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Many of us are so happy to get offered a job that we don’t consider properly negotiating the salary and benefits. If this is you, you are leaving money on the table. It is perfectly acceptable to negotiate a salary and benefits once you have received an offer.
For you folks new to the job market, your first salary can influence your earning potential throughout your career. If you compare two like individuals in the same company, one that starts off with a higher salary and receives a yearly raise of approximately the same percentage as her peers will realize the exponential benefits throughout her career. An article in Business Insider highlights how the difference of $5,000 in starting salary between two like hires (one who negotiated her salary and one who didn’t) could be a ~$50,000 difference in salary and over $1,000,000 in earnings by the time they retire. If you want to learn how to stop leaving money on the table and negotiate a better salary offer, keep reading.
Table of Contents
Before the Salary Negotiations
Do Your Homework
Like any endeavor you undertake, you need to be knowledgeable entering negotiations. Research industry standards such as what licenses, certifications, training, etc. are required and which demand higher salaries. Analyze salary ranges for you position, experience, and location by talking to folks already in the industry and reviewing websites like Glassdoor, Payscale, and LinkedIn. Understanding what others in the field with your similar experience, skills, credentials, etc. are earning will give you a baseline for your salary negotiations.
When performing your salary research, also make sure to consider what benefits and perks are the industry norm. Do most companies provide free or reduced insurance? Is 401K matching on retirement contributions a common benefit? Does the industry typically provide lower salaries, but higher value in the way of stock options? It’s good to understand the benefits and perks in case you either value these more or the company isn’t in a position to offer your ideal salary.
Know Your Value
Perform an assessment of your skills, qualifications, and experience objectively. Be prepared to discuss how they meet or exceed the position’s requirements and how you will use them to benefit the company. If you have any unique strengths or achievements that set you apart from other job applicants, it’s important to highlight them and show how they will add value. The higher the value you can contribute to the company, the more the company can justify paying you.
Be Strategic with Your Timing
This includes both when to apply for jobs and when to bring up salary negotiations.
When applying for a new job, it’s almost always better to apply when you already have a job. When you already have a job, you look more attractive as you have a better alternative to a negotiated agreement (BATNA) than simply not having a job. For most people, this gives them leverage and more confidence during the salary negotiating process.
Choose the right time to discuss your salary. In most cases, it is better to wait until you have a job offer in hand. You have more leverage since you are further in the process and the employer has already expressed interest in hiring you.
Set a Realistic Target
Determine the minimum acceptable salary you are willing to accept, as well as your ideal salary. Aim for a salary slightly higher than your ideal to allow room for negotiation, however, make sure it’s still within the industry’s reasonable range.
Practice and Prepare for Your Negotiations
Practice your negotiation skills with a friend or mentor. Consider potential questions and objections that the employer may have and prepare calculated responses. Practice walking away if the employer will not accept your minimum salary requirements. The more you practice and prepare, the more confident you will feel during the actual negotiation.
During Salary Negotiations
Demonstrate Your Value
Once salary negotiations have begun, focus on the value you will bring to the company when hired. Steer clear of in personal financial needs as these will not matter to an objective negotiator. This is the time to use all of the great research you performed in advance.
Be Respectful and Courteous
Maintain a positive and professional demeanor throughout the negotiation. Avoid aggressive or confrontational behavior. This is strictly a professional business interaction with no winners and losers (unless you accept a salary lower than your value).
Listen Attentively
Actively listen to what the employer is saying and asking. Take time to think through your responses to any concerns and objections they may have. By understanding their perspective, you can better tailor your responses.
Consider More Than Just Salary
Salary negotiations should not be just about base pay. Benefits and perks should be negotiating points as well. This includes bonuses, stock options, health insurance, flexible or remote work arrangements, additional paid time off, college tuition or student loan reimbursements, etc. You should consider the entire picture when negotiating a new job offer.
Be Prepared to Compromise
It is most likely that you will not be able to get everything that you ask for. Be prepared for some give and take. The most effective items to compromise on are those that the employer considers must have negotiating points, but one’s that aren’t as important to you. For instance, if the pay is important to your prospective employer, you may concede a lower salary, but negotiate for additional perks like remote work arrangements and student loan reimbursement.
Keep in mind that there is a limit to compromise. If the offer falls below your minimum expectations and the employer is unwilling to negotiate further, be prepared to walk away from the negotiations and pursue other opportunities.
Get the Final Offer in Writing
Once all of the negotiated terms are finalized and a final agreement is reached, request it in writing. This will give you an opportunity to review the terms again and to verify that there weren’t any misunderstandings during negotiations.
Take Your Time Negotiating
Practice patience and maintain a positive attitude during salary negotiations. As discussed earlier, negotiations are a back-and-forth process. Let the process play out organically to achieve the best results.
Conclusion
The most important point of this entire article is that you need to negotiate your salary offer. If you also follow the steps above, you will set yourself up to negotiate the best salary offer available.
Now that you have a better salary, learn how much of your salary you should save for your financial goals.
Also, since you just started a new job, learn when you should ask for a pay raise at your new job.
Have you ever negotiated a salary offer? Did you follow the steps above? Did you do anything differently? Please share your thoughts below in the comments.