- Personal Finance»
- Frugal Living
Salary Negotiation - Tips and Tactics
Some of us would rather dive into a muddy hole filled with chicken feces than negotiate a salary. Many people wait demurely for their boss to notice their great performance instead of straightforwardly asking for a raise. It's funny how many false rationalizations underpaid employees can come up with in order to validate their choice to remain silent. Many workers modestly diminish the value of their skills and role in the company while others tell themselves that their harmonious relationship with their boss is far more important than money. The truth is they just don't believe in their negotiation skills.
Negotiating is actually something we have been doing almost everyday since we were a child. With our parents, we negotiate our play time and chore schedule. With our friends, we negotiate who's supposed to take care of this and who's supposed to buy that when co-hosting a party. Also, we bargain with car salesmen, flea market vendors, our spouse and even our children. When it comes to negotiating a salary, however, we suddenly feel a flock of giant vultures in our stomach, not just butterflies. So how can we slay those vultures, negotiate smartly and get what we want? Your answers are here!
But first, please answer this one-question survey:
How do you feel about negotiating a salary?
Salary Negotiation Tip # 1 - Don't Accept the Loss Even Before the Game Begins
Don't underestimate your own worth. You will never win if you keep your mouth shut at the negotiation table. This fundamental mistake is usually made by women rather than men. According to a study by Carnegie Mellon University's School of Business, 57% of male MBA graduates negotiated a higher salary after receiving an initial offer. How many percent of female MBA grads did that? Only 7%. The well-known stereotype of women as more humble and compromising than men is not just an old wives' tale. The same study also found that those who were not afraid to negotiate received about $4000 more than their less outspoken peers.
Whether it be for a better salary at your new workplace or a raise at your old job, you've got to speak up! Dig deep inside your own psyche and ask yourself what's stopping you. Do you think you might appear too egotistic and ungrateful? Are you worried they might not like you anymore and give your job to someone else? Or are you afraid they would laugh in your face and say you're not worth that much money? You must get rid of these overly self-effacing thoughts. If the number you request is not ridiculously exorbitant, considering your qualifications and the typical salary range in your field, there is nothing inappropriate or unethical about discussing it. Also, your boss or potential employer won't see you as a greedy ghoul as long as you negotiate in a professional and respectful manner.
Salary Negotiation Tip # 2 - Do Research and Justify Your Goal
Before explaining how and why you should do this, let me tell you my sadly relevant story. It happened several years ago, back when I was studying for my master's degree. I had worked in the university's copy room for four semesters until I got a new part-time job at a small dental office. The dentist offered me $10 an hour. I accepted the job, never negotiated a higher pay and honestly believed that was a reasonable wage. The number didn't seem too bad since my previous job gave me only $8 an hour. I was very grateful for his offer due to the fact that he gave me an opportunity even though I had never worked as a dental receptionist before. And because of my deep-seated grudge against the perpetually droning sound of the copy machines and multiple paper cuts I had to endure at my old job, a front desk position with a slightly higher pay seemed to be a great way out.
I ended up working there for three years. Besides the front office duties, he also trained me to help out his dental assistant with simple routines, such as developing x-rays and sterilizing equipment. Every year he gave me a little raise and I just always said "Thank you very much." The highest salary I received was $12/hour. It wasn't until my last week there that I found out the receptionists at another dental clinic next door got about $15 an hour for doing front desk stuff only. The normal salary range for a dental receptionist in my town was actually $14 - $18 an hour! Yep, due to my lack of research, I had overworked and got underpaid for three whole years.
Before you land a new career, it is wise to visit a salary research website, such as salary.com or payscale.com, to figure out what your target range should be. Don't be naïve like me. Use the internet; it is your best friend. This process not only will allow you to come up with an appropriate number to expect but also help you justify your goal. If you want a better salary because you fancy a more comfortable lifestyle or want to be able to save money for a new house, that is not a justified goal; it is a hope. On the other hand, if you negotiate a higher salary because you know that is what you rightfully deserve, you will be more motivated to strive for it. Your request won't sound half-hearted, and there will be more weight and conviction in your arguments at the bargaining table.
Salary Negotiation Tip # 3 - Have a Back-Up Plan
This negotiation tactic is probably more difficult for new employees to pull off than long-time valuable workers. New employees don't have much leverage in the company yet, thus bargaining for something else after their salary negotiation has deemed itself unsuccessful might not be an easy road to take. That doesn't mean it is impossible, though. Just be careful with what you bargain. You haven't proven yourself to be a decent worker for them yet, so don't ask for a super sweet deal, such as a huge bonus or a permission to leave the office early every Friday. That is inappropriate and downright asinine. If you have been a hardworking and reliable employee at your company for quite a few years, however, your boss is likely to be more willing to strike a privileged deal with you. So before negotiating a salary, you should always develop a specific alternative to fall back in case your request is declined. Take a look at the following example:
Scenario 1 - This is the end of the salary negotiation between Jerry, a cartoonist, and his boss, Ms. Green.
Ms. Green: Jerry, you're one of the best artists we have and I wish I could fulfill your request. But our studio just really can't afford that right now. I really wish we could.
Jerry: Well, all right. I understand. I guess I'd better go back and draw some more spider monkeys now.
Instead of accepting his defeat so easily and engrossing himself in spider monkeys, this is what Jerry should have done:
Ms. Green: Jerry, you're the best artist we have and I wish I could fulfill your request. But our company just really can't afford that right now. I really wish we could.
Jerry: I understand that. But is it possible for us to agree on something else? Well, I've been thinking about this for a while. Instead of coming in here every day, can I work from home two days a week? You know that would be almost as good as a raise for me.
Your alternative might not be the same as Jerry's. You may ask for a better health-benefit package or something as simple as a longer paid vacation in December. Just try not to walk away with an absolute defeat without bargaining for another option first.
How to Counter a Salary Proposal After a Job Offer
Self-Help Manuals for Unfortunate Employees
Salary Negotiation Tip # 4 - Rehearse and Calm Your Nerves
This would probably make you feel silly, but you'd better do it unless you are an impromptu champion. A salary negotiation is pretty much like a political debate. You have to "advertise" yourself and convince the audience you are worth more than what they have offered. Do you remember the nervousness you experienced back in college before an important presentation that counted for 50% of your grade? What did you do to prepare for it? I usually wrote a script and rehearsed it until I knew it by heart. Yes, I felt like an absolute dork doing that. But did it help me make a better presentation in front of my class and hard-to-please professor? Definitely.
A salary negotiation can be ten times more nerve-racking than a class presentation. Many people think they will be able to handle it just fine, but once the negotiation actually begins, they get distracted by their boss' sternness and critical comments, then forget certain key points they're supposed to include in the discussion. To prepare yourself, write down what you think you should say. Don't make it a long, boring speech. Your bargaining statements should be persuasive but concise. Think about how you're going to advertise yourself without sounding boastful or pushy, then rehearse it until it comes out very natural and compelling.
Salary Negotiation Tip # 5 - Assess the Situation Before Asking for a Raise
Should you just barge into your boss's office and request a raise? It is not wrong to do so, but it might be smarter to check and see what your boss really thinks about you first. Ask him to give you a performance review. Sometimes our own ego could blind us from our flaws. We might see ourself as the best employee in the company, yet our boss might think otherwise. By discussing your job performance with him, you will know whether or not he and you are on the same page. If you get numerous compliments and very few criticisms, go ahead and start negotiating a better salary.
In case you receive a mediocre review, try to negotiate a raise anyway if you believe you really deserve it. Yet, also try to put yourself in your boss's shoes and ask yourself how granting you a raise would serve his interests. Would you be able to convince him by volunteering to take on an extra responsibility and make his life a bit easier in exchange of a higher salary? Or should you just guarantee to improve your performance? You would be surprised how many persuasive ideas could emerge from using this "role reversal" technique. And what if your performance review turns out to be horrendous? The best bet is that you won't get a raise, so save your effort for the future. Sit on your boss' criticisms for a while, prove to him that you can be much better and gradually gain more leverage for your next try.
Salary Negotiation Tip # 6 - Listen and Ask Questions
Being able to firmly stick to your conviction is a good thing as long as it doesn't make you turn a deaf ear to your boss's side of the story. True, I said earlier that a salary negotiation is like a self advertisement but that's not all it is. You have to remember it is also a conversation between two parties. You should really listen to what your boss has to say instead of simply waiting for him to finish so that you can reinforce your argument over and over. By listening to the other party's point of view and giving it some thought, you will be able to clear any misunderstanding between you and him as well as negotiate even more effectively. Let me use the following story to exemplify this:
Mr. O'Neil, a senior editor at a magazine, has two personal assistants, Keith and Rachel. One day Rachel finds out that Keith gets paid a thousand dollars more than she does. She is enraged by that and starts to believe Mr. O'Neil might be a misogynist. Entering his office with tight fists and reddened face, she negotiates a raise with her boss and repeatedly tells him it is unfair that her coworker of the exact same position has been rewarded a much better salary. Mr. O'Neil's major contention is that Keith has been working much harder than Rachel so he deserves a higher pay. Instead of asking what makes him think her colleague is a more diligent worker, she yells at him, "Oh, don't pull that bulls#!** on me. I quit!" Her presumption of Mr. O'Neil as a woman hater makes her believe he has misjudged her work performance because of his sexual prejudice.
The truth is Keith has volunteered to come in every Saturday to check Mr. O'Neil's phone messages and take care of the urgent issues for him. Unfortunately, Rachel doesn't know about this, and the tight-lipped boss just doesn't explain it to her clearly enough. If only she listened to him more calmly and asked him to clarify what he meant by "working much harder", she would have come to realize it is not a complete exaggeration. She might want to let him know she is willing to do that for him as well. Or she could remind him about other facts that might better her chance of getting a raise. For example, she might argue that even though Keith comes in to work on Saturday, she's the one who usually stays at the office late in the evening to finish their projects.
Salary Negotiation Tip # 7 - Don't Fall for a Guilt Trap
Not everyone is a hotheaded employee like Rachel in the previous example. In fact, many people can be surprisingly altruistic. You have worked in the same company for quite some time, made lots of friends there and started to see your office as your second home. It is not strange that you have grown to love your job very much and developed such deep loyalty to your company. But does the company reciprocate the love? For some employees with an overactive sympathy gland, they'd rather work like a slave and be underpaid than confronting the awkward feeling of discussing a raise. Even if they gather enough courage to negotiate a better salary, this type of employee would likely fall for a guilt trap and give up soon after the bargaining begins.
What are guilt traps? It could be as simple as a sentimental comment like "Don't you love this company? Please don't make this so difficult for us." Or it could be lengthier excuses of how much your boss has done for you over the years and how grateful you should be. He might have ignored your less than perfect attendance or he might have praised you in front of the company president numerous times. That is very nice of your boss, but it's still not a good enough reason for you to continue to be underpaid. So how can you defend yourself against a guilt trap? You need to be alert to it. As soon as you detect one coming, try to turn the argument around immediately. The whole negotiation is not about whether or not you give a damn about the company, but whether the company gives a damn about you!
Salary Negotiation Tip # 8 - Subtly Create a Vision of How Worse Off the Company Would be if They Lost You
I would like to emphasize on the word "SUBTLY." The little evil voice in your head might encourage you to yell at your boss, "You know I have saved your rear end many times. Without me, everybody in this office will have to run like a headless chicken. You'd better please me, or else your life will be very very very miserable!" Well, don't say something like that. Don't use a threat-based negotiation to get a raise. What are you? A terrorist?
Instead, focus on something positive and give your boss just a tiny hint of some disadvantages they would have to face if you were not there anymore. Here is one good example: "I know my troubleshooting skills have saved the company millions of dollars in lost sales. Ask our business associates and clients, and they all will tell you they trust me more than anyone else here. It won't be easy to find someone to do my job. So I don't think this is too much for me to ask." This statement does not sound like a vicious threat but an awakening reminder. If your boss has a functioning brain, he should be able to foresee a possible negative outcome from making no deal with you. No outright threat is ever needed.