What To Do Before Salary Negotiations
While salary negotiations are intimidating to many job seekers, it's important to bear in mind that even a small raise in your salary will have lasting effects throughout your career. Making your case with research and standing your ground may lock in hundreds of thousands of dollars in extra earnings over the course of your career!
Why Negotiate Salary?
All too often, prospective employees dodge the salary negotiation step during a job offer. In fact, a report by Salary.com has shown that 18% of job seekers never negotiate their salaries, 44% negotiate occasionally, and only 37% of prospective employees will always become an active participant in determining their salary.
Those who make it their policy to negotiate salary can boost their pay be an average of 7.4% compared to their initial offer. Of those asking for a boost, 72% received it. The chances are on your side!
In fact, most employers expect a level of negotiation, and plan accordingly. Statistics show that 85%-90% of hiring managers do not start with their best offer, anticipating a counteroffer of 10%-15% more than they've suggested. It's there for the asking!
This makes sense: more than likely, they've combed through hundreds of resumes and have endured dozens of reviews with candidates before making their decision. They don't want to go through all that again – they want to hire you!
"Are you nervous about negotiating salary? You're not alone! Only 13% of applicants say they are fully comfortable in discussing their salary with a future employer."
What if You Don't Negotiate?
Most job seekers see salary negotiation as an uncomfortable or even risky process, but there's a lot to lose if you don't negotiate as well. Demonstrating your business acumen through a well-orchestrated salary negotiation is one way to gain your employer's respect and make a great first impression (and a lot more money) early on. They're not looking for a pushover!
Lower salaries will mean lower raises, lower pension, and even possible resentment towards the employer. And on top of that, it can mean $500,000 to $1,000,000 less earned throughout your career!
Example:
Imagine a 25-year old who has been offered a job.
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The initial offer is for $50,000/year
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The annual pay increase is 5%/year
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The employee retires at 65, working for 40 years.
If this employee negotiates a 10% pay increase on the onset (making the starting salary $55,000/year), the career-long salary increase will bring in $634,198 in additional wages. That's quite a chunk of change!
Before the Salary Negotiations Begin...
Before you get involved in salary negotiations, you've got some homework to do. Consider these key factors:
What's Your Baseline Salary?
There are many tools online to help you find out which salary range is typical for your job. Your first step should be to find out how much people are being paid for similar work in your area. Indeed has a great resource for that, but there are also many others. You could scope out job postings that include salary, reference the National Association of Colleges and Employers (NACE), or even ask around in your own professional circle.
How's the Company Doing?
Is this company in a period of enormous growth, or is this a routine fill for a position? A company that's experiencing exciting forward movement will also be experiencing overhead like they've never seen before, and just might be feeling a little more generous than a long-standing, stabilized company.
This is also a good time to look forward to your job after this one. How impressive will your resume look when you tack on a few years of experience at this job? Will you be able to use this job as a launching point for a strong future position?
What's their Emotional Investment?
Business is business, but then again, people are people. Any hiring decision will be the result of both rational and emotional considerations. If your employer is excited about the position, personally invested in the job and, more importantly, excited about you, that's a winning combination for scoring some extra income. Rational and emotional engagement is key!
"Whatever you do, make sure that you come into negotiations with a strong idea of what your bottom line will be – and stick to it!"
What's Worked For You?
Being prepared for your job offer will have a lasting effect on both your salary and how you're perceived by your new employer. What do you do to prepare for an interview? We want to hear about it in the comments below.
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