Nine Key Steps on How to Negotiate Salary and Earn More
Knowing how to negotiate salary can be daunting. Instead, it might seem easier to accept whatever offer a job has made, but Ramit Sethi, author of New York Times bestselling finance book I Will Teach You to Be Rich, is here to remind us that salaries often come with a bit of wiggle room and that negotiation is something we should aim for. This excerpt from the book describes nine straightforward steps you can take to leverage professional skills and experience, develop a solid negotiation strategy, and improve chances of a successful salary negotiation.
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The single best time to negotiate salary is when you’re starting a new job. You have the most leverage then, and—with some basic preparation—you can earn $5,000 or $10,000 in a simple ten-minute conversation. Thousands of my students have used my YouTube videos, courses, and the scripts below to increase their salaries. When I coach people on negotiation, I pretend to be the hiring manager and ask the toughest questions they might get. When we’re finished—four to five hours later—they’re exhausted and cranky. But the people I’ve coached end up negotiating, on average, $6,000 more in salary. On my website, we offer a course that includes videos of actual negotiations and word-for-word scripts—but for now, let me give you some of our best material right here. Negotiating is 90 percent about mindset and 10 percent about tactics. Most people don’t believe they should negotiate. They’re afraid of being “rude” or of having the employer rescind their offer. That almost never happens, especially because the company may have already spent up to $5,000 recruiting you. If you negotiate, you explicitly communicate that you value yourself more highly than the average employee. Are you average? If not, why would you settle for an average salary?
The basics of negotiating are very simple:
1. Remember that nobody cares about you.
Most new employees come to the table talking about how much they want to make. To be totally honest, as a hiring manager, I don’t really care what you want to make. Personally, I’d like to be fed octopus ceviche on command. So what? When you’re negotiating, remember this: When it comes to you, your manager cares about two things—how you’re going to make him or her look better, and how you’re going to help the company do well.
Negotiating tactic: Always frame your negotiation requests in a way that shows how the company will benefit. Don’t focus on the amount you’ll cost the company. Instead, illustrate how much value you can provide the company. If your work will help them drive an initiative that will make $1 million for the company, point that out. Tie your work to the company’s strategic goals—and show the boss how you’ll make her look good. Highlight the ways you’ll make your boss’s life easier by being the go-to person she can hand anything to. And remember that your company will make much more off your work than they pay you, so highlight the ways you’ll help your company hit its goals. Your key phrase here is “Let’s find a way to arrive at a fair number that works for both of us.”
2. Have another job offer—and use it.
This is the single most effective thing you can do to increase your salary. When you have another job offer, your potential employers will have a newfound respect for your skills. People like others who are in demand.
Negotiating tactic: Interview with multiple companies at once. Be sure to let each company know when you get another job offer, but don’t reveal the amount of the exact offer—you’re under no obligation to. In the best case, the companies will get into a bidding war and you’ll profit while watching two multinational firms rumble over you. I can think of no better way to spend a casual weekday.
3. Come prepared (99 percent of people don’t).
Don’t just pick a salary out of thin air. First, visit salary.com and payscale.com to get a median amount for the position. Then, if you can, talk to people currently at the company (if you know someone who has recently left, even better—they’ll be more willing to give you the real information) and ask what the salary range really is for the job. Finally—and this is important—bring a plan of how you’ll hit your goals to the negotiating session.
Negotiating tactic: Most of the negotiation happens outside the room. Call your contacts. Figure out the salary amount you’d love, what you can realistically get, and what you’ll settle for. And don’t just ask for money. Literally bring a strategic plan of what you want to do in the position and hand it to your hiring manager. Do you realize how few people come to a negotiation with a plan for their role? This alone could win you $2,000 to $5,000. And, of course, it allows you to negotiate on the value you’re going to bring to the company, not just the amount they’ll pay you.
4. Have a toolbox of negotiating tricks up your sleeve.
Just as in a job interview, you’ll want to have a list of things in your head that you can use to strengthen your negotiation. Think about your strong points and figure out ways you might be able to bring them to the hiring manager’s attention. For example, I often ask, “What qualities make someone do an extraordinary job in this position?” If they say, “The person should be very focused on metrics,” I say, “That’s great that you said that—we’re really on the same page. In fact, when I was at my last company, I launched a product that used an analytical package to . . .”
Negotiating tactic: Have a repertoire of your accomplishments and aptitudes at your fingertips that you can include in your responses to commonly asked questions. These should include the following:
- Stories about successes you’ve had at previous jobs that illustrate your key strengths
- Questions to ask the negotiator if the conversation gets off track(“What do you like most about this job? . . . Oh, really? That’s interesting, because when I was at my last job, I found . . .”)
5. Negotiate for more than money.
Don’t forget to discuss whether or not the company offers a bonus, stock options, flexible commuting, or further education. You can also negotiate vacation and even job title. Note: Startups don’t look very fondly on people negotiating vacations, because it sets a bad tone. But they love negotiating stock options, because top performers always want more, as it aligns them with the company’s goals.
Negotiating tactic: Your line is “Let’s talk about total comp,” which refers to your total compensation—not just salary, but everything. Treat them each as levers: If you pull one up, you can afford to let another fall. Use the levers strategically—for example, by conceding something you don’t really care about—so you can both come to a happy agreement.
6. Be cooperative, not adversarial.
If you’ve gotten to the point of negotiating a salary, the company wants you and you want them. Now you just need to figure out how to make it work. It’s not about you demanding more or them screwing you for less. Negotiation is about finding a cooperative solution to creating a fair package that will work for both of you. So check your attitude: You should be confident, not cocky, and eager to find a deal that benefits you both.
Negotiating tactic: The phrase to use here is “We’re pretty close . . . Now let’s see how we can make this work.”
I’m not joking. This is one of the most effective techniques in negotiation. It’s a disarming technique to break up the tension and demonstrates that you’re a real person. When I was interviewing for college scholarships, I kept getting passed over until I started smiling— and then I started winning a bunch of them.
Negotiating tactic: Smile. Really, do it.
8. Practice negotiating with multiple friends.
This sounds hokey, but it works better than you can imagine. If you practice out loud, you’ll be amazed at how fast you improve. Yet nobody ever does it because it feels “weird.” I guess it also feels “weird” to have an extra $10,000 in your pocket, jackass. For example, one of my friends thought it was too strange to practice negotiating, so when he faced a professional hiring manager, he didn’t have a prayer. Later, he came to me like a clinically depressed Eeyore, whining about how he didn’t negotiate. What could I say? This lack of practice can cost, on average, $5,000 to $10,000.
Negotiating tactic: Call over your toughest, most grizzled friend and have them grill you. Don’t laugh during the role play—treat it like it’s a real negotiation. Better yet, videotape it—you’ll be surprised how much you learn from this. If it sounds ridiculous, think about the benefits of not only the additional money, but the respect you’ll get from your boss for a polished, professional negotiation.
9. If it doesn’t work, save face.
Sometimes the hiring manager simply won’t budge. In that case, you need to be prepared to either walk away or take the job with a salary that’s lower than you wanted. If you do take the job, always give yourself an option to renegotiate down the line—and get it in writing.
Negotiating tactic: Your line here is “I understand you can’t offer me what I’m looking for right now. But let’s assume I do an excellent job over the next six months. Assuming my performance is just extraordinary, I’d like to talk about renegotiating then. I think that’s fair, right?” (Get the hiring manager to agree.) “Great. Let’s put that in writing and we’ll be good to go.”
If you want to learn more about negotiation, I’ve put together a package of in-depth negotiation videos and tips. Check out iwillteachyoutoberich.com/bonus/ for details.
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