Salary Negotiation – Principles & Preparation
Introduction
Having beaten off the competition in what may have been a series of long, protracted, competitive round of interviews and now been chosen as the employer’s preferred candidate, it is surprising how many people take a job offer at face value and accept or reject it as it stands. Having demonstrated that you were the best person to meet the company’s needs, now is the time to ensure that your needs are met. To do that you should look to negotiate.
To give yourself the greatest chance of getting the package you want we have 3 articles covering everything from “Preparation ” through to “Deciding Whether to Accept the Offer”.
It is important to negotiate as good an offer as possible for several reasons:
- For your own sake: you want to be valued at your real worth.
- Because salary is the basis of many other benefits, such as pension, car allowance, bonus etc.
- For the company’s sake. You have told them you have strong influencing skills and are good at negotiating, now may be the first time they have seen these skills in action. No one wants someone working for them who will just roll over at the first stage.
- Money and benefits left on the negotiating table have gone for ever. The package that you agree will be the base for all future negotiations.
Salary Negotiation – Principles
- Don’t discuss salary until you are told there is an offer on the table. At this point there is a crucial shift in power: you become the buyer.
- Get the company to name the figure first: it is better to be negotiating up from a figure than down.
- Know what you want before you start the discussion.
- Focus on the base salary first; discuss other elements once that has been agreed.
- Don’t accept an offer there and then. Get it in writing and check carefully that what is written is what was agreed. Then think it through.
Salary Negotiation – Preparation
Setting Targets
It is important that you know what you want from the negotiation. You should have a target figure, perhaps your current salary plus 10%, if you are staying in a comparable role, but you should also have a minimum or ‘walk away level’, the salary level below which you will not accept the role. When setting your minimum acceptable level consider both your requirements in terms of living expenses and your sense of your own value: you will not be effective in a job where you feel you are being undervalued.
In setting these levels there are of course many other factors to consider – you may be prepared to accept a lower salary where there is high growth potential and you have an equity element, or where you see the role as a stepping-stone into a sector or organisation.
Research will help you set your target level. Investigate salary and benefit levels in the sector and if possible in the company itself. During the negotiating phase you may need to demonstrate that you have done this research.
Look at market rates: you should not be bound by your current salary any more than the company should. The market will have moved on and the laws of supply and demand hold. You will also be affected by factors such as geography, industry, company growth and salary norms.
Use surveys but bear in mind that gaps between highest and lowest will be considerable. Use a number of surveys: many professional associations and publications produce them.
The principal element to consider in determining your target salary is what you are worth to the company. The question ‘what are you worth’ merits careful consideration. Is it your current / most recent package or is it a package that represents the future value that you will bring to the employing company?
It must be the latter. Your worth is directly related to how the employing company, at the present time, perceives the value of your future contribution to the company’s effectiveness in terms of increased profitability, reduced costs, reduced risk, better communication etc. Your objective is to highlight and quantify the future value that you bring.
Setting Priorities
Prepare your list of negotiating variables and be clear what is essential to you and what you are prepared to give away. For example, is working from home for a day or two per week more important than getting a guarantee on your bonus? Use the list in Other Negotiable Elements as a guide, considering your minimum acceptable level, preference, and priority for each.
You must also know what you are prepared to give away, because in any negotiation the other person must feel they have gained something. Perhaps you are prepared to accept a lower base salary and a higher performance-related element? Or you may already have the equipment you need to work from home.
Mindset
The way in which you approach the negotiating phase is crucial if you are to secure the best possible package and terms. Remember your power. You may really need this job but don’t let that show; imagine that an even better position is just around the corner.
It may be well hidden but the decision maker in the employing company is under tremendous pressure. He or she needs to hire the right person. Don’t be wrong-footed if you are told that, ‘There is someone else we are very interested in for this position,’ followed by ‘So what’s your lowest figure?’ Remember that if you are the second choice you will not be offered the role. You are certainly not going to price yourself into it: the company will not compromise its choice for the sake of a possible 10% to 15% price differential.
So, if that question pops up, pause, and ask something like: ‘Is it important to you that you hire the best person for this position?’ When this is confirmed, ask a question along the lines of: ‘At this stage do you think, because of [highlight the company’s main needs and your capabilities], that I’m the best person for this position?’. Unless you hear a ‘yes’ there is no point in proceeding at this stage. If you do hear a ‘yes’ then respond with something like: ‘What sort of figure could you go to for the right person who would really [solve specific problems or capitalise on specific opportunities and bring real commitment /passion / proven track record / energy etc.]?’
Of course, if you are the right person the employing company will want to hire you for the minimum amount that you will accept. Your challenge is to ensure that you negotiate to the maximum amount that the employing company will accept, while maintaining and enhancing your relationship with and perceived value to the hiring manager.
The manner in which you negotiate must demonstrate integrity, sincerity, thoroughness, and professionalism. Don’t get emotional. Don’t make it personal. Don’t play ‘clever’ games.
See the negotiating stage as a fantastic opportunity to demonstrate an extremely valuable transferable skill – negotiating. Focus on reminding them of your future value to the company and remember that you have as much power as you think you have.
Look out the second article “Salary Negotiation – Techniques & Dealing with Questions About Salary.”
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