How to negotiate a killer salary

ARE you too scared to negotiate? You could be dudding yourself tens of thousands of dollars. Here’s how to earn what you’re worth.

1972. Marlon Brando as Don Corleone in the film 'The Godfather'.

THERE is one secret that hiring managers really don’t want you to know: they expect you to negotiate.

Knowing that prospective employers expect you to negotiate should immediately alleviate one of the most common fears — the fear of losing an offer because you negotiated.

It is always worth negotiating a salary offer, as this could be your only chance to secure a pay increase above inflation.

Those five minutes of negotiation — the small window you get immediately after you have been offered a job — could be one of the most important and profitable conversations that you will have.

By bowing out, you stand to lose thousands of dollars over the time you hold the position, and tens of thousands over your working life — because your starting salary becomes the basis for future raises and offers.

If you are already in a position you love, and wish you had pushed for a better compensation package, it’s always worth having the conversation with your superiors.

Either way, these are the negotiating essentials that will give you the best chance at getting paid what you’re worth.

(If you are seriously underpaid and your boss won’t play ball, maybe you should consider looking around for a new role, or scroll to the bottom for some tips on how to score some compensatory work perks.)

Reasonable employers expect you to negotiate.

1. KNOW YOUR WORTH

You need to know your worth in the marketplace — not just the average salary paid for your job.

Your worth is comprised of three values: market value, individual value and leverage value.

The market value is the range of the pay for your desired role within the industry. There are two ways to get information about market value: through online salary resources, and through networking with people who hold or have held similar positions. Determine a range, not one specific number.

Now that you have a range, you need to determine where you are within that range, or if you are above it. Your individual value refers to your assessment of how well or poorly you can do the work compared with other candidates.

Do you have special expertise or is your expertise scarce? Do you have great connections? Are you a cut above the average candidate? Your individual value can quickly take you from earning average or above average to the lucrative level.

Your leverage value won’t come into play for every position, but when it does, it can make a whopping impact. There are three situations in which leverage value comes into play.

The first is in urgent, emergency and rescue situations, where the employer has to fulfil a need under time pressure and is willing to pay more in order to do so.

The second is when part of your compensation is based on performance — for example, sales.

The third is when your contribution or performance would directly impact on the bottom line of the company.

If you are a cog in the wheel, then you will have little leverage, but when your individual value is high and a leverage situation arises, this is when you can command lucrative money.

Boundaries: set them. Firearm not required.

2. SET YOUR BOUNDARIES

Going into a negotiation with a salary range in mind is good, but in order to feel like you are being paid what you deserve, you need clarity to know what you will accept, what will inspire you and what would deflate you.

Set your boundaries to be effective and clear by using the TSN method, which can be broken down into three parts — target, satisfactory, no deal.

Doing this means you need not be worried about being lost for words or fumbling to assess an offer on the spot — or worse, losing composure and locking yourself into a number that is below your expectations or acceptable levels.

3. POSTPONE MONEY TALK

Wherever you may be in the interview process, postpone the money talk until you are sure they are ready to make an offer.

During this process the urge to buy grows stronger, and people make their money supply grow by making it more flexible. It’s this last state of flexibility that we are aiming for in

negotiations.

Revealing your salary expectations before the employer is ready to make an offer can take you out of the race.

Money talks.

4. WHO GOES FIRST

Reaching a mutually satisfying exchange depends on each party pulling against the other and trying to satisfy their own interests. The tension will uncover common ground.

Psychological researchers call this mechanism “anchoring”, and suggest that the final negotiated amount will be closer to the first speaker’s position (the anchor). 

Scenario 1: Let them go first

By letting them go first, you have a rock-solid offer to negotiate from. Choose this option when security is your highest priority. Remember, you’ll need to live with the downward anchoring effect of starting at their lowest number.

Scenario 2: You go first

The dangers of you going first are that you could ask for too much and lose the offer altogether you could start too low and leave money on the table, you could talk too soon and discuss salary before they are ready and in the flexible stage. Note, it may be their strategy to make you go first.

5. THE THREE-LETTER-WORD RESPONSE

One of the most common mistakes people make in negotiations is using the word “OK” after an offer has been made.

What is just an automatic reaction to fill silence while we contemplate the offer is actually taken as acceptance. This one little word can cost you thousands of dollars.

Instead of saying “OK”, immediately after an offer is made, repeat their offer and say “hmm”, letting a quiet look of concern grace your face as you ponder the offer.

Hmmmmmm.

Then, go silent for five to 10 seconds. The other person will often volunteer additional information.

They will either try to appease you by making their offer more attractive, or they will explain why they can’t offer more. Either way, this puts you in a stronger position because they have recognised that you know your worth.

6. THE DOOR-IN-THE-FACE TECHNIQUE

It is time to counteroffer. This could be the start of a bit of back and forth.

Remembering your manners will keep the negotiation conversational and ensure it does not turn adversarial. Say thank you after every offer you receive, and repeat your excitement about the job.

The “door-in-the-face” technique has been proven to be highly effective in salary negotiations.

The principle of the technique states that initially making a large request increases the likelihood of the person agreeing to a second, smaller request.

People tend to view a second offer as more reasonable when it was preceded by an offer that is quite high.

7. DEAL SOME MORE

Once salary is maxed out, or if it is non-negotiable (for example, government roles), ask if you may explore other areas of compensation.

There are loads of options where more dealing would be possible, including stock options,

vacation time, bonuses, early salary review, flexitime, home office, overtime rates or time in lieu, pensions, health and other insurance, car mileage rates or allowances, travel allowance, subscriptions and memberships, training, personal development, further education, leasing arrangements and preferential loans.

8. SAVE FACE

If they just won’t negotiate, the cold hard truth is that they see you as an average candidate who either hasn’t really shown that you understand what the company wants, or failed to demonstrate why you are different and better than the other candidates.

If you want the job and the offer is still within your satisfactory or target range, there is one last strategy that could help you save face and still set you up for a pay rise in the near future.

Here is a sample script of how to save face in this situation: “I understand that times are tough,

and that you don’t have any flexibility on salary right now. With that said, I’m really interested in working with you and if we could just make one agreement, I think we could find a good fit. That agreement is, if I do a great job for the next six months, would you agree that we could revisit and renegotiate my salary at that time?”

A hiring manager is going to say yes to this, because they have just spent $6000 recruiting you and a big chunk of their time. Asking them to agree to reconsider your salary at a point in the near future is a no-brainer.

This is an edited extract from Stand Out and Succeed: Discover Your Passion, Accelerate Your Career and Become Recession-Proof by Christy Frank.