Pay Negotiation - How to do it safely
An objection you will probably hear in response to a request for time or other concessions is “We can’t do that, it’s Company Policy that everyone here…” Of course if you back down and accept this objection at face value you will be dealing your employer all the best cards. I recommend you challenge this objection immediately by asking if your employer is aware of the reason why the company policy was originally made. Often employers don’t really know, and in answering you they need to re-evaluate a possibly outdated in non-applicable policy. Getting more information arms you in knowing how best to get around this stonewall response. Your employer may be worried that making an exception for you could open the floodgates for all other employees to request the same concession. Remember that exceptions are always made to rules. So help them out by thinking through how your valid reason is special and unique enough not to be used by all their employees.
Trading is as valid for salary negotiations as for company negotiations. An example can be “If I forego my current holiday leave to start early for you, then I would like the company car.” Make sure your concessions are not given away freely. Use If-Then statements. After ranking each of your interests, predict which interests make good trades – yet remain flexible.
Nowadays most positions carry an associated salary ‘band’ or range for their grade. This makes salary negotiation more challenging and demands more from creativity in creating an ideal package. In negotiation – information is power. So find out the salary range before interviewing. If you are already working for your employer and going for a promotion, your task is simple. If you know someone already working for this prospective employer – ask them. Alternatively you could ask personnel. I recommend you don’t ask your prospective manager, as this could open the door to premature discussions around your salary expectations.
Grade has become increasingly important given the narrow salary ranges grade dictates. As a client related to us, he was so glad to accept the title “Financial Director” that he only later discovered that most other company directors were a grade higher and being paid handsomely more. So do ask about the differences between the position you are being offered and the next 2 grades above. It may be that there are 3 grades between you and your manager. At worst, if you are not awarded a higher grade, you will at least have shown ambition and foresight. Your interview is an important time to gain insight and agreement on performance measures that spell the difference between grade promotion.
Performance bonuses are no longer the domain of salespeople. Bonuses can be thought of as part of your salary offering. Of course since bonuses are paid only if you exceed a target, you would do well to discover just how stretching the target is. So ask about how often this quarterly or annual bonus has been paid. Often performance targets are only paid if a target is met or exceeded. The risk to the company is of managers either easing their foot off of the accelerator after target is achieved, or of deferring invoices into future periods. As an ambitious manager or executive, you have an opportunity to propose being paid a higher bonus the greater you exceed the target.
Time is arguably your most precious of commodities. So before you promise away valuable time to your employer, you owe it to yourself to do your sums. One useful calculation to perform is that of dividing your salary by your hours to get your effective hourly rate. So a position paying 70’000 with 60 hours per week pays less per hour than 60’000 with only 46 hours per week (22.4 versus 25 per hour). Yet which figure would grab your eyes first in an advertisement? So rather than negotiate salary up, you may find it easier to negotiate your time down. If you are confident of meeting the goals, ask for more vacation or to work 4-day weeks.
External principles and measures are your best source of objectivity and fairness in assessing your salary offering. If you object to a proposal as being too low, no doubt you will be asked why you feel this way, and why your counter proposal is any better. Since we are persuaded by reason, and moved by emotion – research care carefully your reasoning. Some common comparisons to draw include: what their competition pays similar grade professionals, pegging salary increases to inflation or government salary rate increases, case studies of where a new practice that breaks the ‘company policy’ has worked well for another company.
When should you bring up salary? It’s true that “Until you have created value, any price is too high.” So mention salary only after you have convinced your employer of your future value to them, towards the end of your negotiation. This presumes you have worked together with your prospective employer in calculating how much more profit they will be earning through employing you, and how much less risk they will be facing. Be careful not to leave salary for very last. Why? If you have nothing left to trade and want 70’000, whilst they are offering 60’000 – you will most likely settle somewhere near 65’000 (and the battle of wills probably won’t be an enjoyable way to start your business relationship) . To strengthen your trading position, find out what they are most interested in, and keep this in your back pocket for when salary comes up. This nway you will be able to trade something of great value to them (which may be of little or no cost to you, e.g. an early starting date) for a higher salary. It is not important who mentions salary first.
‘Salary Expectations’ boxes from agencies or employers – should you fill them in? NO! Without your knowing the hours, bonus package and benefits, office size etc this figure is meaningless. Routinely this figure will be used as a price ceiling against which to bump your head in later salary negotiations. Leave the box blank.
Leveraging benefits is a concept every professional negotiator understands and uses. Put simply, you want to ask your employer to make concessions that cost them very little – and of course in return make concessions that are of great value to them. This requires stepping into their shoes and asking what they value the least and want the most. So rather than bump up your salary, an employer may find it comparatively easy to pay for: your insurances (health, life or redundancy), a laptop computer, home broadband or extra telephone line, car allowances, subscriptions, training and development, relocation, better/ larger office space, title, flexi-time. These benefits either cost your employer nothing or are tax deductible.
Stepping into the shoes of your manager is usually an illuminating and vital experience. To make sure you are really in their shoes, ask a friend to be you, whilst you play at being your manager to be. The more real you make the experience of being someone else, the higher your chances of mind-opening discoveries.
So what can you discover whilst in their world?
This all depends on the quality of your questions, here are some to start with:
- What challenges & ambitions does hiring you promise to solve?
- What interests underlie these?
- Can you now rank these interests?
- What objections might you face?
- Which concerns might you need to have answered?
How honest should you be with your prospective new manager? Prior to the 1970’s, negotiation texts focussed on ethically questionable tactics to gain the advantage. Since a good long-term relationship between you, them, and the company is essential, I would suggest you be as honest as is customary. A quick generalised cultural contrast to illustrate. A résumé in Holland likely will be an accurate objective description of the experience gained. Whilst a résumé in Britain by contrast is more likely to be slightly embellished. So a Dutch person wishing to enter the British job market may find themselves at a disadvantage if they were not to alter their résumé.
“How much are you earning in your current position?” A dangerous question usually aimed at using this figure to cap your salary ambitions. In the words of E Cummings “Always the beautiful answer who asks a more beautiful question”. So ask to learn more about the position before you get into detailed salary discussions. If asked a second time, have ready your research into the salary of the offered position and similar positions. If your current position either doesn’t provide a meaningful comparison or is comparatively low, then briefly spell out the reasons why this figure should not guide current discussions. Think about the message this question conveys – that your new manager trusts someone else’s judgement more than their own. So make sure your new manager has all the information they need to make up their own minds by accurately valuing your future contribution.
“What are your salary expectations?” In reply you can ask what the normal salary range for this position is (assuming you haven’t already uncovered this information). If asked again, distinguish yourself from the thundering masses by stating “I am much more interested in doing (type of work) for (organisation’s name) than I am in the size of the initial offer.” If asked yet again, a great final response can be “I will consider any reasonable offer.”
Your storytelling skills are vital at interviews. Invest time in remembering and rehearsing the stories of how you saved your previous employer x and completed project y on time. Most words on a résumé are not read, the rest are glossed over – so you need not leave any of your relevant achievements to chance. Stories will also stick in your interviewers mind, helping you stand out from the pack when they come to remembering which candidate they want to invite back. It is largely through succinct storytelling that you give yourself a platform to start creating value in the eyes and ears of your employer.
Some people are great at negotiating for others, yet pushovers when negotiating for themselves. Your interviewer is likely to be acting as an agent for the organisations’ interests. Conversely you will likely be acting on your own interests as principal. So how can you fight harder for your own corner? If you do fight harder for others, then think of the benefits others will gain through your getting a better deal. Start with your partner and those dependent on you. Since to most people money is meaningless on its own, think of all the things you would like to enjoy from your salary, then imagine life without these things and experiences (if you don’t negotiate well). The reason I add this last step of 'life without' is simply that I’ve found most business people are more likely to take action to prevent loss, rather than to achieve something new.
Silence should be your friend. Westerners, particularly Americans, are reputed for wanting to be highly productive with their negotiation time – making silence an uncomfortable experience. So avoid lowering your offer to break the silence. Either wait out the silence or ask if you can help with their thinking. Of course, practice being silent whilst you think through your options.
Various psychology studies suggest that our first few moments of meeting someone new are the most important. This is because we form an opinion and decide whether we like or dislike someone in this small window of time. Some suggest that as much as 90% of our impression is formed at this stage. So our ‘chemistry’ with others is made or lost in the first 60 to 90 seconds. Some reports reports even suggest this happens in our first 4 seconds! Considering you won’t have exchanged very many words at this time, and most certainly nothing of real meaning, that only leaves what isn’t said. So consider carefully your clothes and how you hold yourself, how friendly you come across, your vocal qualities, and of course your attentiveness and rapport skills. A large unspoken question you will be answering every moment of the interview is “Does this person fit in with the team and organisational culture?” Whilst you should be yourself at interviews, you would do better to be yourself at your best!
Finally, be careful not to negotiate yourself into a job you don’t really want. Salary negotiation is one of many significant parts of a job interview. So prepare and ask all the important questions necessary for you to assess whether this job, team, boss and organisation are worthy of you.
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