More Than a Paycheck: 7 Tips for Negotiating Your Salary
Negotiating your salary isn’t easy. Regardless of whether you’re starting at a new company or asking for a raise at your existing job, demanding more money can feel like a selfish and arrogant thing to do. It’s important, however, to realize that you are primarily responsible for deciding your own worth. In most cases, unless you negotiate for a bigger sum, your employer is unlikely to simply offer it to you.
This is why it’s vital that you learn proper salary negotiation skills, and the earlier you do it, the better. Research has shown that only 29% of people at their current jobs negotiated their salaries. That’s a startlingly small minority when you consider that, according to one Carnegie Mellon University economist, the cost of not negotiating your salary can be as high as $1.5 million over a lifetime.
To put it simply, if you are not negotiating for your salary, you are leaving a substantial amount of money on the table. Even more so than knowing how to maximize your paychecks, having good salary negotiation skills will have a substantial impact on your lifetime earnings.
The problem is that many people do not know the right way to conduct salary negotiations. Here are seven simple tips to get you started.
Have a Target
Before entering into any salary negotiation, you should have a good idea of the salary range you’re aiming for. In today’s information age, median salary ranges for any given position are a simple Google search away. You also want to aim high. Once you have an idea of the salary range related to your position, aim for the top of the range. It’s much easier to bring your number down during a negotiation than it is to take it up. Start high and give yourself room to negotiate.
Have the Data to Back You Up
Doing your research isn’t just important when figuring out your salary goal, it also gives you confidence when negotiating. You want to walk into a meeting with the knowledge that the salary you are asking for is realistic. Keep in mind that your potential employer will also be aware of relevant salary data.
Have you heard of the anchoring effect? The Harvard Law School’s Program on Negotiation talks about how the first offer subconsciously sets the tone for the rest of the negotiation. Essentially, it acts as an “anchor” that all subsequent numbers will be based upon. Therefore, if you can set the anchor point for the negotiation, you will be in a better position. Don’t be afraid of setting the anchor significantly higher than your target, since it will often be revised downward.
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Quantify Your Value
The most important thing to any company is how much value you can bring. As long as you can show them that your value is greater than your cost, there will be room for negotiation. Be sure to highlight the skills and experience that you bring to the table. Revenue increases and cost-saving figures from your previous jobs are always good. Never take the “sympathy” route and mention all your expenses and obligations.
Don’t Forget About Benefits
While it’s good to have a hard target when you enter a negotiation, it is also important to be flexible. The salary itself is a major component of the negotiation process, but benefits are also worth considering carefully. By being flexible in one particular area you have a higher chance of getting what you want overall.
Take Your Time
There is no reason that you should accept the first offer given. In fact, being too willing to accept the first offer may be interpreted as a sign of desperation. Don’t be afraid to tell your potential employer that you need time to consider the offer.
Get the Final Offer in Writing
If you’ve followed all the above tips and the negotiations have gone your way, don’t forget to ask for that final offer in writing. Any legitimate employer should have no problem with this, so you should take it as a major warning sign if there’s reluctance to send you an official offer.
Once you successfully negotiate for a higher salary and bump up your income, you shouldn’t waste that money either. It’ll be tempting to burn through all your disposable cash, but start saving as much as you can by opening a high yield savings account, or by putting that money towards your mortgage or retirement.
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