Six Secrets of Salary Negotiation

What Color Is Your Parachute? 2012: A Practical Manual for Job-Hunters and Career-Changers lists the six secrets of salary negotiation as follows:

• Never discuss salary until the end of the interviewing process when (and if) they have definitely said they want you.


• The purpose of salary negotiation is to uncover the most that an employer is willing to pay to get you.


• During salary discussion, never be the first one to mention a salary figure.


• Before you go to the interview, do some careful research on typical salaries for your field and in that organization.


• Research the range that the employer likely has in mind, and then define an interrelated range for yourself, relative to the employer's range.


• Know how to bring the salary negotiation to a close; don't leave it "just hanging."

I'm in a bit of a different situation than most people. Ever since my first post-MBA job, I've either used an executive recruiter to find a job or dealt directly with a potential boss who contacted me because he knew me or knew someone in my network. Each of these conversations always went something like the following:

• They called me or I called them asking about interest in a specific job.


• They described the job briefly.


• I asked a few questions about the job, the company, etc. and they answered them.


• I asked about compensation. TOTAL compensation (salary plus benefits). Even if they only had a ballpark number, I wanted to know it was worth my time to interview for the position. In addition, they wanted to know that I was ok with what they could offer (why interview me otherwise?)


• They told me the compensation numbers and I decided whether or not to proceed.

Now I know that this won't work for many people, but it certainly can when someone contacts you (it's harder when you contact them.) When they phone you and as you're getting information, ask about compensation -- what the position pays. This will save you a TON of time in case the salary is below what you'd ever accept.

And once you know the range, don't bring up the compensation issue again until the very end of the process -- once you know that they want you. It's at this point that you have the greatest negotiating leverage. They've spent a ton of time and money to get to this point and they want you BAD -- probably they want you to start work there tomorrow! It's now that you can begin compensation negotiations with the deck stacked in your favor.

If they bring up compensation during the interview process, here's what I tell them:

• My total compensation is $XXX


• I'm looking for a significant increase to this because I can deliver/actually am already delivering much more value than this.


• I like my current job and I'd only consider leaving if the new opportunity was amazing and if my compensation goals were met. (Even if you hate the job, don't let them know it. Make them think you love your current spot and are quite happy to stay there if need be. This also will give you more negotiating leverage.)

Using the above tactics has helped me achieve significant bumps in pay at almost every job move. Twice I was so successful at increasing salary that I was told they couldn't offer me more or I'd make more than my boss! (I'm assuming this was true, though they could have been lying, of course. The way it was said -- reluctantly -- made me think it was accurate.)

The process didn't work on one occasion, even though I was clear in detailing what I earned and what I expected to be paid in a new position. At the end of the process they tried to low-ball me, giving me an offer that was $15,000 below my current compensation (not to mention not giving me the 10% minimum bump I wanted.) They thought I was so bought into the job and company that I'd take a pay cut to work there. They were mistaken. I was unsuccessful at getting them to come up and they were unsuccessful at getting me to come down. So we parted ways (amicably, of course.) In hindsight it turned out to be a great move because I found another job that was 10 times better than the one I passed up.

I can see where they are coming from above when they suggest not mentioning a salary first. After all, you may low-ball yourself by naming a range well below what you could have gotten. Experience tells me that this is unlikely (that you make $40k now and someone wants to give you a $80k job -- unless there are highly unusual events surrounding the situation) and impracticable (you can only dodge the question so long and in so many ways until you look like someone who won't answer a question -- something you don't want to look like in an interview.) That's why I prefer the steps I've noted above.

I've used the above process to help me attain average annual increases of over 9% throughout a 20-year career, so something has to be working, right?

Your thoughts?

Comments

[STRONGside]

I was in a tough (relative) spot on my current job. I had done the research and knew what the salary range was for the position I was applying. When I was offered the salary, I was prepared to negotiate, but the stated salary actually came in about 10% MORE than my very high end of salary range figures for the job. I know this does not sound much like a problem, but I was thrown off. I ended up accepting the salary they offered without negotiating. I have often kicked myself to see if I could have negotiated higher, but it retrospect I dont think I could have.

[Matt]

In the past couple years, I have been VERY passively job hunting - my current job is OK, but I'd like something that's great. In no less than 4 situations, I got to the end of the interview process and offers tendered were 25-40% LOW relative to my current position. Since the second one, I have always asked the headhunter what the salary expectations were. I was subsequently lied to in two more job prospects and have avoided a lot of wasted time with others.

[soners]

Here's a question for the peanut gallery--my husband is currently applying for new jobs in a different, much lower cost of living, part of the country. How do you negotiate salary when making that move? Cost of living is only 75% of what it is where we currently live. Should he adjust his current salary for cost of living and then ask for 10% more--which would still be a net decrease? Asking for what he makes out here doesn't seem reasonable--and he's not a great negotiator to begin with so doesn't really want to push the issue. Thoughts?

[Aaron]

Soners - you've identified the cost of loving, but you need to also identify the cost of labor as well. What does your husband do? Does he get paid at the high or low end of the range for that job now? What does the pay range look like in the city you're moving to? Where does his experience place him on the range? Call that amount "x".

Do you expect your housing costs, car insurance, food cost and other bills to go down? By how much? Add up your total expected annual savings and call it "y".

Does x+y equal the current salary? If so, add 10% to that, subtract y out, and you have a good starting place for negotiations.

What is your best alternative to a negotiated salary agreement with this company? Can he apply to other companies simultaneously? Can he request other things aside from salary like moving expenses, more vacation time, etc to make up for the pay cut?

[BenC]

soners, I would adjust your salary expectations after doing the appropriate amount of research. Then as you said, add 10% to make it worth your while.

As for me, as I was being hired for my current job, I was asked what my salary requirements were. I kept pushing for them to give me a number first, but finally I relented and gave them a figure 5% higher than what I currently made (which was a great salary IMO). They accepted it on the spot (DOH!). After about 3 months on the job, my manager took me aside and told me they were giving me a 6% raise because I apparently was making too little for the position grade I was in. I asked what the range was and he told me I was now in the middle for my position. And this was all besides the extremely generous 12% bonus they give out every year which I didn't account for in my salary negotiations. So needless to say, I'm probably never leaving this company!

[Rod]

Soners, you have already started your research. But the best thing to do is get a full spreadsheet going of everything, Including food and other stuff. Get what you need to live comfortably there and then add 15% +- to that number and start there. In your budget do not forget to include savings and giving as well.

I just went thru this twice I got to the final part of the negotiations, First company pushed for a number. I stated what my total compensation was. Telling them honestly that this is total compensation and I was in love with their company and if they matched I would have went. I was almost rushed out the door. Oh well. 2nd company offered me without asking me for a number. It was 25% higher than my old salary and the benefits are amazing. Needless to say I took it and it is the best job ever. I have been blessed alot right now.

[spencer]

What do you do about job postings that say "Salary DOE", or "Commensurate with Experience"?

I see this all the time and it is so irritating! Especially when they say "please include salary history on resume".

Do you just leave it off? Say you're paid based on experience? I hate that they try to get you to play your hand.

[soners]

All good thoughts and questions, thanks people. It sounds like the next step is really trying to nail down what other people in his field make--both here and there. It's a pretty nascent field so that will take some leg work but is doable. Our main tactics for that will be to ask former employees and do internet research (glassdoor?)--any other ideas?

The great news is that my boss has approved me working remotely from there. Hello effective 35% raise. I almost feel like offering a pay cut since there will be some added tech costs to my employer and I already make at the very high end of what most people in my job/age do--but we all know that'd be foolish--and it's very easy as a fundraiser to see how you bring value to a non-profit. I love my job and the people I work with so this isn't one of those things where you work remotely for a few months and then transition to something where you've moved. It's great to have that added security as my husband makes a move.

[jim]

Sooners, Glassdoor is one good resource. You could also try checking the government BLS.gov occupational outlook site. bls.gov/oco They have data on earnings for specific professions in individual metro areas. Or theres more data in the occupational employment statistics are at bls.gov/oes It may not be simple to find exact numbers and some obscure professions aren't covered well. If you mind sharing the city/state and the profession area then I can help you see if they have it.

[Mike Hunt]

Spencer, I would not include salary history on any resume or application. But if there is a line requesting salary you may answer negotiable.

FMF,

Your thoughts in this post are spot on and this way of looking at negotiations has been very helpful to me in my career.

-Mike