Going to the dentist. Taking your first driving test. Delivering a speech in front of 1,000 people.
You know what’s even more nerve-racking?
Negotiating your salary. Most people find even the idea of bringing up their salary to be incredibly intimidating.
And guess what? Employers know this, which helps them lowball you.
Whether you’re negotiating a pay rise for a new job, as part of your performance review, or simply because your remuneration doesn’t reflect your current responsibilities, you’re doing yourself a massive disservice by settling for the salary that’s first put on the table.
I know it’s awkward. It’s definitely challenging. It can even be excruciating.
But that doesn’t mean you shouldn’t try.
A study published in the Journal of Organizational Behavior showed that people who negotiated their starting salary increased it by an average of $5,000. While $5,000 may not seem like very much compared to the agony of negotiating with your current or future boss, it adds up over the course of your working life. The study revealed that the cost of not negotiating your salary over your career could be a whopping $600,000!
Would you say no if I wrote you a cheque for $600,000?
I didn’t think so.
Since each subsequent raise (as well as your retirement fund balance) tends to be based on a percentage of your salary, it’s worth negotiating your salary at every opportunity – and getting the practice to boot, so you become a stellar negotiator over time.
Negotiation is both an art and a science, and the good news is that it can be learned! We combed through dozens of scientific studies for proven methods to help you up your negotiation game, and added on some tips from pro recruiters with over 40 years of recruitment experience between them.
Ready? Let’s do this!
And when you think you’re done, do some more. The importance of research in a negotiation cannot be overstated. You need to be armed with as much information as possible: these days, there’s no excuse not to be.
Use websites such as payscale.com, glassdoor.com.au, and talk to people in the industry (including present or future coworkers if possible). This should give you a fairly decent idea of what people in similar roles are getting.
Recruiter and Head of Talent at Ansarada, Emma Jones, says, ‘All negotiations must come from a place of knowledge, preparation and authenticity to have the greatest chance of successful outcomes. The cost of not thinking it through properly can have dire consequences for your career, so it’s worth putting in the prep time.’
While some organisations have banned workers from discussing salaries, there is a movement underway to make information more transparent. As of August 2016, 13 US states have made it illegal to prevent employees from comparing salaries, and companies like Buffer are making all salaries public.
The more well prepared you are, the more confident you’ll feel making the first offer and anchoring the odds in your favour (see number 5). Compensation usually reflects the responsibilities, performance, market rate and ROI of the person hired, so don’t worry about what you are getting paid right now as much as what you should be paid. Treat each salary review with the same gravity as you would a job interview – the purpose is the same, after all! – to sell yourself and demonstrate your worth.
Once you’ve done your research, you need to know what YOU bring to the table. What skills, experience, training, attributes or personality traits do you have that would be hard for an employer to find? Equally important, what will it cost them to find another candidate like you? Once you have an idea of your ‘market value’, calculate how much you will need to be able to cover your rent or mortgage, loans and expenses. You need to know the bare minimum that you would be willing to accept, otherwise negotiating is a waste of time.
For the right combination of benefits and experience, you might be willing to go below the market rate – but you’ll have to decide if this is right for you. Jarka Kunova, a recruiter and Operations Manager at Newscorp says, ‘Be confident but not aggressive and know what is important to you in order to feel happy in your role… Value comes in all forms, not just as a salary.'
In the negotiation, it can’t hurt to mention that you have other offers (if it’s true), and this will be your biggest leverage. A scarce resource is always valued higher than one that is easily available, and the employer has already invested time and resources to recruit or train you.
It can be really easy to get tongue-tied in a stressful situation. If you’re prone to nerves, try putting yourself (metaphorically) in someone else's shoes. Imagine that you're a different person, and adopt the persona of this confident person before you go in for the negotiation.
Research published in the journal Social Cognition demonstrated that priming yourself by thinking of someone who is stereotypically good at something will make you better at it as well. So visualise a powerful negotiator (e.g. Barack Obama) before you go into your negotiation, and you’ll be poised to kick some serious butt.
The first 5 minutes are crucial in any negotiation, so bring out your most assertive, gregarious self. Use your confident, strong alter ego to drive the discussion. Spend a few minutes before the discussion adopting some power poses that have been shown to help increase testosterone (a hormone that makes you feel more dominant) and decrease cortisol (a hormone that makes you feel more stressed).
Frame your discussion in terms of your performance, and relate this to the company’s success. Remember that the company’s focus will be its bottom line, not your financial constraints or how much you ‘deserve’ the raise. Be pleasant and likeable – but assertive. Stay positive – say how much you enjoy (or would enjoy) working at the company, and what you bring (or have brought) to the table. Then you can start talking turkey.
After you've done your research, you should have a specific figure in mind, rather than a ballpark. Multiple studies have shown that such anchor numbers ‘pull’ judgements towards themselves, which is why social psychologists recommend starting high. Starting higher than you’d expect allows room for concessions, and also lets the other side feel like they’ve won.
A Columbia Business School study also suggests coming up with a precise number rather than rounding up or down to make your anchor more potent (say, $63,500 rather than $60,000 - $65,000) because it shows that you’ve done your research. Similarly, studies have demonstrated that making your arguments first could sway the negotiation in your favour.
It’s common knowledge that women get paid approximately 75 cents for every dollar men earn, but until recently, this trend was attributed to the fact that women just don’t ask for raises as often.
A September 2016 study of 4600 Australian workers showed that this simply wasn’t the case – while women asked for raises just as frequently, men were more likely to get them. So if you’re a woman, what can you do about this information? According to Harvard Law School’s excellent free resource Negotiation Strategies for Women: Secrets to Success, women should start higher; frame their demands in terms of its benefits to others; and reference objective, relevant data (see #1).
According to the misunderstood and oft-misquoted study in the European Journal of Social Psychology, caffeine consumption leads to greater agreement in a negotiation. This means that you're more amenable to ideas after you've had your coffee (I could've told you that for free). So it can't hurt to have your negotiation conversation over a cup of coffee. Bonus: holding a hot drink will help your boss have more generous feelings towards you. Of course it may be less easy to do this in an interview situation, but you should definitely try buying your boss a warming cup of tea or coffee at your next performance review (and get yourself an iced decaf!)
This one is particularly important. While many employers will force you to confirm your salary expectations before you’ve even had a chance to interview, try and push the question of money to the last possible moment.
If you’re applying for a new job, ask them what the budget is for the role, and explain that you need an understanding of the bigger picture but you’re ‘happy to consider any reasonable offer’.
For an existing employer, make sure that you time your negotiation around the financial year, or before your appraisal (salary increases are often decided long before performance reviews).
Be overprepared (see #1) – know your market value, the company’s financial performance, industry conditions and your documented achievements – both quantifiable ones (signing on a new client; suggesting a cost-saving improvement) and less tangible ones (training new employees; improving workflows). This will help you anticipate potential objections and show that you have business acumen, which is invaluable to any organisation.
It can be tempting to go into a negotiation, guns blazing, just waiting for the other side to stop talking so you can disarm them with your perfectly rehearsed arguments. Bad idea! According to FBI hostage negotiator Chris Voss, the best way to succeed in a negotiation is to listen actively to the other party, empathise with their point of view, build rapport, influence their behaviour and then close. It also helps to mirror their body language and phrases to reach an agreement. Voss suggests paraphrasing what the other party is saying to confirm that you understand where they are coming from, and to move towards common ground.
If someone else is negotiating on your behalf (e.g. a recruitment agency), it’s very important that you maintain control over the communications. This means asking a lot of questions of the agency when you get started. Make sure that you’re completely transparent about what you want, and that you can trust them to represent you.
Since agents are usually paid a percentage of your starting salary as their commission, they may strong-arm an employer into offering you more than you asked for, which could result in the employer choosing another candidate. Don’t be afraid to talk to more than one recruiter to find one you can really trust to be on your side.
What happens if despite all your preparation, the employer balks at the very idea of negotiation? Guess what? They are trained to do just that, so be prepared to hear no for an answer at least once. While it’s safe to assume that there’s a bit of wiggle room in the compensation package, you also need to know when to back off.
As long as the dollar figure offered is within your ‘walk away’ range, you can always try negotiating things like your hours, flexibility, bonuses, benefits, paid training or annual leave. If you’re not happy with the reasons you’re given, be sure to ask lots of questions to fully understand the situation so you’re even better prepared next time. But even if you leave with nothing more than what you walked into the room with, congratulate yourself anyway.
Before entering a salary negotiation, know your BATNA (Best Alternative To A Negotiated Agreement), a term coined by Roger Fisher, William Ury and Bruce Patton in the seminal book Getting to Yes: Negotiating Agreement Without Giving In. Depending on your personal circumstances and the package on offer, you can consider accepting an alternative offer or even quitting your job. Of course you shouldn’t disclose your BATNA to your employer; particularly if this involves leaving.
Negotiating is like flexing a muscle – the more you do it, the easier it will get. Remember that your goal is to reach a goal that is mutually satisfying, so be willing to make some concessions, and look for creative solutions to find a win-win situation.