Congratulations. You have found a job in your chosen field, one that interests you and is with a company you have confidence in and want to continue your career with.
The company is impressed with your candidacy, and they want you to be an important part of their team. If you’ve made it this far in the job search process, then you’ve done most of the hard work already. The heavy lifting, as it were, is all out of the way.
However, this doesn’t mean that you are finished with your job search or with the interview process. This doesn’t mean you can put it on cruise control or simply coast to the finish line. You still need to negotiate your starting salary.
Salary negotiation is a crucial component that will help determine how happy you will be at your new job, how invested and motivated you will be, and to what extent the company will be invested in you.
In this article, we will take a look at:
- the various aspects of a starting salary negotiation,
- how to best be prepared for the negotiation,
- what curveballs or pitfalls you need to be aware of,
- what questions to ask,
- and what answers you need to be prepared to give.
The article closes with a checklist so that you can be sure that you are entering a starting salary negotiation completely prepared and you won’t risk starting your new job either undervalued, overextended, or being taken advantage of.
Even though the advice and suggestions that will be covered here are intended to help executives in the starting salary negotiation process, the principles that will be examined can also be implemented to help you negotiate a raise like a pro.
Salary Expectations
At some point during the recruitment process – more often than not at the initial stage – the recruitment agency or hiring manager will ask you what kind of salary you are expecting to earn. This is what is known to recruiters as an “elimination question”.
They are trying to narrow down their list of potential candidates, and they use this question to reduce their pile of applications and filter out candidates that they know they won’t hire or won’t be able to hire.
It is worth bearing in mind that the recruitment agent or hiring manager may not only eliminate candidates who express a salary expectation that is higher than what they have budgeted for. They may also eliminate candidates that express a salary expectation that falls well below their budget for the position. This is because your salary expectations also show how valuable a contribution you feel you can make.
If the salary expectation is too low, the recruitment agent or hiring manager is likely to assume that you don’t place a high enough value on the contribution you intend to make. They are likely to agree with you and eliminate your candidacy for that reason.
If you are casting a wide net or if you are applying to many companies, you can answer this question with a restrictive or short salary range. This will help you weed out some or many of the companies you’ve applied to.
On the other hand, if your job search is more focused and you are targeting only a few companies, you’ll want to stay in the game with all of them. So give an answer that is relatively vague. That is, a salary expectation that is expressed in a broad range and that allows for a variety of compensation forms – including a base salary, bonuses, commissions, perks, etc.
Be aware that a non-answer, or one that is overly vague such as “I am flexible. We can discuss that in due time”, could be interpreted as a negative answer.
A recruitment agent or hiring manager that is already overwhelmed with applications may choose to eliminate candidates that give a non-answer to that question simply to lighten their workload and make the recruitment process easier for them.
An answer that consists of a broad salary range is much better than no answer or a vaguely worded answer.
The Takeaway – “What are your salary expectations?”
- Recruiters and hiring managers do not expect a precise answer to this question.
- Recruiters and hiring managers are only asking this question in an effort to eliminate candidates.
- The broader the salary range you give and/or the more options you include (bonuses, commissions, perks, etc.) the more options and flexibility you will have when it comes to the final negotiation phase.
Pitfalls You Need to Avoid with Salary Negotiations
When negotiating your starting salary, be aware that you are setting a precedent for future negotiations such as a potential salary raise or stock options that may come up should you stay with the company for an extended period of time. The way you handle the initial starting salary negotiation will go a long way toward setting the table and defining expectations for future negotiations.
It can often be easier to identify tactics and strategies that you should NOT use. From there, you can explore tactics and strategies that can work to your advantage. With that in mind, here are a few tactics and strategies you should avoid.
Avoid making the first move
In most cases, a job offer will come with a specific and detailed compensation package. However, some recruiters or hiring managers might ask you to tell them what you need, what kind of package you are willing to accept. Proceeding in this fashion is almost never to your advantage.
The reason why you want to avoid making the first step is simple.
If the company accepts your demands, you will invariably be left thinking, “That was easy. I should have asked for more.”
If the company doesn’t accept your demands but instead uses them as a basis for a negotiation (which is the more likely scenario) there is nowhere for you to negotiate but down. You will then ultimately be left to accept an inferior offer. You will also jeopardize future negotiations since you are setting the precedent of accepting an offer that is clearly beneath your demands.
In the event that the recruiter or hiring manager asks you for a specific number, it is in your best interest to instead make them take the first step. For example:
“I am looking for a competitive salary, one that recognizes the unique skills and experience I bring to the company, and one that expresses the company’s seriousness and commitment. Please submit a detailed offer and I will give it immediate and serious consideration.”
Avoid Ultimatums
An ultimatum is by definition confrontational. You do not want to enter into a salary negotiation with this kind of mindset. Instead, you and the recruitment agent or hiring manager should view the salary negotiation as a team effort, a collaborative solution-finding process.
Convey to them that you do want to work for the company and that it is within their means, that they have the power to make it happen. From there, it is a mutual problem-solving process. An ultimatum, on the other hand, is one-sided, aggressive, and does not leave room for teamwork.
Avoid fabrication or outright lies
While it is clearly to your advantage to have multiple offers to consider, if that is not the case, do not lie and say that you have received other offers. Besides the blatant unethical nature of lying, by using lies you are putting yourself at risk unnecessarily.
Instead, you can still use other offers as leverage but stick closer to the truth by saying,
“I am going to take my time and find the right fit. With my extensive experience, expertise, and the transferable skills that companies want, I am confident that I will find the right job with the right compensation package. And I sincerely hope that is with you.”
Other instances where you might be tempted to stretch the truth might be:
Are we your top choice?
This may sound like a yes or no question, but it doesn’t need to be. An honest answer could be,
“There are too many factors involved in a decision of this type. I don’t have my options organized in a hierarchy. I am simply looking for the best fit, and that is based on several factors. I do not yet have all the necessary information to answer that question in a definitive way.”
If we made you an offer today, are you in a position to accept it?
This question is too closely related to an ultimatum, so reword it so that it expresses more flexibility. Also, you may have other interviews lined up, other options you want to explore.
Instead of answering yes or no (which may be a lie or may diminish your chances of success), a better answer might be,
“I am hoping you make me an offer that will be too spectacular to turn down.”
Feel free, in this instance, to use Barnum statements (statements that are overly broad or contradictory and can be interpreted in almost any way imaginable). For example,
“I am not in a rush, but I am anxious to get started and I look forward to accepting an offer as soon as possible.”
Honesty might not always be the best policy, but it will ensure you avoid taking unnecessary risks such as getting caught and ruining your chances of getting hired. The truth of the matter is that you don’t need to lie when negotiating your starting salary.
A candidate who lies is a candidate who lacks the intellectual acuity or creativity to make the truth work to their advantage.
Avoid negotiating point by point
It is in your best interest (and also in the best interest of the hiring company) to be as flexible as possible when it comes to negotiating an attractive and reasonable starting salary.
Instead of going through the compensation package point by point, consider it in its totality. Do not, for example, negotiate the base pay and then proceed to negotiate the bonuses. You may not be able to negotiate a higher base pay but you might be able to negotiate a higher bonus or more perks such as travel or continual training.
As long as you don’t close any specific terms of the negotiation (such as base pay, vacation days, etc.) you will keep your options open. You will have greater flexibility to receive a compensation package that suits you and you will help to avoid ugly ultimatums.
The Takeaway
- Salary negotiation is a team effort
- The more flexibility there is in a salary negotiation, the better off both parties will be
- How you negotiate your starting salary will set a precedent for future negotiations
Effective Salary Negotiation Also Takes Into Account Other Forms of Compensation
Your success and happiness with your new job will be based on a number of factors. Money is certainly one of those factors, but it is far from being the only factor. Take some time to reflect on why exactly you want this job and what you are hoping to get out of it (including, but not limited to, the financial compensation).
When you’ve come up with an exhaustive list of what you are hoping to get out of the job, you will have many more points to negotiate. The more points you have to negotiate, the greater the flexibility you will have. This makes everyone a winner.
Depending on your goals and priorities, here are some other factors that you may want to consider including in the negotiation:
The working environment
This includes the office or work from home options.
The staff at your disposal
This includes assistants and team members that will be under your control, the number of them and the budget allotted to them.
Shares, stocks, and material perks
This includes access to the company’s products and services. You may be entitled to a discount (which would be worth negotiating) or you may be entitled to free products and services.
Control over or a say in a department’s budget
This includes the staff and other resources allocated to your department that could potentially make your job easier or more rewarding, and could play a major role in determining your success at your new position.
Control over or a say in the steering of the company
This could be as small as having a vote on what charitable contributions the company makes or something as large as the direction the company is heading in.
Working hours
They might not be able to offer you the salary you want, but perhaps they could reduce your workload or the number of days or hours you’d be required to put in:
- Vacation days
- The specific wording of the job title
- Access to educational or continual training opportunities
The Takeaway
Negotiating your starting salary should be directly connected with negotiating the job description or the job offer itself. You are negotiating the terms that will help to determine your happiness in the company and your success at your new position. Money is an important factor in these outcomes, but it is far from the only factor.
Understand Your Counterpart’s Position
Effective salary negotiation comes from teamwork. It is important that you have a good understanding of the company’s priorities, expectations, and limitations. It would be counter-productive to ask for or expect them to do something that is simply beyond their means or not at all in line with their priorities or concerns.
How much have they budgeted to fill the position?
If the salary range is not listed on the job offer, there are a few other ways you can find out how much the company has budgeted to fill the position. Start by reaching out to HR and asking the hiring manager. You may also want to do some further research such as reaching out to former employees or current employees in similar positions.
How many positions are they trying to fill at the moment?
The company could be in rapid expansion following a change in owner or management or a change in the market. Understanding the scope of the recruitment the company is undertaking could help you empathize with the recruitment agent or hiring manager.
What kind of turnover has the company been experiencing?
The frequency with which employees come and go from the company can go a long way toward informing you about what kind of culture you are getting yourself into. Furthermore, it can provide some insight into what your counterpart is currently going through.
It could be that they don’t have experience filling executive positions or that it is a far too common occurrence. In either case, this type of information could help you to empathize with your counterpart. Furthermore, the fact that you’re asking or that you’ve taken the time and attention to see things from their perspective could go a long way toward ingratiating yourself to the hiring manager.
Your Compensation Must Equate to the Value You Bring to the Company
From the employee’s perspective, often the compensation requested is calculated by the employee’s needs – rent or mortgage, other outstanding debts, plus living expenses, etc.
However, your debts or other financial obligations are of little concern to the employer. While determining how much you should ask for based on a calculation of your financial needs might be a good thing to do for your own peace of mind, it is best you keep that calculation to yourself.
Instead, try to make a calculation based on the value you will bring to the company. This can be expressed in a number of ways (and generally a combination of them).
- Projected increase in sales
- Projected increase in market share
- Projected increase in brand valuation
- Cost savings
Oftentimes, while waiting to fill a position, a company will solicit temp agencies or outsource some of the tasks to a third party. In most cases, this is quite expensive for a company and unsustainable in the long run. However, it can be a good starting point for your calculation.
Since the compensation package you are requesting will be less than the cost of outsourcing the tasks to a variety of third-party agents, you will be able to ask for a high compensation package while being able to demonstrate how it will end up saving the company money over time.
Salary Negotiation Checklist
You are ready to enter into a salary negotiation when you have all of the following:
- An itemized list of what you are expecting to get out of the job (financial compensation, opportunities for growth, etc.).
- Ability to clearly and effectively express the value you will bring to the company.
- A clear understanding of what the job market bears for a similar position with a similar company.
- A clear understanding of the value the company expects to get from the position they are seeking to fill.
- A clear understanding of what the company can afford.
- Enough rapport with the recruiter or hiring manager so that you can enter into the negotiation from a collaborative point of view and not an adversarial point of view.
The Takeaway
There are probably several substitutes for preparation – immense talent, charisma, luck – but none of those are mutually exclusive to preparation. Be prepared. Understand where your negotiation counterpart is coming from, and what their needs and priorities are as well as their limitations.
Make sure you enter into the salary negotiation with a flexible and collaborative frame of mind and not an adversarial one. If you need to walk away, make sure you do so without burning any bridges but rather keep the door and the line of communication open.
More About Executive Job Search
9 Things To Do Right Now To Get Your Executive Job Search on Track
How to Network Into an Executive Job, Even If You Hate Networking
How to Find Remote Work and Do It Well
About the Author: Russell Ridgeway is an American writer based in Budapest, Hungary. He writes in business, tech, and fashion as well as creative fiction. You can reach him by email or on LinkedIn and other social media platforms.
Image by Carlos Esteves