Salary Negotiation: Part 1 - New job salary negotiation
Published 1 January 2025
This article presents salary negotiation as it relates to a new job. The salary negotiation on a current job is a different process and will be covered in a separate blog post.
One of the experiences that always gives us jitters is the salary negotiation, especially early in the career. Do you agree?
Let's answer these questions:
How many times have you walked away from a salary negotiation feeling happy and satisfied?
Did you (Will I) get what you (I) wanted or deserved?
These questions and feelings always come to mind when we are in a salary negotiation or after the deal is done. The answers to these questions are relative. It depends on several factors, some of them are beyond just the salary.
The next set of questions:
How often are you nervous or anxious going into a salary negotiation?
This happens because you might lack confidence or you feel the uncertainty. You have to negate these emotions. Some of the common concerns or worries seem irrelevant if you know how the thought process of a hiring manager or the organization.
For example,
(1) You might worry that they will have a bad opinion of you if you negotiate hard. It is probably the opposite. It might affect you adversely if you do not negotiate. The hiring manager probably looks for leaders who have courage to ask for what is justified,
(2) You might worry that they will reject or not accommodate. If they do, you don’t lose anything. On the brighter side, in the process maybe you can get something out of the list of things you ask for.
Now let's first talk about the difference between a job interview (which is one type of negotiation) and the salary/pay negotiation. These are often considered and confused to be the same. They might be closely related but they are vastly different with different processes and approaches to be followed. In a job interview, the objectives are clear. Interviewer has an open position that they intend to fill and the interviewee is looking for a position that suits their profile. They start the "negotiation" for the job position. The interviewee presents all value they can bring to the organization in order to help them qualify for the role and get the job. In the process, they have to follow an interesting and intensive negotiation process. This article is not to provide details of this type of negotiation. That is an area to cover separately.
In this article we are discussing the next and important step after the job negotiation, i.e., the salary or compensation negotiation. Make a great impression in the job interview, and you will help yourself to a better position in the salary negotiation.
Salary negotiation for a new job
One important point to remember is that if you are already in a salary/pay negotiation, you're close to the final deal already. The job interview process is a long and hectic process for all interviewers, and they are ready to pick the right candidate and close the deal. You are among the chosen few that made it to the end. They don’t give an offer to more than one candidate. So if you got an offer, you should already be happy to get this far.
In a salary negotiation you need to know specific aspects and follow a particular approach that helps you get the best possible pay according to your profile and the circumstances. There are some attributes that are also important to bear in mind as these can sweeten the deal. Note that the below mentioned provide a playbook to work with but some aspects could vary based on your specific circumstances. A coach can help you break down the situational aspects into meaningful insights.
Salary negotiation is not only about the base salary; it comprises several aspects. Some of these might be easy for the organization to give. Let's understand this further.
Your compensation package includes aspects such as the base pay, equity, bonus, sign on bonus, retention bonus (if applicable), tuition reimbursement, relocation, housing allowance, house sale and purchase assistance, etc. You could be creative with these solutions. Preparation will help you here. Cash compensation is extremely important but do not underestimate the value the non-cash components could bring to you. Negotiate for a bit more of the non-cash components if they are absolutely not budging on the cash component. Of course, it depends whether you have other offers that give you a better cash component. But, do factor the non-cash component in your decision-making.
Do your research. If the company is in a good space and the future potential is strong, a bit of concession in the base pay now might lead to strong financial gains in the future. I have known several people who got equity/stock and became millionaires from the equity. Be aware of the circumstances and make a sound decision.
Know your interests and circumstances: At the time of salary negotiation, you should be fully aware of your interests and circumstances. If you're a new graduate, your salary expectation and negotiation will not be driven by your job experience but will be highly dependent on the school activities/leadership roles, extracurricular etc. that you hold or have pursued. If you are currently out of job, you will find it harder to negotiate a high pay unless you have pursued significant activities or attended important courses. Also, some other interests might be more important to you. For ex. If the company helps you relocate to another location, the overall salary plus relocation benefits might become an important consideration.
Note: Your current salary is not always the benchmark for the next salary. Remember this! If you have been in a job at a company for 10 years, your salary increase within the company might not accurately represent your worth in the market. This is because the increments in salary while you are in a company are generally slower than the market changes. So always understand what the market rate is at the level you are applying to before coming up with your range.
Ask for their interests also. What would it take to get a higher pay? Maybe an additional project or added responsibilities? What are the reasons they state not to offer you a higher salary? Can you get some clues when you listen to their explanations?
Prepare to the best of your ability: When you make a presentation, you prepare well and arm yourself with information and data to support your presentation. Negotiations are the same. As with any negotiation, in a salary negotiation you need to prepare in the best possible manner. Lay out your salary number based on your ability and market profile based on your preparation. Some of the best possible ways and sources to prepare yourself:
talk to your mentors and to other people in the industry
talk to other people/friends in the organization. They could provide you with great info.
talk to HR contacts in the industry
get data from reliable sources on pay ranges
talk to experienced negotiators
Alternatives: One important point in salary negotiation is the alternatives or back-up options you have. Having an alternative or option gives you the courage and confidence to negotiate stronger. Further, having an option also provides you the opportunity to anchor better. So feel free to refer to and quote the alternatives/options you have.
Anchoring strongly: If you have prepared well, you will be able to counter an offer with a strong anchor from your side or you could go ahead and anchor first. Just be careful that any amount you put first needs to be justified. The other party might ask you how you came up with the anchor. Always have a range in mind. The range could be your minimum expected salary to the minimum plus 15-20%.
Know your style: There are five different, distinct styles. Know what is your style. Avoid letting your style come in the way of effective negotiation. For ex. A person of Accommodative style always provides concessions to the other person, sometimes even before getting a response back. In this article, I cannot explain styles in detail. Reach out to me for more info.
Have courage to ask! One of the most common concerns people have is that they cannot muster the courage to ask. Do you know that early in the career, most people are just given an offer letter and they accept it. Negotiating the offer doesn’t come to mind. Eliminate the fear. Remember, you have nothing to lose. Most of the time, you negotiate with the recruiting team but the budget belongs to the hiring managers. So the final say is not with the recruiting team.
Talking about psychology, the recruiter might use some psychological persuading techniques. They might try to push you into a quick decision or mention certain time challenges. Be aware! Don’t be influenced by those techniques easily. Taking some time to make an informed decision is a fair ask and accepted by the other party.
Anuj is an experienced finance professional and an established negotiation trainer and coach. Over his career of 28+ years, he has been on both sides of the table in salary negotiations multiple times. He assists his friends, contacts and others with salary negotiations and has also coached people on salary negotiations. Reach out to Anuj Jagannathan at anuj@propelurs.com or +91 6380060041 if you want to know more. Check out his LinkedIn profile.
Copyright © Anuj Jagannathan
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