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Salary Negotiations

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Get Paid What You Deserve

For most of us, improving our salary is our best bet for imroving our lifestyle, saving more and ultimately achieving financial independance. However, many of us do not feel comfortable asking for more money. 

This lens is all about improving your chances of getting a raise. It deals with negotiating new job offers, asking for an increase from an existing employer, and just as importantly knowing what to do about a dreaded "no".

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How Much Are You Worth?

Nobody is going to increase your pay just for your good looks (unless you are a model, that is). An employer's goal is to pay you the bare minimum that will make you stay in your job.

For this reason, you must arm yourself with information before salary negotiations even begin.

Here is how to get that information:
  1. Online Salary Comparison Tools - the easiest and fastest way to get a good idea of your market value is to check-out sites such as Salary.com and Payscale.com these free sites provide a great deal of information regarding salaries in your specific industry. They let you compare yourself to others working for similar sized companies, with similar background, title and responsibilities. Salary.com also offers a paid service which supposedly provides you with even more customization. I did not use this paid service so I cannot recommend it. Starting at these sites you will not only be able to benchmark your salary, but also compare your bonus, benefits and so forth to those typical in your industry. Both of these sites not only provide the average salary for someone in a position similar to yours, but also the bottom and top of the salary range.

  2. Industry Salary Surveys - if you work for a company big enough to have an HR department, be aware that those groups often make salary decisions based upon industry salary surveys which they purchase from specialized consulting companies. I was recently able to get my hands on a salary survey for the Silicon Valley and boy, was that survey enlightening. Getting your hands on such a survey may not be easy. The best way may be to reach out to friends and acquaintances who work in finance or HR positions in other companies in your industry to ask if they have access to such data. This data is likely the same data that your employer is using to make salary decisions and as such it is invaluable.

  3. Friends & Acquaintances - it is never easy to speak to people directly about your salary. BUT, if you have contacts you can trust in your industry (especially if you work for different companies) consider confiding in them and asking for their input on your market value. One method that I find particularly effective is reaching out to former bosses (who already know your past salary as well as your background) and asking them to estimate your market value. Another method that may work is reaching out to former colleagues from your company, and asking them what they had previously earned when working for the company. Since this is not current data, some may be willing to share the information.

  4. Headhunters - headhunters are an excellent source of information, and many of them will be glad to speak with you, especially if you can do something to help them. For example, a few weeks ago I got a call from a headhunter that was looking to fill a certain position. I referred the headhunter to a great contact I knew, and then asked if she could return the favor by giving me some information. She was only too happy to oblige.

  5. Interviewing - yes, this one is resource intensive and risky, but the best validation of your market worth is what someone else is willing to pay for you. If you get a written offer from another company, that is the ultimate testament to your value. Nevertheless, I don't recommend this strategy unless you are really interested in exploring opportunities with another company. For one thing, it is unfair to take up the time and resources of this new company. For another, by taking this approach you may be creating a bad reputation for yourself in the industry by needlessly interviewing. Lastly, there is always a risk your employer will find out you interviewed with another company and will react badly to this information.

How Big Was Your Last Raise?

How successful are your salary negotiations? Compare your negotiations success to that of other readers by taking this quick poll:

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Get Prepared to Negotiate

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Get Paid What You're Worth: The Expert Negotiators' Guide to Salary and Compensation by Robin L. Pinkley

Get Paid What You're Worth: The Expert Negotiators' Guide to Salary and Compensation by Robin L. Pinkley

50 percent of prospective employees accept job off more...0 points

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Negotiating Your Salary: How to Make $1000 a Minute by Jack Chapman

Negotiating Your Salary: How to Make $1000 a Minute by Jack Chapman

Nationally known career advisor Jack Chapman teach more...0 points

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Secrets of Power Salary Negotiating: Inside Secrets from a Master Negotiator by Roger Dawson

Secrets of Power Salary Negotiating: Inside Secrets from a Master Negotiator by Roger Dawson

Master negotiator Roger Dawson, author of the best more...0 points

Nagotiating a New Job Offer

The way you negotiate a new job offer will have a profound impact on your compensation for years to come. In essence, you are determining not only your current compensation, but also the base from which you will negotiate future compensation increases and even future job offers.

With so much at stake, it is important to get the negotiations right. Here are a few pointers:
  1. Never Take the First Offer - as someone who has both hired people and who has received an offer or two in his life, I can tell you with a high degree of confidence that the first offer you receive from a company is never the best you can get. Hiring managers expect you to negotiate, and for that very reason leave some room for concessions.

  2. Negotiate Only if You Intend to Accept the Offer - always negotiate in good faith. If you have no intention of accepting the offer anyway, don't waste everyone's time by making demands. Say "no" and move on. Negotiating without intent to accept is unfair to the hiring company who gave you an honest offer.

  3. Be Honest - Do not lie. If you don't have another offer, don't pretend that you do. If you have multiple offers, don't over-sell them. The last thing you need is to start with a new employer on the wrong foot.

  4. Ask for What You Want to Get - don't sell yourself short. Ask for what you think is going to make you happy, not what you think the new company will agree to. I would even say that if the company immediately agrees to what you are asking for, you are probably asking for too little. Of course, don't be ridiculous in your demands. When my wife was negotiating her most recent job, the new company immediately agreed to my wife's request for an extra $10K in salary. This is an indication that she should have asked for more. Nevertheless, my wife was very happy with her offer and compensation package, and THAT is the MOST important thing.

  5. It's Always Easier to Negotiate Before You Join - Keep in mind that getting a better offer before you join the company is much easier than getting a raise once you have already joined the company. Before you accept the offer, you have all the power and the company is courting you. After you accept the offer and start working, the company knows that switching jobs is not a simple task, and therefore will be less inclined to agree to your requests.

  6. Be Matter of Fact - when asking for the improved offer, be matter of fact. Don't threaten, don't plead, explain what you want and then shut up. For example, consider something like: "Thank you for the offer. I currently have two offers to choose from. I prefer your company over the other one I am talking to, and will accept your offer if you increase the salary package by $3,000". Don't over-explain your request. Give the company a "carrot" by making it clear that you will accept the offer if your requests are met.

  7. Don't Paint Yourself into a Corner - Don't say that you will walk away from the offer if your demands are unmet, unless you really intend to reject the offer in that case. Regardless, doubt is a much more effective tool than an ultimatum. Rather than saying you intend to walk away unless you get what you want, consider saying that getting what you want will simply make the decision much easier for you.

Salary Comparison Web Sites

Both websites below provide free comparative salary information.
Salary.com
Salary.com also provides premium salary comparison reports for a fee.
Payscale.com
Payscale also has a free cool feature called GigZig that tells you what your title and compensation may look like 5 years down the road, based on your current title.

Personal Finance on Money and Such

If you find the information in this lens useful, you may also enjoy my personal finance blog: Money and Such. Here are some of the latest articles from this blog. It is updated every week day.
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Do You Negotiate New Job Offers?

Some take the first offer they are give. Others negotiate so aggressively that employers wish they never made the offer. How do you rank yourself?

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Getting (Another) Raise

How should you communicate the fact that you are not entirely satisfied with your raise, without coming off as greedy, ungrateful or selfish? Here are a few pointers:
  1. Thank the Boss - as someone who runs a team, I know that if I make an effort for one of my team members, it is personally important to me that the employee acknowledge my efforts on his behalf. Even if you do not get everything you were asking for, take the time to sincerely thank your boss for the effort he or she made on your behalf and for the raise you are getting. Bosses are humans too and like every other person on the planet, they appreciate it when their work is recognized.
  2. Do Not Immediately Ask for Another Raise - It is not appropriate to express outright dissatisfaction with a raise you just received when speaking with your boss. That would send the wrong message. Even worse, it would be counter-productive since your boss would get the feeling that you do not appreciate his or her efforts on your behalf. Why try do to more for you if all they get is a sour face?
  3. Setting Expectations is OK - although it is not a good idea to ask for another increase as you are receiving news of your raise, it is very much OK to set the correct expectations, as long as you do so professionally, courteously and in a positive manner. For example, when my boss recently gave me formal notice of a raise I was getting, I thanked her for her efforts, and commented that I am very happy with my raise and did not expect that we would be able to get to my market compensation level all at once. By doing that, I believe that I both created good will with my boss and set the expectation that I do not consider my new compensation level to be satisfactory in the long run. In asking for an increase, you want your boss as an ally, not an adversary.
  4. Support Your Claims - providing detailed documentation as to your market value makes salary negotiations a whole lot easier. If you provided such documentation prior to being told about your raise, you can always use those materials later down the road to support your new bid for a raise. Every professional should develop an understanding of his true market value, whether or not he is re-negotiating his compensation package. Use some of the resources provided in this lens to find out what your compenstion level should be.
  5. Make a Plan - it is a generally correct statement that the act of making a plan substantially increases your chances for achieving your goal. Salary negotiations are no exception. I strongly recommend making a plan for where you think your compensation should be, what process you will follow to achieve this goal and when you would like to achieve it.
  6. Keep Your Options Open - in some cases by giving you a lower than expected raise, your company is sending the message that your work is not appreciated. If you are getting a feeling that your chances of getting the compensation you deserve with your current employer are not satisfactory, you may want to start looking for a new position.

Mistakes to Avoid in Asking for a Raise

One of my team members has been asking for a raise. He made every single one of the mistakes listed below:
  1. Don't Give Ultimatums - making statements like "it's now or never", give your boss an incentive to say: "OK, never". Threatening will not help your cause.

  2. Don't Be a Pain - compulsively bringing up the topic of a raise every time you get your boss alone for three minutes, will cement your image as a nag. There is a time and a place for everything. Make your request and follow up after a few weeks.

  3. Your Financial Issues Are Irrelevant - you are not improving your case by describing your financial difficulties, you are only making your boss uncomfortable. Unless you are a welfare recipient, your level of financial need has no bearing on the check you will be receiving.

  4. Don't Gossip - Don't discuss with others within the organization your request for a raise, least of all other managers in the organization. If news of such discussions gets back to your boss, you will find yourself in an uncomfortable situation. Going directly to your boss' superior is an even worse idea, unless your company process calls for this or unless your relationship with your direct boss is so bad that you have nothing to lose.

Discussion Forum

Questions, suggestions, ideas and opinions are all welcome here.

  • ken Feb 3, 2012 @ 8:04 am | delete
    nice tips, also researching the market before salary negotiation helps to know your value.

    http//www.salarynegotiationstips.com
  • Pixelrage Aug 7, 2007 @ 9:18 pm | delete
    5 stars - great lens! Thanks for joining the Tutorials group, you're now featured.
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by

Shadox

I am an executive at a technology firm, in my late 30's and I negotiate deals for a living. I've also negotiated a lot of job offers, on both sides of... more »

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