Part 4: Salary Negotiations
Do you know your worth?
If you don’t, you could be leaving $10,000+ on the table.
Here’s some tips to getting the highest compensation possible.
In part 3 if our four part series, we covered nailing the job interview. Not only did you nail it, but you got a job offer! Now it’s time to maximize it to your advantage.
When we land a job offer, we often set ourselves up for failure by immediately accepting. For me, I have done this because I have been grateful to get any job offer, or maybe because I felt like I couldn’t convince the company that I was worth more money.
However, did you know that over 75% of employers report that they could raise their initial offers by up to 10% during negotiations?
Simple math. $15 an hour + 10% = $16.50 per hour…just for asking!
Whatever the reason, not negotiating your salary up front will cost you tens of thousands of dollars throughout your career.
We want to earn the most money that we can. The employer wants to attract the best talent that they can. It’s a win/win, except the fact that the employer also wants to keep their costs low (your salary offer). Thus, it’s imperative that you always know your worth.
Here’s my tips.
Do your research.
You can use resources like Bureau of Labor Statistics and Glass Door.com to figure out what employers are paying in your industry, projected futures, and education requirements. Every job has a low and high range. Google is your friend so take a minute to figure it out before you interview.
Divorce yourself from the hourly wage.
Hourly pay isn’t everything. I know many people who pursue the highest hourly wage that they can find, but they don’t realize all the ways they’re leaving money on the table.
In my last company, I made less hourly than a few of my friends, but my annual salary was always thousands of dollars higher.
Why? My company offered bonuses, a strong 401k match, and plenty of paid holidays. Although their hourly pay was higher than mine, I ultimately I made more money, got more time off, and received more perks. Works for me!
Clarify your interests.
Your compensation needs to satisfy a big range of needs, not just hourly pay. Are you receiving bonuses or profit-sharing? How soon is your 401k fully vested? Will you be fast-tracked into a promotion? Will you have more vacation time or better working hours?
Don’t accept less money than you can afford, but understand that your hourly pay is simply a small piece of the compensation pie.
Anticipate their interests.
The employer doesn’t care that you “need” or “want” more money, they want to know what you’re going to bring to their table and why you’re worth the investment.
Justify asking for more money by persuading them with ideas, skills, and tactics that you offer. Show them why you shine, and why a small investment on their end will reward them handsomely for many years to come.
Seriously! When they offer you a pay, never accept it. Take a minute to think it over…and ASK FOR MORE.
Use what you’ve learned about their company, needs, and how you fit in to convince them you’re worth more. Speak confidently, precisely, and then… STOP TALKING.
You may feel like filling the dead air with more reasons, or you might even begin to downplay your offer. Don’t do this. Know your worth, and wait for them to respond. Silence is king, and the first person to speak during a negotiation…loses ground.
Think through alternatives.
Don’t run out of options in a negotiation. If your boss doesn’t say yes, you need a Plan B. In your research, you need to know what else you’re ready to ask for in lieu of more pay.
If pay isn’t flexible, try negotiating for other benefits. Many people are successful altering their work schedule, asking for additional paid time off, stock options, bonuses, or more.
Don’t be afraid to say no.
Ultimately, don’t be afraid to decline the job offer. If it doesn’t work, it doesn’t work.
I did this in 2016. The city that I live in offered me a salaried position doing financial auditing. The opportunity was solid, but the pay was low. I asked for more money and/or perks, and they couldn’t meet me in the middle, so I declined the offer. My life is better for it.
Don’t be afraid to leave.
One of the worst kept secrets is that employees are making less per year, on average. Staying with the same company for over two years will likely mean earning about 50% less over your lifetime.
The average annual raise is about 3%. However, the average raise that somebody receives by moving to another company is 10% to 20%.
Why? The recession made businesses freeze their payroll or decrease salary increases. Although understandable, these freezes were designed to be “temporary”. Instead, this has become the new norm and we’ve become used to everyone getting 3% raises per year.
3% annual raises barely offset the cost of inflation.
The days of staying loyal to the same company for many decades are over.
Last year, I left my employer of 4 years for two reasons.
- Stagnant growth opportunities.
I knew that they wouldn’t be able to open the door to other opportunities for many years. I knew that I was being paid below market value, and I knew that they couldn’t match my salary goals or market value within my role. So, I left.
Accepting the reality that I was leaving years of career growth, friends, and seniority/rank took months to swallow, but allowing myself to break loyalty came with some big rewards.
I got a salary bump in excess of $10,000, better hours, more vacation time, and a brand new and progressive office culture (ping-pong tables and bicycles, among other things).
At the end of the day, it’s just business.
I still champion my former employer and would be open to an opportunity working for them in the future, but for the time being… I’m going to grow myself by all means available to me.
I don’t advocate job-hopping, or quitting your job without something else lined up, but never be afraid to shop the market every year or two. Worst case, you become a well-oiled interviewing machine who isn’t stagnant in their role.
Best case, you discover an opportunity that aligns perfectly with your goals.
No matter what you do or where you go, always negotiate for a higher compensation package. Your future self will thank you for it.
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