After hours of interview prep, several cover-letter drafts, many pending (but hopeful!) LinkedIn connections, and numerous versions of “tell me about yourself,” you’ve finally landed the job!
And then the offer letter hits your inbox. You click the PDF and scan the salary line only to find it’s not as robust as you imagined.
What comes next?
You negotiate. Here are our top tips for negotiating your salary with confidence and purpose.
Why Negotiate Your Salary?
The practice of salary negotiation is becoming more commonplace but that doesn’t make it feel any easier to do it yourself. In its annual survey, ZipRecruiter found that 64% of applicants in their last job accepted the first salary offer offered—even if they were dissatisfied with the pay.
But salary negotiation isn’t just for newcomers. Seasoned professionals with demonstrated experience should periodically evaluate their earnings to ensure proper compensation for their skills, knowledge, deliverables, and the value they bring to their job each day.
The same ZipRecruiter study also found women negotiated far less than men, 31% to 40% respectively. This statistic is particularly startling when factoring in the wage gap.
The discomfort around negotiating might come from a general lack of financial openness in our culture. A Bank Rate study discovered that less than 24% of people have shared their salary with a co-worker, further illustrating a hesitancy to talk about money, even among peers.
While negotiating your salary may seem uncomfortable at first, the cost of not doing it could be even worse. Increasing your salary, even by 5%, could help you boost retirement savings, build an emergency fund, or pay off high-interest debt, all elements that put you on solid financial footing.
Your salary is a significant component of your total compensation, making it critical to evaluate with care and strategy. Salary negotiations can be a pivotal step in your professional career as it helps you earn what you’re worth and catalyze your financial future.
Financial knowledge is for everyone.
1. Know and Demonstrate Your Worth
The first step in negotiating your salary is knowing your worth. Your unique combination of knowledge, skills, experience, and achievements are a valuable asset to your organization, so hold your head high and build an empowered and confident framework to start the process.
Once you know your worth, it’s time to demonstrate it. When negotiating, you’ll need to craft a clear and compelling business case for bumping your salary. How can you build an air-tight case? Consider the following.
Research Market Salary Rates
Negotiation is all about the numbers, so start by researching comparable salary ranges. Be sure to include the following factors:
- People with Similar Knowledge and Experience
- When looking at compensation, compare apples to apples. If you are at the Director level, it might not make sense to compare your salary to a Vice President.
- Similar Company Sizes
- Small and large companies have different budgets, constraints, and benefits. Know where you are so you can make direct comparisons to related companies.
- Similar Industries
- A PR specialist for a big pharmaceutical company might make a different salary than a PR rep for a local news organization.
- Area Requirements
- The range of job salaries varies by location. Focus your research on companies in your area.
These parameters will start to give you an idea of your market worth. You can take that range and compare it to your offer or current salary. Are there blatant discrepancies?
Your comparison research doesn’t have to be external. Look at what your company would pay to hire someone to do your job. What’s the salary range? Where do you fall on that scale? Knowing the salary range for a comparable position can give you more insight and leverage at the negotiating table.
Outline Specific Value-Adds
To have a better chance of getting the salary raise you want, you’ll need to prove the undeniable value you bring to the company.
Our advice? Be as specific as possible. Don’t just say your innovative idea boosted productivity. Outline how this idea transformed processes that led to a 20% increase in billable hours.
- How have you been instrumental in your team/division’s growth?
- What specific projects or initiatives led to the company’s success?
- How has your role/responsibilities changed since you started?
These questions can help you better formulate your unique value proposition. You want to enter your negotiation with a clear and reasonable ask. Being thorough and methodical will help you be as prepared as possible.
2. Provide Your Boss/Hiring Manager Proper Notice
Perhaps the fastest way to get a “no” is failing to prepare your superior for a negotiation. You’ve spent hours researching comparable salaries and outlining your value, so your employer also deserves time to evaluate your work/application from this new vantage point.
Once you receive an offer letter, let the hiring manager know you’d like to speak further about compensation or contact your manager to say you’d like to discuss your salary.
Giving proper notice is a courtesy to your superior, letting them know you respect their time and want to give this matter the attention it deserves.
3. Approach Negotiation as a Compromise, Not a Competition
Try not to enter a negotiation with a “versus” attitude. A negotiation isn’t you versus the company or you versus the hiring manager, it’s simply about obtaining the right compensation for your skills. Remember that you are talking with a person, so be sure your tone and attitude reflects that.
Also realize you’ll likely have to compromise. A negotiation isn’t a list of demands, it’s a conversation to reach an equitable agreement. Keep this idea in mind and know what you’re willing to compromise on and what you’re not.
4. Set Healthy Boundaries and Know When to Walk Away
You might not always walk away with the deal you wanted, but it’s critical to walk away with a deal you deserve. Before you start the process, create your list of non-negotiable items. Do you need flexible work hours? Does your salary have to be above a certain threshold to meet your daily expenses? Is a healthy retirement fund match critical?
Be honest with yourself about your non-starters and be confident enough to walk away from the offer if necessary. For example, say your new job requires a move. Examine your boundaries surrounding a move and ask yourself:
- Are you comfortable with a big move?
- How will it affect your family? Does your spouse need to find a new job? Will your kids be in a different school district? Are you moving away from friends and loved ones?
- How will it impact your finances? Are you in a position to sell your house? Will you make enough on the sale to buy another home in a new area? Does the company offer a moving bonus and does it have to be paid back? Are you moving to an area with a higher cost of living? How will your short and long-term savings be impacted?
- Does it lengthen your commute? While many companies are adopting more virtual work, you may still need to go into the office a few times per week. How will that commute impact your life and wallet (i.e. added highway stress, paying for more gas, putting more miles on your car, etc.)?
These are all questions to consider. If you simply can’t leave your area and the job won’t allow virtual work, then it’s likely not the best fit. Setting boundaries is a great way to keep your values, goals, and priorities at the heart of your decision-making process.
5. Negotiate for Compensation Outside Your Base Salary
While salary is a significant part of your compensation, it’s far from the only item in your total package. Benefits can add a lot to your experience and round out your salary. Be sure to investigate and negotiate the following:
- Bonus structure
- Equity compensation
- Retirement match
- Good health insurance
- Company-sponsored health savings account
- Affordable insurance offerings (life, disability, etc.)
- Generous paid time off
- Parental leave and/or child care assistance
- Flexible schedule and hours
- Tuition reimbursement
- Professional development (courses, certifications, degrees, etc.)
- Health and Wellness benefits
Employer benefits often translate to a healthy dollar amount. While your salary might be lower than expected, a robust bonus deal could help make up that disparity.
How to Negotiate Your Salary — Even During a Crisis.
During the pandemic, so many people were grateful to have a stable job (or be offered one), that it made them less willing to negotiate for more money. But negotiating your salary isn’t about gumption or greed, it’s about being properly compensated for the immense value you bring to an organization. You want the time spent at work to be appreciated, valued, and help you further your unique goals.
As long as you approach the negotiation from a place of honesty, confidence, and respect, you won’t have burned any bridges.
It’s Time to Negotiate!
Salary negotiation can be a crucial financial springboard for working toward short and long-term goals. Do yourself (and your finances) a favor by knowing your worth and being willing to openly talk with your company about it.
Need help making the most of your salary? Schedule a call with an Abacus advisor today. We love helping clients align their values with their money.