“The Darkest Hour of any man’s life is when he sits down to plan how to get money without earning it.”
– Horace Greeley
It is very important to delay discussions on salary or compensation until after you know the employer has decided to hire you. Employers will always be willing to pay more once they have committed to offer you the job and have decided they want to work it out with you.
Almost all compensation discussions are negotiations and it is to your advantage to learn how to effectively negotiate your compensation without alienating your potential boss. Having a win-win goal is the right goal, but it takes skill.Do you dread negotiation? It’s not irrational; few people enjoy butting heads with inflexible, hard-nosed, all-or-nothing adversaries. Whether it happens in a car dealer’s showroom, realtor’s office, personnel office — or even at a flea market stall — it’s no fun when you can’t reach a meeting of minds.The good news is, salary negotiation doesn’t have to be a win/lose game in which the best player wins. In fact, when it comes to negotiating the terms for your career moves that’s exactly the outcome you want to avoid. If you win and your employer loses, you lose in the long run. Inevitably, your employer will start looking for someone who can perform your function at less extraordinary rates. If you lose and your employer wins, well, you lose.So your goal going into negotiation must be to secure the best possible compensation package you deserve and can justify based on skills, past performance, and market conditions.Assuming that your work itself is satisfactory, good negotiating skills are the key to getting the maximum possible increase in pay. Over a lifetime, these skills can double your income for the same quality and quantity of work. Yet few people spend time learning to be good income negotiators. Most people would rather just let their income “happen” to them instead of taking charge of their income growth.The sooner you learn to negotiate, the sooner you’ll start reaping the rewards. Unfair as it may seem, employers tend to prefer those candidates who already earn a greater income. While these candidates cost more to employ, their higher incoming salaries are assumed to reflect greater competence, initiative, and achievement. So, it’s triply in your interest to pursue income increases at every legitimate opportunity. One, you immediately increases your income each time you succeed. Two, you make yourself more desirable as a candidate for your next position. Three, you increase your future income; the higher your salary/benefit package going into a new job, the better the offer a prospective employee must make to attract you. Four, it earns the employer’s respect making him or her feel comfortable with you representing the firm’s best financial interest in dealing with customers and suppliers.Whether you’re looking for a raise and promotion within your current company, or looking for greener pastures, the following strategies apply.
Prepare before you proceed
Negotiating a significant jump in income requires research on the negotiator, firm, and industry. You must be familiar with the company’s wage limits and fringe benefit options for the job in question, and with the style, thinking, and perspective of the person with whom you will be negotiating. Explore the types of compensation programs available in the industry and the industry-wide income levels typical for persons with your background and experience. Try to determine how much authority the interviewer will have to discuss salary and fringe benefits.
Contact industry associations, executive recruiters, and competitive companies for salary ranges and fringe benefit packages. Research library references including the Occupational Outlook Handbook and the American Almanac of Jobs and Salaries, and other reference works. Also independent research companies like the Hay Consulting Group in Dallas, Texas, offer industry data on average salary levels for specific positions. The Internet can also offer convenient salary comparisons such as the Salary Calculator at http://www2.homefair.com/calc/salcalc.html or Jobsmart at http://jobsmart.org/tools/salary/sal-prof.htm.Before your negotiation, set specific income and benefit goals, develop acceptable trade-offs among these elements, and identify areas in which you will be willing to make concessions. Keep in mind that it’s not how much you’re worth, but how much they think you’re worth that counts. Also, examine alternate routes to the compensation you desire. These may include changing employers, changing positions within your present company, or becoming self-employed. The less desperate you feel about attaining your desired income through one particular course of action, the more vigorously you can negotiate to get it.Remember that you are negotiating a total compensation package. Weigh pure dollars against all benefits — perks, automobile allowances, guaranteed incentive and bonus, commissions, insurance, country club privileges, financial and legal assistance, first class air passage, four-week paid vacation, job title, secretary or support assistance, car phone, and so forth.One industrial troubleshooter I earned $6,500 per year in 30 minutes just by researching his industry — and by having a ready trade-off. In negotiating with a potential new employer, this man had reached agreement on every point except salary. The employer wasn’t budging from a figure $7,500 beneath what the applicant felt he was worth.”In my current job,” this man recalls, “I had calculated the monthly revenue I generated for my employer through billable hours and warranty claims avoidance. It turned out to be about $12,000 per month over and above my salary.””I also knew that the position for which I was applying had been open for two months; experts in my field are rare. So I pointed out that it would cost the company less to hire me on the spot at my desired salary than to wait another month and hire another applicant at the lower salary — if they could find one. They wavered. So I offered to use my new personal car for regional site visits at a fair reimbursement rate. (I prefer my car over their fleet cars anyhow.) That clinched it. They offered me $6,500 more and I happily took it.”Identify the goals of your prospective employer by trying to anticipate what offers you will be made. Run through all possible scenarios you may encounter in the negotiating phase. Set limits you will accept, and be prepared to walk away if your terms can’t be met — assuming they’re reasonable and realistic. In the early stages of the negotiation, let the negotiator know you’re interested only in an exceptional opportunity. You thereby set the stage so that the interviewer is unlikely to make you a low offer.
Choose a conducive setting
Choose an environment for the negotiation in which both you and the interviewer feel comfortable. If possible, avoid distracting events such as dinner, and distracting settings such as lounges or lobbies.Make sure the person you’re meeting has the authority to make the final decision. Otherwise, delay until someone with authority can meet with you.
Always negotiate in person
Negotiating in person gives you the greatest control. Face-to-face meetings provide the chance to read and exchange body language, use silence constructively, make eye contact, and in general enjoy a much richer and subtler communication. Less personal means of negotiation — phone calls and/or the mails — will almost always result in a less satisfactory outcome.
One sales engineer told me the difference it made to negotiate in the office of her future boss. “The minute I walked in, I noticed pictures of racing sailboats on his wall. Well, I’m a nationally ranked, Hobie Cat racer, so we wound up swapping great racing stories for 20 minutes before we began talking business. I got the job — not only because we built a personal rapport, but because our good feelings convinced my boss that I’d warm up his firm’s prospects, too.””By phone,” she concedes, “I never would have had the visual cues that got things moving in the right direction.”
Never negotiate with strangers
Build rapport early in the meeting. Creating an open, relaxed, friendly environment develops trust and mutual respect. Start negotiation proper only after you and your counterparts are comfortable with one another.
Establish mutual goals
Concentrate on establishing and reinforcing points of agreement. Continually reiterate your feeling of mutual compatibility and cite the positive attributes of both parties. This creates a bond of harmony to help overcome the differences, which are likely to arise in negotiation. If you hit a sticking point, reviewing your points of agreement and shared goals will rebuild your accord with your negotiators.
Let the negotiator raise the subject of money
The first person to mention money usually pays for his impatience. Let the employer bring it up as many times as necessary — without talking numbers yourself — until you feel ready. Getting the employer to want you is crucial to maintaining the upper hand in your negotiating.
If the question of money arises too soon, tell the interviewer you need to learn more about the company and the job opportunity before discussing financial needs. If the employer still persists, ask if your are being offered the job. If pressed to give a salary figure, speak in terms of the job’s worth and your ability to do it well. Let your interviewer know that, while money is not your main objective, you believe in excellent compensation for excellent performance. A good answer to the salary question is to quote another offer you’ve been made, provided it is attractive. You may announce the salary you would expect or answer that it depends on the total compensation package with fringe benefits and other perks.You might also respond by saying that salary is the third item on your priority list. Number one is making sure you can work well with the employer, and number two is being the right candidate for the job. You also invite the company to offer you what it feels you are worth based on your skills and accomplishments. Your weakest response is to divulge your present earnings. Or worse, to say, “I’m willing to accept a comparable offer with good earning potential.” This will typically net you to a zero-to-ten percent increase, with an accompanying song and dance about the many intangible benefits of your new position. If you must quote your current salary, tell the employer that you will be getting a salary review, and you expect at least a 10% increase. If this isn’t true, make it true by having such a discussion with your current employer. If you’re ready to discuss money and your negotiator still hasn’t brought it up, you can move her in that direction if the mood is highly positive and you feel that she really wants you for the job. You might say, for example: “I feel very comfortable with you, the position available, and the quality of this corporation. Now where do we go from here?” Remember, don’t be impatient! Your ultimate goal is to get the interviewer to make the best possible offer first. This offer is simply the opening gambit as you begin further negotiations in earnest.
Seek the employer’s position before stating your own
Just as you should allow the employer to mention money first, you should also encourage the employer to mention his or her other terms — relocation, starting date, car allowance, salary limits, job title, and the like — before revealing yours. Probe carefully to see what he or she really wants. Size up the importance of any points of disagreement. You need to gain an understanding of the employer’s position to plan your proper gain and to plan your proper strategy. Don’t let the negotiator pressure you into accepting an offer until you feel satisfied you’re fully informed.
Keep good records of your achievements
Throughout your career you should develop the habit of documenting everything that reflects positive performance. Save (and when appropriate, solicit) written letters of recognition. Note the overtime you work, the goals you achieve, the money you save your employer, the bonuses you earn, etc. Be specific. Having all the pertinent facts at your disposal will help you build a credible case for your worth to the company.
A colleague of mine helped place a substance abuse counselor who began in this field as a volunteer. Years before, this man’s hometown paper had devoted a Sunday feature story to his volunteer work and the crisis intervention center he had helped found. “I made this article an attachment to the resume,” says the counselor. “It said things about me that might have sounded egotistical had I said them — and carried more credibility as an outside source, too. I believe that article, as much as any one thing, helped me win my current position.”
Never make an easy concession
When you make a concession, let the employer know it’s difficult. Make small concessions first. Say to the employer, “If I give this up for you, what will you do for me?” or “Will you give me this in return?” You can afford to trade a few chips from your pile for an immediate concession from your negotiator in return. But remember the value of your concession diminishes rapidly, so the time to work your trade is before you concede a point for keeps.
Sometimes the best way to reduce your ultimate concession is to “flinch in surprise” and then be silent for a few moments when a figure is given. You may even slowly repeat the figure and then be silent again. If the employer becomes anxious about your apparent resistance, he or she may sweeten the offer to mollify you.
When you do respond to an offer, make a counteroffer a little higher than you expect to get. The result? You may gain something without having to give up something later in the negotiation. However, keep your ultimate goals in mind: a win/win resolution. You have to come to work every day with your negotiator, so it’s important to appear reasonable as well as self-respecting.
Accept when the time is right
If your instincts tell you the time is right for getting the best offer, push for a decision immediately, even if it’s your first offer. Sometimes an employer will be more receptive to making an offer right after a long, impressive interview than after a thoughtful delay and a cooling-off period. Emotions play a major role in every negotiation, so settle when the employer’s emotions are most strongly in your favor.
Get your agreement in writing. Better yet, write it yourself!
As you accept an offer, establish your expectation of receiving the offer in writing by a specific time. A written agreement reflects a firm commitment, and clarifies what is expected of both you and your employer.
As part of your agreement, insist on a three to six month severance pay. This protects you if things don’t work out. It protects you from a company merger, takeover, new boss, and similar surprises. It also insures fairer treatment from the employer.Offer to write the agreement yourself as this allows you to ensure the inclusion of all details to which you and your employer agree.If you’re switching employers, don’t turn in your resignation until after you have the letter of agreement in your hands.
Guarantee your performance, and honor your guarantee.
You can generally negotiate better terms for yourself if you are willing to commit to specific performance goals. Doing so also works in your favor when it’s time to review your performance; these goals provide a ready-made, tailor-made yardstick. Once you commit to performance goals, follow through. Negotiations with employers are a continuous cycle, beginning the day you arrive and extending to your next salary review when the cycle begins anew.
If you decide not to accept the offer for whatever reason, make sure you leave on the best of terms. Treat every offer seriously and graciously. You can never tell who you may be doing business with in the future so do not burn any bridges with your current or new employer.
However, using the offer as a means to increase your current financial stature with your present employer is considered unethical. Once you commit yourself and accept an offer you cannot back out without losing your reputation and compromising your integrity. Changing your mind after giving your word will cause employers to feel used, and will shatter their favorable perspective of you. Decide before you get to the offer stage if the position is right for you.
“The article above was written by construction recruiter Frederick Hornberger, CPC, president of Hornberger Management Company in Wilmington, Delaware (www.hmc.com), a construction recruiter specializing in senior level, executive search.“