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Salary Negotiations: the Basics

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Negotiate

Yes, do negotiate. Employers actually EXPECT you to negotiate your package even when they pretend they don’t so don’t deprive them, or yourself, of that pleasure.

Negotiate After You Have An Offer

The time to negotiate your salary is after the employer has decided he wants you on board and has made you a concrete offer – not in the elevator on the way up to the Interview or after an interview question you think you’ve particularly aced. An offer indicates that the employer wants you on board and is convinced you have the skill-set and potential to be a valuable addition to the team. You now have the upper hand and should use it to secure a compensation package commensurate with your worth. It is far easier to negotiate a satisfactory package at this stage when the employer really wants you and is focused on getting you on board, than after you are on board and firmly entrenched at a given salary level and job description. It is unlikely you will ever be in a better position to negotiate a good package than you are at this stage.

Establish Job Responsibilities

Clarify your job responsibilities before beginning to negotiate the compensation. Make sure you have all the facts pertaining to the new position and are very clear about your role, responsibilities and the job title. This detailed knowledge of the position will come in handy as you negotiate your package.

Determine Your Salary Range Beforehand

Before you can begin negotiating, you need to determine a salary range that you can base your discussions with the employer on.

Firstly, determine the minimum salary you could possibly accept, and make sure this is a salary that you can survive on. This minimum is not to be revealed to the employer in your negotiations.

Next, determine a reasonable mid-point salary based on what the job responsibilities are, what you have to offer the employer and what you are worth in the market. To get a realistic idea of what the position is worth, research the market. Look at published annual salary surveys and job ads for similar positions in newspapers, magazines and on internet job sites and talk to friends in the industry and recruitment agents. If you are applying to a position at the right level, there should not be a large discrepancy between what the position is worth based on your research and what you are worth based on your experience, education, compensation history and what you have to offer the position.

Finally, determine an extremely generous salary level that is not too unrealistic for the position and that you would be extremely ecstatically happy to receive.

Get the Employer to Reveal his Hand First

Always get your employer to reveal his hand first to avoid pricing yourself out of the game or limiting the discussions prematurely. If you are first to put a number on the table, you run the risk of being perceived as ‘overqualified’ if your range is too high or casting doubts on your professional abilities and track record if you short-sell yourself. Revealing your expectations or salary history will limit your negotiating range and remove a lot of the leverage you otherwise have.

Often, the employer will make you a verbal offer and throw the salary ball into your field by asking you what salary you expect, or what salary you made in your previous position. Try to throw the ball right back in the employer’s field by countering with another question, such as “What do you think someone with my track record, experience and skills could make in this position?” or “You now have a good idea of my skills and track record and potential. What do you think is a fair salary given the job’s requirements and responsibilities?”

Do not reveal your previous salary if you can possibly help it. Focus the discussion instead on what your background, responsibilities and potential contributions are worth in this position. Your goal should be to maximize your worth and potential value to this employer through effective negotiation – the value your previous employer placed on you should be irrelevant. Remember, what you are worth to this employer is a function of the value-added you can bring to this particular job and your potential contributions in the new role, not a function of how your skills were utilized (or not utilized) in the last job.

If absolutely pressed for a number and the employer will not give you an idea of his target range despite all your best efforts to gain the upper hand, you can present the employer with the range you have determined beforehand. The ‘expected’ salary range you reveal will have what is really your midpoint as the minimum, with the upper bound representing your ‘dream’ salary. Make sure you always start your negotiations with a range, not a specific salary level.

Let the Games Begin

You are now officially at the starting line, equipped with a verbal offer, your own well-studied salary range and a solid understanding of your job responsibilities in this new role. The negotiations will be fired either with the employer revealing his salary range for the position or, despite all your best efforts to reverse the roles, you revealing your predetermined ‘expected’ salary range first.

Best case scenario: You have played your cards right and the employer extends you an offer that is at the upper bound or significantly above your expectations. Your downside risk has been eliminated and you can now focus your discussions on making a good situation even better. If your predetermined salary range was $75,000-$90,000 and the employer has offered you $90,000 – $95,000, you can counter with something akin to “That is close to the range I had in mind. My expectations given my background and the job responsibilities were closer to $95,000 – $105,000 with $95,000 really having been my very minimum. How much flexibility do you have on the upside?”

Worst case scenario: You have prematurely limited your negotiating range by revealing your hand too soon and the employer counters with a lower range, or the employer starts the negotiations with an offer below your expectations. This is where your negotiating savvy really comes into play.

Before you begin to negotiate, make sure you and the employer are roughly in the same ballpark. If your well researched and well thought out range of $75-90,000 was met with an offer of $50-55,000 from the employer, you have either misconstrued the job responsibilities or the employer is paying significantly below the market. This is where your minimum salary comes in. Does the range meet your minimum threshold? If not and your negotiations don’t bring you upto that minimum requirement, this may well be the wrong position and/or company for you!

Justify Your Counter-Offer

Your $75-90,000 range was met with a $70-75,000 offer from the employer. All is not lost. You will keep the discussion alive by coming back with a sell proposition along the lines of “Well let me see, the job’s responsibilities as I understand them are A-B-C” at which time you carefully recite in detail all the various aspects of the job. “I really feel that someone with my track record and qualifications could be making a minimum of $75,000 on the job. I was actually looking for a salary much closer to the $80,000 mark.” You then proceed to justify your range. Confirm to the employer that you are very interested in working with the company and that you feel you would really fit into the team and could make a significant contribution there. Recap on your most relevant work experience and mention again the skills you will immediately put to productive use on the job. Mention that you feel your ideal salary is actually very realistic given your experience and the job requirements.

Gain Leverage by Negotiating the Job Responsibilities

If the employer’s range is carved in stone despite all your well-rehearsed negotiation tactics, move to another stone. You do this by altering the role, albeit modestly to justify a higher salary. This is where your detailed knowledge of the position comes in.

You can do this in three ways. Firstly, you can add to the list of job requirements a task or responsibility you have thought of beforehand; one that you have either read about, thought of yourself or heard about from a friend in the industry. Secondly, you can seize on one of the problems the employer mentioned during the Interview and offer a solution that you would personally be responsible for. Thirdly, you can ask the employer outright, what added responsibilities he would ideally like to have the person holding this job ultimately assume if they were brought upto speed quickly enough. Another way to pose the latter question is what added responsibilities or areas does the employer wish your predecessor had taken charge of. Asking the question “What are some of the areas you would like improved on” or “What are some of the problems that my predecessor faced” during the Interview comes in useful at this stage of the negotiations as you try to establish additional value-added ground.

The ‘business solution’ or added responsibility you come up with need not be monumental; in fact you should refrain from making any big promises. It can be something as simple as a Marketing Executive offering to arrange a brief monthly newsletter for the firm’s clients, or a database that would speed client reporting up, or a slightly revised format for the monthly reports that would be more visually appealing. The important thing is that once you have elevated the position to a slightly higher plateau, you can then proceed to justify your ‘ideal’ salary as commensurate with the increased responsibilities. You can go back to the employer with “From what I understand, my role in this position would be XYZ. However, I am also bringing to the job the following function(s) and responsibilities . . . ” at which point you recant the additional responsibilities.

Justifying your desired salary as being commensurate with a higher level of responsibility is an excellent way to jumpstart stalled negotiations.

Negotiate the Package not just the Salary

You should be ready to negotiate the entire package, not just the salary. Remember that you can enhance a less than stellar salary by negotiating the perks. If your most ardent, well-rehearsed salary negotiation tactics were ineffective at boosting the starting salary, you can try to gain the lost ground at this stage of the game. Your discussions can include medical insurance, car and housing allowance, children’s education, plane tickets home for expats, club memberships and further education and professional training for yourself. Try to get any courses, seminars or further education you intend to take included in your package. In many industries you can negotiate a guaranteed bonus at a given date or a sign-up bonus. You can try to secure a commitment to a minimum salary increase and/or title promotion at a prespecified date in the future providing you meet certain performance criteria. At the very minimum, you can ask for a performance (and salary) review a few months after joining.

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