Salary Negotiation 101

Most people have a mental image of negotiation: two people on opposite sides of the table, staring each other down with steely eye contact until someone blinks, caves., caves, and “loses” the negotiation.

But when it comes to salary negotiations, this couldn’t be further from the truth. Remember: at the end of the day, both sides share the same goal… and that’s to end up working together as teammates and colleagues!

The person you’re negotiating with is not out to get you: they arere out to hire you (or retain you when you’re negotiating a raise), and you should approach the whole conversation like a joint problem-solving exercise where the point is to overcome the barriers (i.e., money) that are getting in the way of being able to work together effectively.

When you are applying for a new job, you honestly have no idea how much you are worth to the company – so you gain absolutely nothing by telling them how much you are hoping to make.

Recruiters and hiring managers will often try and pin you down on this point by asking something like “what are your salary requirements / expectations?” (Or, even though it is illegal in many jurisdictions, some may ask what you’re making currently.) DO NOT ANSWER THIS QUESTION! It can ONLY hurt you – your best bet is to politely weasel out of answering (see below for advice on preparing for this & other “toughest questions”).

But! When you are asking for a raise, remember that both sides already know how much you make, and your employer is almost always going to lowball you (even for a promotion). With inflation at 8%, anything under that figure is effectively a pay cut – so your best bet is to open with something more substantial, like 10% or more, and force them to justify why you should be paid less than you were last year after adjusting for the cost of living going up.

Finally: never give a range. The hiring manager will only hear the bottom number and 9 times out of 10 – (surprise!) That’s exactly what they had in mind to pay you, and often far less than you’re truly worth.

Numbers have a funny way of sticking in your head. If I tell you I paid $8 for a sandwich, you’re going to think it’s a scam if someone tries to sell you the same sandwich for $15. But if I told you I paid $20, $15 will feel like a deal!

The same goes for salary negotiations. Before you even begin talking pay, do yourself a favor and write down three numbers: how much you WISH this job paid (within reason), how much you realistically WANT to get paid for this job, and the number at which you would turn down the offer and WALK AWAY.

Then, once the negotiations get going you’ll be able to refer back to these numbers and know when it’s time to say no, when you’re getting close, and when your answer should be an enthusiastic “yes” to their offer!

As a job candidate, you have no idea what is cheap for the company to give away. Maybe their cash flow is really tight right now, and it’ll be hard for them to come up a lot on your biweekly paychecks – but by the end of the year a big customer will have paid their invoice and they can more than make it up to you with a bonus.

That’s why, so long as you can pay the bills every month, you are best served by being as flexible as possible on how your overall compensation package is structured. There are lots of potential ways to get value out of your job – among them:

Oftentimes, signing bonus and promotion cycles are the areas where companies will have the most flexibility – even when the base pay is fixed for your title/level, it always makes sense to ask about other elements like this if you want to increase your overall pay package by as much as possible.

So many people will spend all their time worrying about their negotiation, staying up late at night just fretting over what might happen. Don’t do this – it can’t help, and at worst it can mean you show up exhausted, overly anxious and bomb your interview or negotiation conversation.

Instead, spend your time preparing great answers for the toughest questions they might ask you. Best case scenario they never ask – but at minimum you will have a rock-solid answer to give when they do. Some examples include:

Situational awareness is key in any high-stakes situation, but when it comes to negotiation having imbalanced information can put you at a huge disadvantage. HR departments pay thousands of dollars for the latest salary data, but thanks to modern platforms like Glassdoor, Salary.com, Levels.FYI and more, individuals now have the tools to fight back and come armed with great market data on compensation.

In some cases, you may even be able to find data by looking at similar job postings in jurisdictions like New York and California that are increasingly mandating that companies post pay ranges on job descriptions. Short of that, a solid bet is always to just ask around: talk to friends at similar companies, or even reach out to recruiters in your industry for informational conversations about what’s being offered elsewhere.

The more you can come prepared with market data for similar roles and competitors, the better your chances of knowing when to ask for more – and when to say yes.

Information on market rates can be important, but knowledge alone isn’t power – imagine if confidently telling a recruiter that their pay is below average, and having them tell you that you may be right but they still cannot go any higher. What do you do then?

Well, the answer to that question is going to depend entirely on your backup plan. In a negotiation, having a great “walkaway option” is your #1 source of leverage: the happier you would be even if the deal doesn’t work out, the stronger your position at the bargaining table.

Of course, the same is true in reverse: if you hear during interviews that the company is short-staffed or that they’ve been interviewing for months to try and fill the role, you know their alternative to hiring you is pretty rough too. And the tighter the labor market as a whole, the more likely it is that potential employers will be desperate to hire you.

So naturally, the #1 thing you can do to increase your odds of walking away from the negotiation with a GREAT outcome is to come prepared with a competing offer in hand. Who doesn’t love a bidding war for your talents? Even when you don’t have a firm written offer, even just mentioning interest from other recruiters or companies can be a strong signal that your skillset is in high demand.

But how do you use this leverage effectively? You don’t want to make it seem like the company has zero chance of attracting you, or they won’t bother spending the time, effort, and internal political capital to increase your offer. Instead, play hard to get: flirtatious, not easy. You’re interested in them and they’re interested in you, but how can you possibly justify it to yourself (and your loved ones) if you turn down potentially thousands of dollars just to come work for your 1st choice company?

You will want to approach this again like you are on the same side of the table, and ask something like: “I’m really torn, because I’d love to find a way to say yes to your offer but it’s hard to justify accepting a lower paycheck just because I’m excited about the team. How can we make this decision easier for me?”

The more conflicted you are – and the more that comes across for the recrutier – the better your odds of maximizing your payday.

If there’s one crucial lesson to take away from this blog post, it’s this: companies don’t negotiate. People do.

The person on the other side of the table is just that: a person. They showed up for work today with their own personal life issues, professional priorities, and with constraints imposed on them by HR, their own boss or the budget/market. And who they are matters a lot: it’s a big difference if this person is from HR (who might get in trouble if they lose out on a top candidate over a few thousand bucks) or if the person you’re dealing with will be your future boss (who really, really wants you on their team but not if you’re going to be an asshole to deal with).

The more you can empathize with your negotiation counterpart, work to understand their interests and align what you’re saying to what matters most to them, and – if possible – talk to other people at the company (friends, people you interviewed with, etc.) to advocate on your behalf, the better your odds of reaching a great deal.

And remember, above all: tell the story behind your proposal. Never let numbers sit in a vacuum – put your arguments down in an email, frame up your ask in win/win terms, and make sure that every word out of your mouth reminds them that you’re on the same team, and that you both have the same goal: to work together!