First, let me tell you I want you to get paid! You deserve to be paid a fair (and hopefully high) wage for the work that you are doing.
As a strong proponent of lifestyle design, I wish that salary potential didn’t need to dictate what kinds of careers we decide to pursue. At the same time, I know that making a living wage is vital.
When I was in the traditional workforce, I never chose the highest-paying careers. I always worked in nonprofit organizations. I also worked in less lucrative roles – fundraising and human resources.
In every job I had, though, you had better believe that I was negotiating to get paid the highest possible salary for the work I was doing. That’s how I doubled my income in a period of about 3 years and how I negotiated a salary above the range for my last job.
Throughout my career as an HR professional, I was often on the employer side of the salary negotiation. Now, I have a unique insight into how pay is determined and successful negotiation strategies. While I don’t necessarily agree with how these things are typically done, I learned to play the game.
I recently left the HR profession to become an entrepreneur. Before I get too out-of-touch with the 9-to-5 workforce, I wanted to write one final post on salary negotiation.
4 Strategies to Negotiate a Higher Starting Salary
A few weeks ago, I had the opportunity to help one of my coaching clients negotiate her starting salary for a new role. I was excited to see her walk away with something a lot more favorable than the original offer.
Looking back on the discussion, here were the 4 main things I encouraged her to do.
1. Know that Companies Expect You to (AND Benefit if you) Negotiate
First, almost* all companies expect you to negotiate. If you do not negotiate, you are typically leaving money on the table. You are not selfish to negotiate. Negotiating is not pushy. Negotiation is part of the game.
The company is making you an offer because they want you to work there. Typically, the structure is set-up to offer you the lowest amount of money that they think you might accept. I wish it didn’t work this way.
Hopefully, they shared a salary range upfront. Even if you did not have a conversation upfront, it is your job to tell them what you need to accept the job happily and to feel valued.
Here is additional important context about hiring from someone who served as a recruiter for many years.
Hiring the right person can be extremely challenging. I’ve gone through many searches where we have hundreds of applicants and come out the other side not wanting to hire any of them. Especially for mid- or higher-level roles, it’s a myth that quality candidates are everywhere.
Let’s also talk about the costs of recruitment. According to the Society for Human Resources Management, the administrative and recruitment costs are around $4,000 per employee.
I think this is a very low estimate. This might be possible if you are hiring hundreds of people for the same entry-level job.
If not, there are a lot of costs associated with hiring. These include:
- Creating the job description
- Designing interview processes
- Posting the roles on good job boards (that actually cost money)
- The time associated with scheduling interviews and communicating with candidates
- The time for everyone who needs to interview each candidate
- The time to debrief the interviews and make a decision.
They certainly aren’t including all these costs when coming up with $4,000 to recruit a new employee.
There’s another study that includes the costs of onboarding and says that a company could spend 38% of the first year’s salary to hire and onboard a new person. Based on my experience, this seems a lot more accurate, especially for higher-level roles. And, if they don’t hire the right person, that cost could be doubled.
This context is important for one reason.
If the company is making you an offer, they want to hire YOU to work there. And, if they don’t hire you, they could end up spending almost 40% of your first year’s salary to hire someone else. There’s also likely not someone just as good as you waiting in the wings.
Given this context, the company should want to hear from you if $5,000-10,000 (or even $15,000) in salary would make a difference in your decision. When I worked in HR, I certainly wanted to know this.
Usually, we could go up.
Sometimes, a company doesn’t have all the information about your qualifications or what you need to do the job. Think about it this way. You are giving the company the choice of increasing your starting salary or needing to go back to the drawing board and rehire. When faced with this choice, the better trade-off is usually to give the candidate more money.
Let me repeat that… The better trade-off is usually to give the candidate more money.
Oftentimes, it benefits the company to hire you for an increased salary than to need to start back at square zero.
I hope this awareness allows you to approach a salary negotiation as a problem-solving conversation. They want to hire you. If you want to work there, you just need to come up with mutually agreeable terms.
*Note: There are a few companies out there that have no negotiation policies. This could be because of their commitment to diversity and anti-racist policies. Salary negotiation has typically benefitted white people and men more than women and people of color. If the company does not negotiate for this reason, they will usually tell you upfront and have information about it on their website. While I love this in theory, it’s hard to do in practice. Companies who do this need to be okay with losing great candidates over $10,000 even though it could cost a lot more to rehire.
Where I worked most recently, we kept a record of salary negotiation. This allowed us to analyze our decisions to see if we could uncover inequities. Also, there was an occasion where we made offers to three people for the same role. Two of them negotiated. Through these conversations, we realized that we actually should offer a higher salary for the role. So, we increased the starting salary for all three employees even though one did not negotiate. This was on top of posting public salary ranges.
2. Do Your Research
It’s always important to do your own research to determine what a fair wage would be for the work.
Ideally, your salary will take the following things into account:
- Comparable roles in the labor market in your location
- Role qualifications, including required education, certifications, and experience
- Your unique background and experiences
There are a number of websites that will allow you to look up comparable roles. I like to use the following websites:
- Glassdoor – Glassdoor uses self-reported data. This data could also be outdated, so you should always take it with a grain of salt. Companies may have increased their salaries, and it may not be reflected yet in Glassdoor.
- Payscale – Payscale allows you to put in a lot of information about your location, job title, skill set, years of experience, and education level. It then shares with you the salary range for your role.
I like to use both of these websites together. The reason why is that I can look up the salary ranges in my area for a few different job titles on Payscale. Then, I can look at the Glassdoor data to see if the company generally pays above, below, or at the median.
This data is really helpful for a negotiation conversation. It allows you to approach the conversation from a position of power. For example, you could say something like, “From the data, I could see that you generally pay at around the 75th percentile in the ranges for various roles. That is incredible. I’m excited to work for an organization that invests so much in its talent. For my role, the range for our area is _________. Because of this and the experience I bring, I feel like it is fair to ask for ___________, which is the 75th percentile for my role.”
Depending on your role or industry, there might also be other salary data available. For example, there are many different nonprofit salary surveys. You can also look at a nonprofit organization’s 990 forms to see how much they pay their top executives. There are even a few industries, such as healthcare or government, where salaries are part of the public record.
3. Know the Different Types of Compensation that Could Help Meet your Needs
You may encounter a situation where a company comes back and tells you that they can’t increase your base salary above a certain amount. Their reason could be that they want to make sure that your salary is equitable with existing employees.
I can definitely understand this. An employer doesn’t want to bring in someone new and pay them a much higher wage than an existing employee who has experience within the company. At the same time, the company will incur much higher costs to rehire for the role if they can’t hire you.
If this is the case, there are a few things that you could ask for in lieu of a salary increase so that it doesn’t impact the pay equity across the team.
- A signing or transition bonus: This is not added to base pay. It is typically paid out upon someone’s start date and/or their first anniversary.
- Relocation assistance: If you need to relocate to take on the role, you could ask for help with your relocation costs.
- Student loan payback support
- To work fewer hours: While this doesn’t increase your overall pay, it would increase your hourly rate.
In the case of my recent client’s salary negotiation, they were not able to provide as much of a change in salary as she had hoped. Their reasoning was that they wanted to ensure equity across the team. Yet, they were able to offer her a signing bonus that almost covered the difference between what they offered and what she asked for. They were also able to support her in applying for a student loan payback program. This program requires the employer to pay a certain percentage of the payback each year.
4. Take Your Time
No one expects you to respond to a job offer at the moment it’s offered. I recommend that people always take time to think about it. You need time to determine the questions you want to ask and to ensure that you can accept the offer happily.
You can then come back with a counter-offer a few days later after you take your time to figure out what you would be happy with.
Also, it’s important to know that the person you are talking to often doesn’t have the authority to give you what you want at that same moment. They’ll need to talk to their boss and likely look at the budget to see what’s possible.
If you approach the exchange as a problem-solving conversation, your new supervisor is more likely to advocate on your behalf. It’ll feel worth it for them to propose creative solutions to help get you closer to your ideal proposal.
One Unexpected Benefit of Negotiating
If you negotiate, you will hopefully receive a higher starting salary. That is the expected benefit.
There is also one important and unexpected benefit of negotiating. It sets up a more open and honest conversation with your boss from the very beginning. When you have honest conversations focused on problem-solving, it creates a virtuous cycle. It makes it easier to have the next honest conversation that you need to have.
And, it gives you the reputation right away that you are not a pushover. People will expect you to advocate for what you want and set boundaries. In my opinion, that might have an even greater impact on your happiness at work than an increased salary ever could. Lucky for all of us, these two things go hand in hand.
What are your best salary negotiation strategies? What did I miss?