The question of how to negotiate salary seems to preoccupy negotiators more than any other negotiation topic—and with good reason, considering how dramatically even a small salary increase can impact our lifetime earnings. The following three salary bargaining tips from leading negotiation experts will help you gain more from your new-job negotiations.
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Get Out of Your Own Way
In job and salary negotiations, we sometimes “get in our own way,” write Deborah M. Kolb and Jessica L. Porter in their book Negotiating at Work: Turn Small Wins Into Big Gains (Jossey-Bass, 2015). We may fail to recognize opportunities to negotiate, focus only on our weaknesses, and make the first concessions in our own heads before the negotiation even begins. These internal dialogues are where the first concessions in the negotiation are made, write Kolb and Porter.
Kolb and Porter suggest ways to address the question of how to negotiate salary. Begin by gathering information so that you will feel that what you are asking for is defensible. Prepare to explain the value you would bring to the organization. Develop alternatives to the current negotiation to increase your flexibility at the table, and remember that the other party’s alternatives may be less attractive than yours.
In addition, examine your vulnerabilities and plan ahead to compensate for them. For example, if you are insecure about a gap in your work history, think about the important things you were doing during that time and prepare to share them with enthusiasm.
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Consider the Context
Large, established companies often measure job candidates against well-defined job categories with a set range of salaries. In addition, you may negotiate compensation with recruiters or human-resources personnel rather than with your future boss. In this environment, when determining how to negotiate salary, try to figure out what pay category someone with your education level and experience would receive, then build a case for a salary at the high end of that range.
If an interviewer asks you to name your price, do you know how should you respond? In their book 3-D Negotiation (Harvard Business School Press, 2006), David Lax and James Sebenius recommend making a “non-offer offer,” or a statement that could anchor the discussion in your favor without seeming extreme.
Suppose your research suggests that you would most likely fall into the $70,000 to $80,000 pay range, but the next-highest category seems within reach. Rather than saying, “I think I deserve $80,000,” consider saying, “Correct me if I’m wrong, but I’ve heard that people like me typically earn $80,000 to $90,000.” Notice that this statement is not a demand. Yet due to the powerful impact of the $80,000-to-$90,000 “anchor”—a reference point that may or may not be relevant to the discussion—it could very well steer the numbers toward your upper goal.
Now consider how you might adjust your salary negotiation strategy to a start-up that is recruiting you to become its third employee. You obviously won’t be shuttled off to the HR department, nor will your salary be determined by existing pay scales. In this case, you may have more latitude to structure a creative package that includes stock options.
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Adapt Your Style for Maximum Success
Individual differences in negotiating style determine how to negotiate salary and what we achieve, Michelle Marks of George Mason University and Crystal Harold of Temple University found in a study published in the Journal of Organizational Behavior.
The researchers surveyed 149 professional employees who had been hired in the previous three years about their negotiations for their current position, including their attitudes toward negotiation and risk, their negotiation strategies and outcomes, and their level of satisfaction with the process of negotiating for their jobs.
The researchers identified five types of negotiating strategies: collaborating (engaging in problem solving to reach the best possible outcome for both sides); competing (trying to maximize one’s own outcomes with little concern for others); accommodating (putting the other party’s concerns first); compromising (trying to reach middle ground); and avoiding (dodging negotiation altogether).
Independent of the power the applicants had at the table, choice of negotiation strategy turned out to be the critical factor in determining effective salary negotiation. Those who chose to negotiate salary, rather than accepting the offer on the table, increased their starting pay by an average of $5,000, primarily by using competing and collaborating strategies. Those who behaved competitively did better than those who focused on collaboration, but collaborators were more satisfied than competitive bargainers with the negotiation process. By contrast, compromising and accommodating strategies were not linked to salary gains.
The study’s authors conclude that it pays to negotiate assertively for a salary increase. They also encourage employers to recognize that giving employees wiggle room to bargain up their starting pay could help create a more satisfied and productive workforce.
When determining how to negotiate salary, what strategies have you used?
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I think the point about establishing your value to the organization is probably the most poignant from these tips and strategies.
You want to change the employer’s perspective from you being a “cost” to you being an “investment”.
In that way, your selling point is what you bring to the table and you move some of the focus away from what it costs to do so.
It’s the same way any sales person works to get you to buy their thing or service. They move you to the concept of what you’ll get out of the purchase and away from the cost.
I think it also depends on the employer that you are negotiating with. It is true that you do not know the background of the employer or his expectations, but more info you can get helps with negotiation as well. Gathering collateral information regarding the negotiation styles of a particular employer is the best strategy but it is not always possible. Some employers are power seeking rather than caring much about financial success and others might be different, mean more about money than seeking power. The latter group are easier to deal with and typically they come from better educational backgrounds. Experience ahs shown me that power seeking ones will end last and the risk of bankruptcy and failure is high amongst them. Having some idea about the background of the company also helps.