One of the best ways to increase your income is through salary negotiations, either when you're first offered the job or during a performance review. It may make you uncomfortable, but it's extremely important. Here's how to get what you want out of a negotiation.
According to a recent study in the Journal of Organizational Behavior, failing to negotiate on an initial job offer could mean missing out on over $600,000 in salary during a typical career.Before you go into the interview, have a minimum salary in mind. Base this on careful research using tools like Salary.com, CareerBliss.com, PayScale.com, and GlassDoor.com. Also take the time to ask friends and colleagues for confidential feedback on what the position you want ought to pay. This information will give you power.
But research isn't enough. Remember that the purpose of a job interview (or performance review) is to sell yourself. If you don't believe you're worth the price you're asking, your employer won't believe it either.
Focus on the value you bring to the company, not what comparable salaries are. When asking for a raise or making a move to another job, note your accomplishments, and attach time and money to them. For instance, you might point out that you automated your employer's TPS Reports, saving 40 work hours a month (or $500 a day). Create a written list of talking points and use this to make your case for a higher salary. Hand the page to the interviewer so that she has the info in front of her.
If you're just starting out—you're a recent university graduate or moving to a new career—you might not have hard numbers to prove your worth. In that case, pitch your enthusiasm and work ethic. At the very least, ask for about ten percent more than what you're offered.
The best guide to salary negotiation I've found is Negotiating Your Salary: How to Make $1000 a Minute. In it, career coach Jack Chapman writes offers five rules for negotiating your salary:
Postpone salary negotiations until you're offered the job. Let your potential employer decide whether you're the right candidate, and then talk about money. The same is true of raises. Discuss a salary increase after you have your performance review. Let the other side make the first offer. As in the Smith-Wenkle Method, your goal is to allow the employer to suggest a salary. Lots of people find it awkward to evade direct questions about salary history. For these folks, Chapman has recorded a short video that explains how to answer questions about salary expectations. (See also Penelope Trunk's advice on discussing salaries.) When you hear the offer, repeat the number—and then stop talking. Chapman calls this "the flinch". "The most likely outcome of this silence is a raise," he says. This technique buys you some time to think while putting pressure on the employer. Often they'll come back with a higher offer. Counter the offer with a researched response. Your counter-offer should be based on what you know about yourself, the market, and the company. This is why it's vital to do some research before the interview so that you know a reasonable salary range for your position. Clinch the deal—then deal some more. Your last step is to lock in the offer, then negotiate additional benefits, such as extra vacation days or a company car. This is like agreeing on the price of a car before you negotiate the value of your trade-in, and it's a great way to get a better
Jack Chapman has an entire website devoted to career management. There you can order his book and view short videos filled with tips and scripts for salary negotiation.
These two methods offer an excellent framework for negotiating your salary, but we all know there's more to the process than simply waiting for the other side to go first. Here are some of the best negotiating tips I've gathered during a decade of writing about money: Be brave. The biggest mistake you can make is to not negotiate at all. Don't make excuses—"The economy is awful", "I'm lucky to have this offer", "I'd rather have a root canal"—and don't fret about being rejected. The courage to negotiate is especially important for women—men are four to eight times more likely to negotiate salary. Most companies are willing to negotiate salary, but most employees never give it a go.
Be prepared. Research a fair salary. Figure out how much you want—but ask for a bit more to leave room for compromise. Practice negotiating your salary. Sit down with someone you trust and role-play the experience. Record yourself so that you can find your flaws. The more you practice, the more you'll feel comfortable during the actual interview.
Be silent. During salary negotiations, it's often best to let the other side do the talking. Using the Chapman Method, when you receive an offer – no matter what it is – follow the offer with "the flinch", a long period of silence. In You Can Negotiate Anything, Herb Cohen writes," Oddly enough, silence, which is probably easier to carry out, can be just as effective as tears, anger, and aggression." Silence is golden.
Be persistent. In many cases, the employer will reject your first request for a higher offer. Don't let this deter you. Push back gently, justifying your proposed salary. Explain how the company will benefit from the investment.
Be patient.The deeper you get in the process, the more committed the company is to hiring you. Do not mention your current income or your salary expectation—not even on the job application. If you do, you provide an anchor for the negotiation, and that can only hurt you. Wait for the employer to make the first mention of money.
Be flexible. If the company won't budge on salary, negotiate other compensation. Ask for things like an extra week of vacation, a private office, or a flexible schedule. (Maybe you can work four ten-hour days instead of driving to the office five days a week!) Other possible perks include transit passes, educational reimbursement, better health insurance, performance bonuses, or permission to bring your dog to work.