If salary negotiations make you nervous, you are not alone. In a recent study I ran, most working adults accept job offers without negotiating them. The issue? The first offer an employer makes you is rarely the best offer you can get. If you want to get the best offer, you need to negotiate.
How does one negotiate a salary? Successful negotiation is 80% preparation. Tips and tricks won’t cut it. If you want to get a good deal, you need to prepare the negotiation seriously. In this week’s edition, I will present a simple four-step process to prepare a salary negotiation. Let’s go!
Improve your alternatives
Your negotiation power depends on the alternatives you have. If you walk into a salary negotiation and your best alternative is unemployment, you have close to no bargaining power. Sure, you could bluff, but that’s the kind of risk I would not recommend when your livelihood is at stake.
The best way to increase your negotiation power is to improve your alternatives. If you are looking for a job, apply to several positions until you find at least two companies interested in your profile. Do not give up any alternative until you have a signed contract, even if you have a favorite. You will need the leverage.
This strategy also applies to promotions. Employers are often interested in increasing your responsibilities, but rarely match them with a salary raise. Why would they, if you’re not going anywhere? If you want more than a fancy title and an increased workload, your best source of leverage is another company willing to pay you that amount.
Research your market value
The biggest mistake you can make in a salary negotiation is to let the employer determine your market-worth for you. Employers, just like candidates, are trying to negotiate great deals. From their perspective, it would be nice if you accepted a salary much below your market worth. It’s pretty easy to do when candidates don’t know how much they’re worth.
I sometimes meet young professionals who try to convince me that knowing your market value is impossible and that only the employer has that information. That’s wrong. You have an actual market value; you just don’t know what it is yet. All you need to do is your research. Your goal should be to understand how the market values what you bring to the table.
One source of information is competing offers, obviously. Other sources include friends who work in the industry, your alumni network, and the internet. Whatever the avenue, find people who might have that information for you. Call them up and discuss the topic with them. Don’t stop your research until the information becomes redundant.
Craft different options
It’s natural to believe that a salary negotiation only involves one item: the annual salary. The problem? It’s the best way to approach the negotiation with a fixed-pie mindset: the belief that you can only win if the other party loses. Salary negotiations involve many different factors, including working hours, vacation days, remote work possibilities, scheduling flexibility, training opportunities, relocation stipends, etc.
You know these restaurants that have a fixed price for a dish and let you swap the ingredients? They let you create multiple combinations of identical values that can accommodate different tastes. Your goal is to do the same with your offer.
Determine what factors are the most valuable to you and find different ways the employer could give you the same value using different combinations of these factors. Maybe the employer won’t be very flexible with the salary but can give you great hours and more vacation days. At the end of the day, what matters is that you are getting the value you expect.
Write your talking points
90% of the people I coach for salary negotiations tell me that they are worried about what the employer will think of them. It’s often the reason they request to meet me. They don’t want to sound greedy or difficult, and they are worried that if they phrase their demands wrong, they’ll lose the offer altogether.
You want to know a great way of avoiding saying the wrong things? Preparing your talking points in advance. You can’t prepare for every possibility, sure, but you can prepare for the discussions you know will happen. In any job offer negotiation, you will have to formulate at the very least (1) what you want and (2) why you deserve to get it.
Your goal at this point is to express these two points in a way that feels right to you. Maybe you will prefer to be rather humble about it, or maybe excited and friendly. Write these points in a Word document and work on them. Sleep on them and work on them again, until they feel right. Otherwise, you might be very tempted to avoid the negotiation altogether when the moment comes.
If you reach this point, you are in good shape. You have improved your alternatives, you have done your market research, you have crafted different options, and you have prepared your talking points. Now, it’s time to memorize your document, sleep on it, and practice in front of your mirror.
Will you still feel nervous about the negotiation? Sure, but a lot less than you would without any preparation. Is it OK to be nervous? Absolutely. I’d be worried if you weren’t. Recruiters and most managers have extensive experience dealing with nervous candidates; they won’t think lesser of you.
In my next issue, I will discuss how to ace the negotiation. Stay tuned!