For most people, negotiating your salary can be an uncomfortable process. Asking your boss for a raise can make you feel uneasy.
But, if done correctly, negotiating a raise in your salary will reap you long-term rewards. Each raise in your salary will have cumulative effects; it will lead to tens of thousands of dollars more earned over your lifetime.
What is Salary Negotiation?
Salary negotiation involves coming to an agreement with your employer on the total amount of your salary – whether it is the monetary value, or other benefits such as health care and retirement pensions.
Negotiating your salary usually occurs at a performance review or at a job interview. Before entering a salary negotiation situation, you must understand that the purpose of this negotiation is to convince the employer of your value. Essentially, you must sell yourself.
Things to Consider Before Negotiating Your Salary
- Define your outcome – If you enter a negotiation without knowing the exact number that you want, an experienced hiring manager will simply control the process. When you can firmly state the number you want, as well as explain why you deserve it, you will have greater success at obtaining the salary you want.
- Know the needs of the other person – When you know exactly what the needs of the other person are, and can explain how you are able to fulfill these needs, you will have a better experience with your negotiation.
- Know your ‘bargaining chips” – Don’t walk into a negotiation situation and just ‘wing it’. Come up with a list of points that you are able to bargain/negotiate with. For example, if an employer won’t budge on your total salary, say you will accept the lower price if you have extra vacation days. A simple way of doing this is to come up with a list of “what they want” vs “what you want”.
- Get Practice – You know the saying ‘practice makes perfect’. By practicing, you will feel less nervous in the interview process.
- Have a fallback position – if you ask for “75k” but are met with a flat “no”, then ask “what about “70k?”. There is a good chance the fallback number will be accepted, and if it isn’t at least you know for sure.
How to Negotiate Your Salary
- Ask what it takes to get a raise – Ask your boss “What would it take to get a raise? What would success look like to you?”
- Execute based on what they said – Take action based on what they said. Document the results of your increased productivity, results, etc. A common mistake here is to think “my boss should automatically know if I am producing results and give me a raise”. This is not the case, you must explicitly tell them and show proof.
- Let them know you want a raise – Once you have increased your results, bring up the topic of a raise. An example script would be “You said it would take X for me to get a raise. I have achieved X and more. I would like to have a discussion with you about getting a raise”
- Have other job options available – Being declined for a raise once is not uncommon.
However, if you are a top performer and are rejected a raise two or three times, let them know you have other options available and you are willing to walk. Often, they will give you a raise to avoid having to find a replacement for you.
Overcoming Common Negotiation Hurdles
“It’s not in our budget to give you a raise”
To overcome this you need to demonstrate that the value you bring, outweighs the increase in your salary. It may actually cost the company nothing, if the increase in sales that you produce is more than the raise you are requesting.
“I can only offer you a smaller raise”
If the smaller raise is substantially less than you expect, having other job options is a good way to deal with this. As mentioned earlier, they will often keep you to avoid finding a replacement
“Nobody else is paid that much”
You must relate this back to your unique value. By demonstrating to the boss “nobody else can do X” you can justify your raise in comparison to others.
Salary negotiation doesn’t have to be a difficult process. By knowing your outcome before negotiating, being prepared by practicing, and having an effective negotiation process you can reap disproportionate rewards with your salary.