4 Secrets to Negotiating a Salary That Will Make Your Bank Account Smile
At some point during an interview process, the hiring manager will ask you, “How much are you looking for?” And while you want to respond with a competitive, yet reasonable and well-researched number, you end up blurting out a tongue-tied, “Uh, what you’re paying?”
And you end up getting paid, well, what they’re paying—which is almost always less than what you want (and often times, less than what is fair).
So, how are you supposed to answer that question? By taking note of these four key lessons in salary negotiation and keeping them in mind as you prepare for the conversation.
Lesson 1: You Are Worth Your Market Value, Not Your Individual Merit
You are “worth” whatever other people in your field are worth. It doesn’t matter how much you made at your first job, nor does it matter what your last salary was. You have a “market value,” just like your house or your car or the stuff you sell on eBay has a market value. You’re “worth” whatever other people with your background, credentials, schooling, skills, and zip code are being paid to do the job.
So, how do you know what that is? Go directly to PayScale. Do not pass go, do not collect $200. Fill out the questionnaire. In less than 10 minutes, you’ll have a report that tells you what the median salary in your city for your job, in the profit or nonprofit sector, with approximately the same size staff, is paying everyone else with your credentials. They have gathered together 40 million pay profiles from all over the world. 40 million!
Lesson 2: It Doesn’t Matter What You Were Making Before
When selling your car or your rusty 24-speed bike, no one asks what you paid for it. They check Craigslist or eBay to learn what other people are selling bikes for in similar conditions, and that’s what they expect to pay.
Similarly, if you’re selling a house on the open market, no one asks you what it was worth in 1999 when it was last sold. Even knowing what your profit will be, no one has the chutzpah to say, “Gee, you only paid $150,000 for this house, and now you’re asking for $400,000. That’s more than double what you paid for it. Why do you think you deserve that kind of increase?” No one asks that question because what you were worth in 1999 has nothing to do with what you are worth today.
That said, you will still very likely get asked the question of what you are currently making. Here’s what I tell my clients to say (choose the one that best fits your situation):
“My current total compensation is $60,000. I’m looking for employment because my company’s not staying competitive in the market. I’ve benchmarked salaries for the job I’ve been doing for the last two years, and new hires are being paid $75,000 [or $80K or $100K, whatever it is].”
“I’m happy to give you my current compensation. It’s $75,000 with a guaranteed 30% bonus based on company performance and a performance bonus anywhere between $10,000 and $20,000. Last year, my performance bonus was at the top of the range because my company knows I’m being paid under-market and hasn’t figured out a way to adjust my pay to match market conditions without throwing the entire pay bracket out of whack.”
Really, you can say anything that’s credible and true. Even this:
“I’ve hit a pay ceiling at my shop and am looking for a company that values its existing employees as much as its new hires.”
Lesson 3: Getting “No” for an Answer Is Your Opportunity to Problem Solve
Seasoned negotiators say that the negotiation doesn’t really begin until someone says “no.” A negative response to your salary proposal usually means that your bargaining partner has simply hit a roadblock in his or her ability to hire you.
Help her help you by inviting her to problem solve the compensation decision.
Here are some questions to ask when you’re told “no.”
“I’m terrifically excited about this opportunity [or potential for a raise]. Money isn’t everything. I’m also interested in the shape my career path will take here. But I do have responsibilities to meet. Can you share with me any of the reasons X company isn’t paying market for this position?”
“It must be difficult to try to fill this position with an under-market compensation package. Would it help to loop someone else into the conversation?”
“I’ve been in your position before, trying to hire the people I want but being hampered by a tight budget. Is there anything I could do to help you get the authority you’d need to make an exception for this important position?”
“Do HR guidelines on compensation compression play a role in the compensation authorized for this position? If so, I’d be happy to discuss a signing bonus, taking an equity position, or any other incentive the company might have to incentivize candidates to accept this position.”
Lesson 4: You Don’t Get What You Deserve, You Get What You Negotiate
There’s a full-page ad for negotiation training in most in-flight magazines that trumpets, “You don’t get what you deserve; you get what you negotiate.” Truer words were never spoken.
Let’s go back to that house you’re selling. Do you deserve to close a sales deal that is 100% higher than the deal you closed when you bought your house 10 years ago? No. Price and compensation have nothing to do with what anyone deserves—and everything to do with market value, preparation, and problem solving skills.
So research your market value with online resources like those available at PayScale, learn what your employer or prospective employer wants, needs, and fears, and start a conversation that will lead to an agreement based on objective metrics, rather than subjective judgments about yourself or your current company.
Photo of money tree courtesy of Shutterstock.
Victoria Pynchon is an attorney who practiced commercial litigation for 25 years. Since 2004, she has been mediating and arbitrating commercial disputes—the former with ADR Services, Inc. in Century City and the latter with the American Arbitration Association in Los Angeles. In 2010, she founded She Negotiates Consulting and Training with her business partner Lisa Gates. In 2006, Victoria earned her legal masters degree in Dispute Resolution. She has been teaching negotiation and providing negotiation consulting services to lawyers, executives, professionals and entrepreneurs ever since. She is the author of two books, The Grownups' ABCs of Conflict Resolution (2010) and Success as a Mediator for Dummies (2012).More from this Author