How to Negotiate a Salary
One of the best ways to increase your income is by negotiating wages when you are first offered a job or during a performance review. This may be uncomfortable for you, but it is very important. Here’s how to get what you want out of negotiation.
This is a guest post from JD Roth , who founded the Get Rich Slowly blog in 2006. Roth wrote Your Money: The Missing Manual and was a columnist for Your Money for Entrepreneur magazine. It also stands behind a one-year course on How To Manage Your Money , which explains how to cut costs and increase income so you can pursue early retirement and other goals. This article is part of this course.
According to a 2010 study published in the Journal of Organizational Behavior , not being able to negotiate an initial job offer could mean a lost paycheck of over $ 600,000 over the course of a typical career. Remember the minimum wage before going to your interview. Base this on rigorous research using tools such as Salary.com , CareerBliss.com , PayScale.com, and GlassDoor.com . Also take the time to ask friends and coworkers for their opinion on the job you want to pay in confidence. This information will empower you.
But research isn’t enough. Remember that the goal of an interview (or performance test) is to sell yourself . If you don’t believe that you’re worth the price you are asking, your employer won’t.
Focus on the value you bring to the company, not comparable salaries. When asking for a promotion or transfer to another job, celebrate your accomplishments and give them time and money. For example, you can specify that you have automated your employer’sTPS reports , saving you 40 work hours per month (or $ 500 per day). Make a written list of topics for discussion and use it to convince you of the need for a pay raise. Give the page to the interviewer to have the information in front of it.
If you are just starting out – say, recently graduated from university or are looking to start a new career – you may not have hard numbers to prove your worth. In this case, show your enthusiasm and work ethic. At the very least, ask for about 10 percent more than what you are offered.
Now let’s look at two specific methods of negotiating wages. As you will notice, they are very similar.
The Noel Smith-Vencle salary negotiation method
Noel Smith-Wencle worked as a headhunter in the 1980s. He devised the following method to get as much money as possible for his clients during salary negotiations (which in turn meant a higher commission for him).
The first rule of the Smith-Wencle method is to never tell your employer how much you will take. Have the company name the first number.
In practice, the Smith-Wencle method involves four steps:
- If the company requests a number in the application, leave this field blank.
- When a company verbally asks how much you will charge, you say, “I am much more interested in doing [type of work] here at [company name] than in the size of the initial offer.” Smith-Wenkle says this will be sufficient about 40% of the time.
- If the company asks a second time, you say, “I will consider any reasonable offer.” This is a polite delaying tactic, and Smith-Wenckle claims it will work another 30% of the time.
- About 30% of the time, you will reach this last step. Again, your answer is a polite refusal to answer the question, “You know much better how much I value to you than I do.” This is your final answer, no matter how many times the company tries to get you to act first.
Again, the goal of this method is to get the company to call the number first. When a company makes an offer, there are two options. If the offer is above your minimum, take a job. If it’s below your minimum, tell them it’s too low, but don’t elaborate on how much.
Jack Chapman’s Salary Negotiation Method
The best salary negotiation guide I have found is Salary Negotiation: How To Make $ 1,000 Per Minute . In it, professional trainer Jack Chapman offers five rules for negotiating salaries:
- Postpone salary negotiations until you are offered a job. Let your potential employer decide if you are the right candidate and then talk about money. It’s the same with raises. Discuss salary increases after the performance check.
- Have the other party make the first offer. As with the Smith-Wencle method, your goal is to allow the employer to offer a salary. Many people are embarrassed to shy away from direct questions about wage history. For these people, there is a section on Chapman’s website that explains how to answer questions about expected wages . (See also Penelope Trunk ‘s advice on discussing wages .)
- When you hear the sentence, repeat the number and then shut up. Chapman calls this “flinch .” “The most likely result of this silence is an increase,” he says. This technique gives you time to think while putting pressure on the employer. They often return with a higher offer.
- Respond to a sentence with a thoughtful response. Your counter-offer should be based on what you know about yourself, the market, and the company. This is why it is so important to do a little research before interviewing to know the reasonable salary range for your job.
- Make a deal – then negotiate more. Your final step is to capture the offer and then discuss additional benefits such as extra vacation days or a company car. It’s like agreeing on the price of a car before you negotiate the cost of your exchange, and it’s a great way to get the best compensation package.
If you’d like to hear more from Chapman, he has an entire website dedicated to career management . There you can order his book and watch short videos with tips and scenarios for salary negotiations.
Salary Negotiation Tips
These two methods offer a great basis for negotiating your salary, but we all know that there is more to the process than just waiting for the other side to go first. Here are some of the best negotiating tips I’ve gathered over ten years of writing articles on money: Be brave. The biggest mistake you can make is not negotiating at all.
Don’t make excuses – “The economy is terrible,” “I’m lucky to have this offer,” “I’d rather have a root canal than negotiate” – and don’t worry about getting turned down. The courage to negotiate is especially important for women: men are four to eight times more likely to negotiate a salary. Most companies are willing to negotiate salaries, but most employees never agree.
Get ready. Find a fair salary. Figure out how much you want, but ask for a little more to leave room for compromise. Practice negotiating salaries. Sit down with someone you trust and act out the experience. Record yourself to find your flaws. The more you practice, the more comfortable you will feel during the interview.
Shut up. During salary negotiations, it is often best to let the other party talk. Using Chapman’s Method, when you receive an offer – no matter what it is – follow the offer with a “wince” for a long period of silence. In You Can Agree On Anything, Herb Cohen writes: “Ironically, silence, which is probably easier to do, can be as effective as crying, anger and aggression.” Silence is gold.
Be persistent. In many cases, the employer will reject your first request for a higher offer. Don’t let this hold you back. Push gently to justify your proposed salary. Explain how the company will benefit from the investment.
Be patient. The deeper you go into the process, the more the company is looking to hire you. Don’t include your current income or expected salary – not even on your job application. If you do this, you will provide an anchor for negotiations, and it can only hurt you. Wait for the employer to mention money for the first time.
Be flexible. If the company does not want to change the salary, negotiate a different compensation. Ask for an extra week of vacation, a personal account, or a flexible schedule. (You might be able to work four ten to ten days instead of commuting to the office five days a week!) work.
If you need more information about getting a fair wage, the National Association of Colleges and Employers offers a free wage calculator program to help you determine a wage benchmark. The Ask a Manager blog is filled with tips for getting a job, including this article on what to say when you’re negotiating a paycheck . Finally, Ramit Sethi offers a free one-day mini-course on negotiation that includes tips on negotiating salary.
This Salary Negotiation Guide is just a fraction of the 1 -year Get Up Slow Course , which also includes 18 financial expert interviews and 120 guides on spending your money so you can retire early, send our kids to college, or travel. around the world. The course is already on sale.
This article was originally published in 2014 and updated on March 6, 2020 by Elizabeth Yuko. Updates include the following: checked accuracy links, updated formatting to reflect the current style, changed the function image, and fixed the article for accuracy.