Congratulations, so you’ve been offered a job! This is the time for you to soak it all in and not be in a hurry to respond to your soon to be employer even if you really want the job.
I always give this advice; never take the first offer no matter how good it looks on paper. If they really want you, there’s usually room for some negotiation. Most entry-level candidates make this mistake simply because they believe that their lack of work experience reduces their negotiating power. At the interview stage, you should have demonstrated your worth clearly with various examples and scenarios that would have given the employer the confidence to select you as their top candidate. If you followed the interview guidelines I propose, you shouldn’t be too surprised to know that your supposedly future employer would be willing to make some changes to their initial offer.
There are so many benefits you can gain from negotiating your salary, but here are a few you should certainly keep in mind:
- Life-time earnings – there’s been a lot of research that has been conducted and proven that your next salary is highly influenced by your current salary and when you analyze your earnings over a lifetime, the difference in pay if you started out with a much lower salary, could be significant. On average, except you’re seriously fed up with your current employer or changing career, you should be seeking a minimum salary of 20% above what you currently earn. This theory doesn’t take into consideration what your other fringe benefits are; you’re first going to look at your take-home pay and make judgments on whether you think it’s fair or not. From my experience, most employers would prefer to pay the minimum competitive rate for any given job position; it’s your responsibility to get them to pay the maximum. Instead of you earning at the lower quartile of the salary band, you would want to negotiate a salary that places you at the upper quartile of the salary band.
- Career Investment & Self-development – The higher you earn, the more likely you have funds to invest in yourself. if you invest in yourself, the more likely it is that you would be able to accelerate your career earnings. Depending on the industry and field you want to work in, you may need to take further education such as earn a master’s degree or professional certification that is of high value to future employers. Except your current employer would like to pay for such training, I’ll advise that you create a mental budget for these costs and include it as part of your negotiation tactics especially if you’re younger in your career. Note that when you do bring investment in yourself as part of the negotiation discussion, you have to link it to how it would help improve your performance on the job.
- Higher Disposable Income – The caveat here is that I have to assume that you’re a reasonable saver and you don’t live above your means. But on a general note, the idea is that when you successfully negotiate a better take-home pay than the average of your peers, you should be able to have a bit more funds saved for future investments and expenses such as property purchases, child care costs, etc.
- Productivity Improvement – One of the major reasons why many people are unsatisfied with their jobs is because of their financial situation. This affects people’s productivity and mental state. The best time to solve this problem is when the employer is interested in offering you a job. You need not tell the employer why you deserve it because they wouldn’t really care. They are interested in what you can offer them and that’s the best way you can spin the story to show that when you’re 100% engaged at work, your performance really shoots off the roof and this can translate to amazing results for the company.
Now that you know the impact of not negotiating a higher compensation, I’ll like to give you some tips on how to fully prepare yourself for the discussion. The HR manager is likely going to be more experienced in the art of salary negotiation than you are because they do it all the time and have pretty much heard it all. As a matter of fact, they are likely going to come up with reasons why the offer that has been initially presented is as good as gold. Don’t fall for it, there’s usually a wiggle room if you’ve done your research.
In my negotiation with so many HR managers, here are some top excuses that they are likely to bring up as a reason not to increase your proposed remuneration.
- We are an early-stage startup – This is what I refer to as emotional blackmail. If you’ve ever worked in a high growth startup, you’ll know that the workload can be pretty hectic, yet they would want to trick you to earn less than most traditional firms they are looking to disrupt. Whilst it is true that they may have lower salary budgets than larger firms, your take-home pay is not the only thing you should be looking to negotiate. You may want to discuss bonus schemes, stock options, and other important compensation that is important to you.
- The Economy is tough at the moment – Well, it is tough on everyone. The economy doesn’t target individual companies except it’s the industry that is severely hit. Nonetheless, you’re being hired to achieve a specific set of objectives and if you demonstrated your ability to perform well on the job during the interview stage, there’s a likelyhood that they would be willing to slightly negotiate further.
- This is the compensation for your designated level – It is true that some companies have a fixed salary for each designation in the company. This is what everyone on that level would earn. The biggest negotiation tactic to use is for you to either request to move up the level immediately or at the next appraisal period or probation period, whichever one is earlier. If this doesn’t work, you’ll need to negotiate non-monetary compensation, if they are just as important.
- We have other candidates that are just as good – Probably true, but they chose to still give you an offer and not the other candidates. This kind of situation usually occurs in poor economic situations or in an environment that has a weak job market, giving employers better leverage in dictating terms. The earlier you are in your career, the more likely it is that the employer has more leverage. Nonetheless, there are still ways to go about this that I would talk about later on in the post.
- We usually don’t hire from your background but we liked you at the interview – Yes, you heard that right. I’ve been told that before but I knew better. No company hires you because they like you. They hire for what value you can potentially bring to them. I politely informed the hiring manager of my transferability skills and how my fresh ideas coming from a slightly different industry would be beneficial to the firm as a whole.
- A review cycle is coming up and we can talk about it then – Don’t be fooled. Anything that is not on paper can easily be changed. It is important that you do not settle for anything less than your minimum salary expectation, else you’ll be doing both the employer and yourself a disservice.
- The offer is better than what you already earn – Even if you never stated your current salary throughout the interview process, it is still possible for the hiring manager through some investigation to come up with a near-accurate figure of how much you currently earn. One of the ways to do this is if they have hired from your current firm in the past or if they have strong relationships with those that work there. If this happens, you should state two things (1) demonstrate that your current responsibility at the firm where you currently work is higher than your pay grade, and (2) the expectation for this new job is even way higher and more demanding.
- Age and Sex Discrimination – This is truly the worst and I can’t believe it still happens. If you’re a single woman, you’re likely going to get a lower offer than a married woman doing the same job. It is even worse if we compare those stats with a man, single or married. The same thing happens with younger people. A client who happened to be closing in on a CFO role with an FMCG company disclosed how poorly the salary negotiation went. The company was hoping to get a bargain on the salary structure and they had offered to pay him less than market value because he was in his early 30s and many of his contemporaries were in their 40s. He soon realized that the company culture was not as friendly as they projected and the job offer fell apart.
When you first review your employment contract, you should always start with what is expected of you. Most companies would include your responsibilities and KPIs in the contract. You should be able to monetize the value expected of you and compare it to the compensation being offered. This is easier to compute in roles where your primary responsibility requires you to increase revenues, reduce costs, improve processes, or mitigate risks. If you can put a number on the value you bring and can defend how you derived the number, you’re slowly building a case for why your compensation needs to go up.
However, before you proceed to negotiate the compensation (Salary and other benefits) stated in the employment contract, you have to assign a value to the non-monetary part, which could include items that reduce your personal expenses (e.g. official car, phone bills, daily lunch, leave allowance, improve pension payout, training and development, accommodation, etc). Once you’re done with this, add the monetary value back to your take-home pay in order to derive the total value that the employer believes you’re worth. Sometimes, the hiring manager brings this up in the negotiation process and you want to be prepared for how you plan to neutralize this argument at that stage if necessary. For you to position yourself for a well thought out negotiation, you have to have done some quality research on the total compensation that your peers of the same level of expertise earn.
As you are about to start negotiating your compensation, think of your personal brand and all the qualities that make you special. There are some aspects of your interview process that you may want to bring up during this discussion that can help increase your perceived value:
- Quality Education (including professional certifications) – If you went to a prestigious or highly ranked University that is extremely difficult to get into, this could be something worth bringing up in order to prove that you demand nothing but excellence from yourself and you’re looking forward to investing further in continuous education that would support the growth of the firm.
- Work experience from a Prestigious firm – If you’re being poached from a competitor that is doing relatively better than your prospective employer; let them know that the experience and ideas that you bring would be worth a lot more than what you’re asking for.
- Previous Awards and Recognition – Did you get a first-class from University? Were you given an award for achievement from your current or previous employer? This is something you say in a subtle manner without looking arrogant and flaunting your trumpet. This is something more for the interview process than for the negotiation process.
- Thought leadership – Do you have a blog or a strong social media following where you’re respected as a thought leader in your area of expertise. This is something that can easily be verified and you can always refer to.
- Personal Brand – From experience, the hiring manager usually has a salary cap he can’t go beyond without seeking further approval. In addition, if you make requests for fringe benefits that haven’t been approved internally, it would mean that the hiring manager would have to negotiate on your behalf with a higher authority that can grant your request. For this to happen, you must really be admired and liked by the hiring manager, else he would likely not fight hard enough for you. Always think about projecting your personal brand during all your interactions with the company’s representatives. They must believe that you can contribute immensely to the organization and you surely fit the culture they are looking for.
Now that you know all the qualities that could give you an edge in your salary negotiation, here’s the exact Do’s and Don’ts to follow as you begin your negotiation:
- Always Negotiate in Person – Preferably, book an appointment to do it in person or at least have a phone call discussion. Avoid sending negotiation mails as you may not be able to properly convey your message.
- Conduct an extensive salary research and come up with a precise number, not a range. If you pick a range, the HR manager would focus on the minimum amount in the range you asked for. However, if you are precise in your ask and can show proof that this is what peers in similar companies and with similar titles typically earn, there’s a higher probability that the company would come very close to your ask. Make sure when you ask though, they know it’s the magic number that would make you happy to sign on the dotted line.
- Define what your minimum expected salary should be, but more importantly, you should define what you want out of this job besides salary (growth opportunities, development, autonomy, strong network, is it firm with a prestigious name, etc)
- Negotiate everything at the same time not in parts. Negotiations are usually stressful and sometimes tense, that if it extends beyond a certain point, it can become personal. You never want it to get to that point, that’s why you should discuss everything you want at the same time. This also allows each party to make certain trade-offs, thereby giving a win-win scenario.
- Breakdown why you deserve the take-home pay – current job achievement, education achievement, certification, training (Masters, Ph.D., MBA). Always justify your counter offer.
- Consider other fringe benefits that the company offers (accommodation, vehicle, travel expense, food, etc).
- If all else fails this round, defer the compensation increase until the next appraisal period but it has to be stated in the offer letter. There are times when you would not get your minimum expected compensation due to a stumbling block in the approval process e.g. you would be earning higher than the peers you would be working with. The only thing you can do is to prove that you’re deserving of your ask by demonstrating your value before your first appraisal period.
- Finally, if the hiring manager couldn’t get you what you wanted, perhaps, you can get a hold of your potential boss by requesting to speak to him. This individual who would gain directly from your employment with the company would be more willing to expend social and political power on your behalf than the HR manager.
The Don’ts are just as important:
- Never Share your Current Salary if it’s far from what your current value is – this is one of the biggest rookie mistakes that most people make. It is usually a bit difficult to steer away from this question because you’re likely going to be asked either during the application process or during the job interviews. If I had to put something at the application stage, I usually put nil and if it was brought up during the interview, I’ll just say “I’d rather not share my salary at this stage because it does one of two things from my experience. If it’s slightly higher than what you’ll like to offer, you may assume that I won’t be interested in the job any longer and if it’s slightly lower than your expectation, it becomes a benchmark at the time I receive the job offer. I do not want this question to derail the whole interview and I’ll prefer you to judge me based on my capabilities and what value I can bring to your organization. Besides, the salary is only one component that I look out for when considering a new role. There’s a whole lot of others that are just as important”.
- Don’t make the first offer – Avoid speaking about salary expectations until the prospective employer is willing to present an offer. You need to sell yourself first and give an aura of a higher perceived value. The prospective employer is likely to bring it up at the later stage of the interview process – “what are your salary expectations”. Here’s something I’d say “My expectation is that you’ll be offering me the market value for this position after considering my skill set, professional experience, and current achievements in similar roles; in combination with the outcomes expected from someone working in this role. Besides, I know you already have a salary band for this role and I would be looking to be at the higher end of the band”. You can create something similar but don’t give a NUMBER!!!
- Don’t make it about you but about the value you bring. Were you able to demonstrate that your value in several areas that the company could gain from immensely e.g. Can you prove that you can further reduce the company’s expenses, increase their earnings, develop a new product or improve an existing process? These are areas you can easily quantify, however, there are areas that are quite important as well, such as designing methods that increase productivity, introducing valuable new customer segments or any other value add that currently doesn’t exist or has been a challenge for the company to capture.
- Don’t ever lie about other offers if you don’t have any. If your bluff is called, you may end up conceding defeat in the negotiation process but more importantly, they’ll know you lied which is likely to harm your reputation. If you actually have other offers, your confidence in the negotiation process would speak for itself and you’re likely going to stick to your guns. Everyone uses the “I’ve got other offers” and it’s truly not as effective as it once was.
- Don’t accept anything that is not written. There’s nothing like a verbal offer, it has to be contractual and executed on the company’s letterhead.
Salary negotiation is like playing office politics. You need to be aware of the players you’ll be negotiating with and systems that have been put in place to manage employee costs. You certainly don’t want to be argumentative but rather have a friendly conversation regarding the value of your work and what that could mean for the company’s top line. know what you want especially, the minimum expected compensation you can accept and be willing to walk away if you feel undervalued. Goodluck!
This post is part of the dream job course, an 8 part series guide on landing your dream job.