about your pay? Stall if you can. Say something like, “I’d like to know more about what the job entails before I discuss salary.” If that tactic doesn’t dissuade the interviewer, try to be vague. Rather than offering up a specific number, give a range, such as “$70,000 to $80,000.”

5  Determine Your Bottom Line

Say the employer is unwilling to agree to your initial salary request. What then? To answer that question, it’s wise to calculate your bottom line before you enter salary negotiations. What’s the lowest number you’ll accept? If $75,000 is your goal, will you settle for $70,000, or $65,000?

In order to calculate your bottom line, take a look at your monthly budget and spending. What would be an ideal, comfortable increase? Now look at where you can currently save, such as credit cards, auto loans, homeowners or renters insurance, and home loan refinancing, to determine where you can settle.

Be sure to also factor in non-monetary factors, such as job responsibilities, working hours, annual bonuses, time off, retirement contributions and health coverage. If you’re applying for a job with a new employer that refuses to meet your bottom line, your course of action is simple: reject the offer. But if your current boss denies your request, the decision is more complicated. One comeback: ask your boss what criteria would validate a bump in salary. Do you need to hit certain goals, gain a particular professional certification, or gain new experience? Then you can concentrate on making the case your boss has outlined.

6  Explain Your Rationale

You know you deserve more money, but your boss might not agree. Sure, there are all sorts of reasons you might want a raise: You haven’t gotten a pay bump in a year or more, or you’re having a baby, or you’re facing unexpected medical costs. Those might be compelling issues for you, but they’re not particularly persuasive to your boss, who needs a valid reason to pay you more. So – provide the ammunition that will make the decision easy for your boss. Why do you deserve a raise? Prove your case in a way that stresses your contributions without making you seem boastful or whiny. Use a clear, logical line of reasoning to support your position. For instance, you could say, “My salary requirement is $70,000 to $80,000, and let me share with you how I arrived at this range.” Try to distance yourself emotionally; pretend that you’re a consultant who has been hired to objectively analyze your contributions and value.

7  Pick The Right Time

Timing is crucial, both in terms of the overall economic scheme and in the smaller picture of your company. The midst of the Great Recession was not a good time to demand a raise. But now that the labor market is gradually improving, the timing is more opportune. Next, consider what’s going on at your place of work. Record profits and the company’s on a hiring spree? Ask away. Are you in a struggling industry and just went through a round of layoffs? In that case, bite your tongue and bide your time. Finally, put some effort into planning the conversation when you actually pop the question. Don’t simply barge into the boss’s office and demand more money. Schedule a time when you can have your manager’s undivided attention as you make your case.

8  Use the Right Tone and Show Confidence

This is tricky. You don’t want to seem arrogant, but you do want to come across as a passionate advocate of your value. Doing your homework – researching salaries, laying out your worth, planning the timing of your request – goes a long way toward creating confidence. The confidence game can be especially tricky if you’re a woman negotiating a raise. Studies have shown women to be more likely than men to suffer a reputational backlash for coming across as too aggressive during negotiations, according to Hannah Riley Bowles, a senior lecturer at Harvard. Whether you’re a man or a woman, bargaining without alienating requires a delicate balance. You need to tout your skills and make your case, but you also need to show that you’re reasonable and humble.

9  Prepare for the Counteroffer

If you’re negotiating with your current boss, dealing with the counteroffer is straightforward. You might reiterate your case for your original request, or you might make your own counterproposal, but, in the end, if the counteroffer is a reasonable one, accept graciously. But if the counteroffer comes because you told your boss you’ve been offered another job elsewhere, then the decision gets complicated. Employment experts say you shouldn’t accept a counteroffer that is extended simply in response to another company’s interest in you. That’s because you can often be considered tainted if you stay – you’ve shown that you’re disloyal enough to seek employment elsewhere, and you’re likely to be the target of heightened scrutiny. However, in some industries, using a job offer as leverage for a raise is common practice and won’t be held against you.

10  Consider Negotiating Perks

Many employers are just stubborn about giving out raises. They don’t want to increase “fixed costs,” a category that includes salaries. But they’re more generous with one-time costs such as signing bonuses or annual bonuses. If you don’t get the salary you want, see if you can coax a bigger bonus. And try to negotiate perks – the sort of things your employer thinks of as “free” but in fact can be very valuable. These include vacation time, flexible working hours, telecommuting, job title, moving expenses, training costs, and dues for professional associations. Employers tend to be more willing to sweeten the perks.

Perks and issues to consider

Basics

Salary Increases

Vacation time

Work schedule

Additional Compensation

Bonus

Equity Benefits

Profit sharing

Additional Perks

Relocation assistance

Company car

Childcare facility or costs

Phone allowance

Flexible work schedule

Travel budget

 

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