With the dismal career outlook, people are struggling to find new work and even maintain current employment. After days (if not weeks or months) of submitting resumes, tapping networks, attending conferences, or any of the other suggestions out there – job seekers may be content settling for whichever offer comes their way.
Although the market is tough, the situation doesn’t warrant forfeiting your opportunity, and ability, to negotiate an offer. With proper negotiation training, you can drastically improve your situation.
Recently a friend asked for some feedback on his own offer. Foreseeing the near-term end of his existing circumstance, he was excited about the new prospect. Looking for recommendations on the compensation, he outlined the parameters of the position for me to help formulate a counter-offer. Whipping together a simple excel sheet, we discussed the results:
“Probably should ask for 30% more”, I stated.
“Really”, he wondered, “that’s not too much?”
Following our conversation about the job in general, we reviewed the reasons which justified the considerable increase:
1.) Changing Industries
Switching from non-profit work to the private sector, his current salary was likely lower than a comparable position in private enterprise.
2.) Cost of Living Adjustment
Moving from an already high cost-of-living location to an even higher cost-of-living location, accepting the offer as it stood would have been a decrease in his standard of living.
3.) Relocation Expenses
Despite previously offering to cover the costs of his move, these shouldn’t be written off and therefore should be accounted for when evaluating the total package.
4.) Industry Medians
The current offer was slightly lower than most median salaries for that position. *We used a variety of sources so we had a more representative sample range.
5.) Future Prospects
A commonly accepted principle – your best chance at negotiating a higher salary is prior to accepting an offer, not once you have the position through raises/promotions.
Regardless of where the negotiations landed, my friend planned on accepting the offer. But because he didn’t shy away from asking for more and provided concrete reasons for why he thought the higher request was appropriate, the negotiation leaned towards his favor and he ended up increasing his base salary by 20%.
I’ve purposely neglected to mention my friend has the potential to increase his total earnings by up to 50% through future bonuses. Since those aren’t guaranteed, we focused first on improving his base salary. Considering those bonuses will be based on his annual figure, it was especially worthwhile to focus on negotiating a higher base compensation.
While it may seem greedy to ask for more and be perceived as money-centric, ultimately you must make yourself a priority. Many seem unaware of the very real and long-term negative impacts short-changing your worth can have down the road. All forms of future earnings are tied to what’s negotiated now – raises, promotions, bonuses, social security, new job offers, etc. And since it isn’t uncommon for companies to carry out layoffs merely to report quarterly profits nowadays, you cannot passively participate in your own career and hope for the best.
Whenever you ask for raise, it is important to have a good justification for the raise. Why you are worth it vs. why you need it?
Numbers are just numbers without reasons behind them! Providing solid backup also forces them to do their own homework and provide you with a researched counter as to why you aren’t worth/need that amount.
I haven’t come across an employer that will pay you more necessarily because YOU need it, but definitely justifying why you are worth it and why THEY need it.
Starting with a higher salary is just another place where compounding and the time value of money is important. If the company gives 10% a year raises typically, the more you start with, the more that 10% will be each year.
Yes – absolutely. Young people shouldn’t forget that negotiating their salaries now is just as important as saving/investing early on.
Great article. In salary negotiations do you suggest starting in the middle and work your way up or start high and work your way to the middle?
Quoting Star Wars – “It’s a Trap!”
Neither. Start high and help the employer up to your position.
1.) Like any negotiation, your counter anchors to the number first established so it can be difficult to garner more/higher salary after stating a mid-point.
2.) Often people want to “split the difference”. They know their number is low and think your number is too high – so let’s meet in the middle.