A Step-by-Step Guide to Negotiating for the Pay You Deserve
Salary negotiations are a challenge for most workers. Striking the right tone, being confident without being cocky, and crafting the business case for why you deserve more is a career skill in itself.
If you're angling for a raise, take heart: Economic tailwinds probably provide context for your personal case, at least for the moment. The average American worker got a 2.9 percent raise in the year between September 2018 and 2019 - among the biggest increases since the Great Recession, according to the U.S. Labor Department. That's just an average, of course. Exceptional performers and workers with scarce skills did even better. How do you fight through the agony of asking for a raise to reach the ecstasy of winning one? Whether you are negotiating a new job offer or asking for a raise at your longtime place of work, read on for a step-by-step guide to getting what you're worth.
89 percent of U.S. workers in one study believed they deserve a raise but only 54 percent planned to ask for one.
What would these workers rather do than bargain for a pay bump?
32 percent say house cleaning is more fun than asking for a raise.
13 percent say they would prefer to look for a new job.
7 percent say they prefer to get a root canal.
6 percent say they would opt for an IRS audit over asking for a raise.
A Ten-Step Plan for Negotiating Your Salary
Adopt a Positive Frame of Mind
In the U.S. and some other developed nations, negotiating is perceived by some as being pushy and even insensitive - as you probably know if you've ever cringed at negotiating with locals for souvenirs while traveling abroad. This reticence infuses our view of negotiating for ourselves: how dare we ask more than someone else? Here's a healthier way to think of negotiating: It's simply a way to solve a problem. In the case of a salary negotiation, the problem involves two parties with conflicting goals. You want to make as much as you can; your employer wants to pay you as little as possible. But you also share similar goals. You want to keep your employer happy so that you can continue to receive a paycheck, and your boss wants you to feel motivated and fairly compensated. Be reasonable and polite, and your negotiations won't damage your relationship - and could even win your boss's respect.
Identify Your Leverage
Assess the supply-and-demand balance to determine if you have room to negotiate a better deal. In general, the 2019 economy favors workers. At the end of 2018, there were 7.3 million job openings in the U.S. labor market, up over a million from the previous year. Of course, the trends vary by industry. The oil industry has been shrinking, so petroleum engineers might lack leverage at the moment. But demand for some types of workers - including physical therapists, statisticians, and audiologists - could soar in the coming years. The more competitive the labor market, and the more unique your skills, the more leverage you will have to negotiate. If you're negotiating a salary as part of a hiring process, congratulations - by definition, the leverage is in your favor. If you're seeking a raise from your existing employer, the calculus is a bit trickier. If your employer is struggling to keep pace with demand, or if workers in your position have recently left, the moment might be right to negotiate.
Know Your Worth
Private-sector salary information tends to be a secret, so employers have that advantage. You can level the field a bit with research. How much do workers in your field make? To determine the salary range for your position, start with online sites that gather salary information for various jobs, professions, and industries. Among the places to look are the Bureau of Labor Statistics' Occupational Outlook Handbook, Salary.com, SalaryExpert.com, JobStar.org, Glassdoor.com, PayScale.com, and MoneyGeek's salary calculator. Nonprofit organizations disclose salaries for some workers on the IRS Form 990; those tax returns are available for free at Guidestar.org. And publicly traded companies disclose salaries for top executives to the Securities and Exchange Commission. In the public sector, pay is far more transparent; salaries for federal, state and local workers are a matter of public record. Florida, for instance, posts paychecks for all state government and state university workers online. Internet research is just the start; the most valuable information comes from talking to your coworkers, or to people at the company where you're interviewing. The more confidential information you can gather, the better informed you will be about actual market rates.
Have a Plan for the Dreaded Question
Career coaches are unanimous in this bit of advice: Disclosing your salary too early in the hiring process kills your negotiating leverage. Employers ask because they want to know if you're a realistic candidate. But answering with a number that's too low can put a cap on the salary you ultimately negotiate. So how do you respond when the first interview includes a query about your pay? Stall if you can. Say something like, "I'd like to know more about what the job entails before I discuss salary." If that tactic doesn't dissuade the interviewer, try to be vague. Rather than offering up a specific number, give a range, such as "$70,000 to $80,000."
Determine Your Bottom Line
Say the employer is unwilling to agree to your initial salary request. What then? To answer that question, it's wise to calculate your bottom line before you enter salary negotiations. What's the lowest number you'll accept? If $75,000 is your goal, will you settle for $70,000, or $65,000?
In order to calculate your bottom line, take a look at your monthly budget and spending. What would be an ideal, comfortable increase? Now look at where you can currently save, such as credit cards, auto loans, homeowners or renters insurance, and home loan refinancing, to determine where you can settle.
Be sure to also factor in non-monetary factors, such as job responsibilities, working hours, annual bonuses, time off, retirement contributions and health coverage. If you're applying for a job with a new employer that refuses to meet your bottom line, your course of action is simple: reject the offer. But if your current boss denies your request, the decision is more complicated. One comeback: ask your boss what criteria would validate a bump in salary. Do you need to hit certain goals, gain a particular professional certification, or gain new experience? Then you can concentrate on making the case your boss has outlined.
Explain Your Rationale
You know you deserve more money, but your boss might not agree. Sure, there are all sorts of reasons you might want a raise: You haven't gotten a pay bump in a year or more, or you're having a baby, or you're facing unexpected medical costs. Those might be compelling issues for you, but they're not particularly persuasive to your boss, who needs a valid reason to pay you more. So - provide the ammunition that will make the decision easy for your boss. Why do you deserve a raise? Prove your case in a way that stresses your contributions without making you seem boastful or whiny. Use a clear, logical line of reasoning to support your position. For instance, you could say, "My salary requirement is $70,000 to $80,000, and let me share with you how I arrived at this range." Try to distance yourself emotionally; pretend that you're a consultant who has been hired to objectively analyze your contributions and value.
Pick The Right Time
Timing is crucial, both in terms of the overall economic scheme and in the smaller picture of your company. The midst of the Great Recession was not a good time to demand a raise. But now that the labor market is gradually improving, the timing is more opportune. Next, consider what's going on at your place of work. Record profits and the company's on a hiring spree? Ask away. Are you in a struggling industry and just went through a round of layoffs? In that case, bite your tongue and bide your time. Finally, put some effort into planning the conversation when you actually pop the question. Don't simply barge into the boss's office and demand more money. Schedule a time when you can have your manager's undivided attention as you make your case.
Use the Right Tone and Show Confidence
This is tricky. You don't want to seem arrogant, but you do want to come across as a passionate advocate of your value. Doing your homework - researching salaries, laying out your worth, planning the timing of your request - goes a long way toward creating confidence. The confidence game can be especially tricky if you're a woman negotiating a raise. Studies have shown women to be more likely than men to suffer a reputational backlash for coming across as too aggressive during negotiations, according to Hannah Riley Bowles, a senior lecturer at Harvard. Whether you're a man or a woman, bargaining without alienating requires a delicate balance. You need to tout your skills and make your case, but you also need to show that you're reasonable and humble.
Prepare for the Counteroffer
If you're negotiating with your current boss, dealing with the counteroffer is straightforward. You might reiterate your case for your original request, or you might make your own counterproposal, but, in the end, if the counteroffer is a reasonable one, accept graciously. But if the counteroffer comes because you told your boss you've been offered another job elsewhere, then the decision gets complicated. Employment experts say you shouldn't accept a counteroffer that is extended simply in response to another company's interest in you. That's because you can often be considered tainted if you stay - you've shown that you're disloyal enough to seek employment elsewhere, and you're likely to be the target of heightened scrutiny. However, in some industries, using a job offer as leverage for a raise is common practice and won't be held against you.
Consider Negotiating Perks
Many employers are just stubborn about giving out raises. They don't want to increase "fixed costs," a category that includes salaries. But they're more generous with one-time costs such as signing bonuses or annual bonuses. If you don't get the salary you want, see if you can coax a bigger bonus. And try to negotiate perks - the sort of things your employer thinks of as "free" but in fact can be very valuable. These include vacation time, flexible working hours, telecommuting, job title, moving expenses, training costs, and dues for professional associations. Employers tend to be more willing to sweeten the perks.
Perks and issues to consider
- Salary Increases
- Vacation time
- Work schedule
- Equity Benefits
- Profit sharing
- Relocation assistance
- Company car
- Childcare facility or costs
- Phone allowance
- Flexible work schedule
- Travel budget
Source: Get Paid What You Are Worth (Robyn L. Pinkley and Gregory B. Northcraft)
How Much Can You Ask For?
- How scarce are your skills?
- What unique expertise and experience do you bring?
- How many people can do your job?
- How well is the company performing?
- How much revenue do you bring in?
- How many of your coworkers have moved on to other jobs?
- How did you do on your latest performance review?
- Have your responsibilities expanded since your last raise?
- How easily can your employer hire a replacement for you?
Top Ten Mistakes People Make When Asking For a Raise
Fearing the Ask
For many workers, asking the boss for a raise creates feelings of deep discomfort. "Most people do not like to deal with conflict, and negotiation is all about conflict — it's about people saying no to you," says Joyce Russell, director of executive coaching at the Robert H. Smith School of Business at the University of Maryland. But if you're a valued performer who feels you deserve more, why not request a raise? Too many workers simply quit for another job rather than facing the dreaded back-and-forth. "Bosses often will say, 'I would have done something if I had known,'" Russell says.
Forgetting to Do Your Homework
If you believe you're underpaid, do the market research to prove it. Collect as much information as you can about what people in your position make. (See Step 3 above for tips on gathering salary information). Identify unique skills, expertise and client relationships that you bring to the company. This will help you build a compelling case.
If you want your boss to pay you more, you need to be persuasive. Talking too fast, failing to make eye contact and other signs of nerves will undermine your pitch. Unless you're in a position that requires regular negotiation, it's only natural that you'll feel nervous when asking for more money. But projecting confidence will help you make your case.
Before you make your pitch, practice. Russell advises writing a script that contains your talking points, then acting out the conversation with a friend or coach who will raise the objections you can expect to hear from your boss. "Practice with somebody who's going to challenge you, and not be super-easy," Russell says. Don't just memorize the script; think of ways to parry your manager's objections. Remember body language, too - practice eye contact and a relaxed, confident posture. All this practice will help you overcome your nerves.
Giving Up Too Easily
Workers often ask the boss for a raise, and then fail to follow up. Your boss probably isn't any more eager to discuss your pay than you are, but don't let him (or her) off the hook. Polite persistence wears down resistance, so if you haven't heard an answer after a couple of weeks, follow up.
Not Asking Questions
Any negotiator's job is to find out what's behind an objection. If your boss doesn't agree to give you a raise, you want to find out why. Russell's go-to question: "Can you help me understand why this is a problem?" It's a non-confrontational way to probe. Remember, your boss probably doesn't control the purse strings, and therefore must ask someone else's permission to give you more money.
Focusing on the Wrong Reasons
Need a raise because your rent went up, or the cost of childcare is killing your budget? Leave your personal life out of your pitch. "Nobody cares about your needs," Russell says. "They just want to know, logically, what the market is for your position." So keep the raise request professional: Focus on what you bring to the table, and what fair compensation is for your skills.
Not Having a Plan B
So your boss rejects your request for a raise. Now what? Too many workers simply accept no. Instead, try other ways to get to your goal. Perhaps you could move up the date of your next review, or agree to revisit your pay at a certain time. Get creative: There are other things besides salary that you could negotiate. They include time off, bonuses, working hours, telecommuting, training costs and job responsibilities. These are all valuable perks that your boss might be more willing to part with.
Naming a Number First
If you're interviewing for a new job, the hiring manager is going to ask right away how much money you make. Find a way to stall. "From an applicant's standpoint, that's not the right time to get into it," Russell says. "If your numbers are too high, they rule you out. And if your numbers are too low, they use that against you later. It's really in your best interest to start salary negotiations after you've gotten a written offer." Expect to be asked, and practice politely deflecting the question.
Having Only One Offer
If you're negotiating a salary for a new job, try to get multiple job offers. This helps you get a feel for what your skills are really worth, and it gives you the leverage to create a bidding war for your services.
Salary Negotiating Tips for Women
Our society has made huge strides in gender equality, but vestiges of the old days remain. One glaring example: How women are viewed if they negotiate aggressively for higher pay. When men engage in hard-nosed negotiating, it's seen as a sign of strength. When women do it, the same tactics often are interpreted as an act of selfishness. "No wonder women don't negotiate as much as men," writes Facebook Chief Operating Officer Sheryl Sandberg in her bestselling book Lean In. "It's like trying to cross a minefield backward in high heels." Indeed, a number of academic studies have found women are less likely than men to negotiate for raises, and less likely to do so successfully.
Sandberg and others say women should negotiate anyway - but to succeed, female employees must approach the negotiating process strategically. For starters, unlike men, women should explain their need to negotiate, couching their haggling as a fight against the pay gap rather than a play for individual rewards. When touting achievements, women should highlight their contributions to their team's performance rather than individual results - for instance, positioning their accomplishments as key to a group effort, using 'we' instead of the egocentric "I".
Some experts say women should use non-threatening body language - such as smiling a lot — to provide social context to their salary demands. But Katie Donovan, a salary expert who runs Equal Pay Negotiations LLC, disagrees.
"I don't buy that," she says. "Don't change your personality, and don't change the relationship drastically. If you joke around with your boss, keep that same relationship intact when you negotiate for salary. We don't need to flip our hair."
But Donovan acknowledges that when women play hardball it can be perceived differently than when men do it. Taking a softer approach may be the answer in many cases. For example, when receiving an offer you may say, "I'm really excited about the job offer, but here's what's holding me back from accepting."
Even as you couch your request, you should reach for the stars, Donovan says. Her advice: Ask for a big raise. There are two reasons for this approach. First, unlike men, women often don't feel as self-confident as men. "In general, men think they're bigger and better than they really are," Donovan says. "Women think we're smaller and worse than we really are." Asking for more can help boost a woman's confidence, Donovan says. What's more, by asking for a big raise, you can push the employer to close the huge pay gap that still exists between men and women.
Biggest Mistakes Women Make When Negotiating Salary
Being Scared to Negotiate
Chances are your boss won't mind negotiating, so long as you keep the tone professional and polite.
Asking for Too Little
The pay gap means women are underpaid, so don't be afraid to ask for a big raise.
Negotiating Like a Man
Men can afford to be brusque when negotiating. Research shows women are more successful in negotiating when they take a less combative approach.
Before a negotiation, practice what you'll say. Think of every possible objection and craft a response.
Q&A With a Career Coach
What's the biggest mistake job seekers make in salary negotiations?
Karen James Chopra:
The biggest mistake is that job seekers tell employers their salary history and what they're making now. If you divulge your salary before the end of the process, you've lost a key piece of leverage. If the employer knows what you make, they'll say, "Give them a 5 percent bump, and they'll be happy." The online applications are really challenging because you have to put down a number. You should be networking so that your first contact is not an online form. Then you'll not be eliminating yourself from consideration by putting down an aggressive number.
Do job seekers typically negotiate pay?
Karen James Chopra:
No, sadly they don't — and the surveys tell us women negotiate even less than men. You should negotiate because it's an important skill. Employers are expecting the candidate to negotiate. If there's no room to negotiate the salary, there's almost always something else you can ask for. Employers drag on the hiring process for months, then they want you to start in two weeks. So negotiate the start date. You can negotiate the title. A bigger title doesn't cost the company anything, especially at smaller companies. I call that "money for free" because the big title sets you up for a bigger salary at your next job. You can negotiate core hours, telecommuting, signing bonus, vacation time.
Why are women less likely to negotiate?
Karen James Chopra:
I've got a soft spot in my heart for women who are really lagging behind in pay because they don't ask upfront for more money. There's a bit of socialization. The research backs this up: Women who negotiated find their employer holds it against them. What I tell my female clients is ask anyway. Even if they hold it against you, the money still goes into your bank account, which is what matters. Unlike men, women have to soften the edge in a salary request. Ask for what you want, but with a smile - because people expect us to smile. Use body language. Tilt your head. When you want the other person not to feel intimidated, tilting your head always works. Use hesitations in your speech and words like "perhaps." When women are learning to be executives, they're taught not to be weak, but when you're negotiating a salary, you need to forget that advice. But don't be timid. I don't want women to say, "I'm not worthy of the money." I want them to say they're worthy, but they're going to say it with a big smile.
Salary information isn't exactly transparent. How does a job seeker dig up the true range?
Karen James Chopra:
If employers would publish everyone's salaries, there would be no need to negotiate. But I don't think that time will ever come. Start online. Always check out Salary.com and Vault. But job search is all about networking. When you're networking, ask about salary range. Then, when an employer gives you a range, you can say, "Based on my research, the salary range is x." But you can only use that gambit if you've done the research.
Say I've researched and negotiated, but the employer still won't pay me what I think I'm worth. Then what?
Karen James Chopra:
You want to go all the way through the interview process, and you want them to make the offer. If it's not in your range, say,""The ballpark is this much to this much, can you get me in this ballpark?" They may have absolutely fallen in love with you, and they may go find more money. If not, you've given them every opportunity to make you happy, and you can genuinely say "I'm so sorry." If you turn down a position respectfully, in most cases, employers get it, and you look like the really good one who got away.
What if my current employer makes a counteroffer to keep me?
Karen James Chopra:
The rule of thumb is don't take it. They're counter offering almost from a sense of panic. They're going to throw some money at you, but in their mind you're tainted goods, and they're going to be waiting for you to make a mistake. Sometimes taking the counteroffer works out, but usually the advice is not to. If you decide you like your old company and want to stay, turn down the offer and don't tell your old company about it.
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