In this article, I will be discussing how to negotiate salary. I will cover all the tips with specific examples that you can implement right away.
You made an excellent resume and wrote an exceptional email to your hiring manager, who got you an interview and nailed the interview.
But there’s one final step remaining to crack the job.
The salary negotiation.
I know that negotiations can be difficult. I used to get butterflies in my stomach at the very thought of negotiation. It was an activity I wanted to get done with as quickly as possible to move on with my life. As a result, I failed many negotiations and settled for whatever was given to me. And I learnt the hard way that negotiation is one of the most essential skills to catapult your career and income.
I was determined to make a change. And that’s when I stumbled upon ‘Never Split The Difference’ co-authored by FBI negotiator Chris Voss and Tahl Raz, one of the best books out there on negotiation, and it also happens to be one of my favourite books.
I quickly got to implementing some of the methods mentioned in the book. Many trials and errors later, I have realised that there’s a strategy to negotiate salary. And it works! I was able to 4X my salary using the system.
In this article, I will share a blueprint to help you negotiate salaries. After reading this article, you will have a set of specific action items to help you successfully negotiate your salary.
How to negotiate salary: pre-negotiation
Before you walk into any negotiation, you should do everything in your power to make yourself believe that you have nothing to lose. Confidence in yourself is the key to a successful negotiation. This might sound vague. But there are concrete, actionable steps you can take to ensure your confidence. And I am going to delve into them in the following sections.
What is a successful salary negotiation?
Successful salary negotiation is a discussion where both parties walk out feeling like they have got what they wanted. Your hiring manager should feel like he got the best person for the job, and you believe that you are fairly compensated for what you are worth. It is a win-win situation and not a zero-sum game. Therefore, you have to be willing to listen, and your empathy radar has to be on high alert. You have got to pay attention to the desires and needs of the other party.
According to a 2021 survey by Capital One CreditWise, 73% of Americas ranked finances as the most significant source of stress in their life. It is only natural to feel anxious about your finances. Unfortunately, our education system does not teach us personal finance (high time they start doing this!). It is a journey you have to embark on on your own. What’s even worse is that nobody will talk about their finances. So good advice containing actionable insights is hard to come by. But you must work on managing this stress through financial literacy. Because walking into a negotiation feeling stressed is a recipe for disaster.
Ensure that you have an emergency fund that is kept liquid. The emergency fund should be enough to cover your basic needs for 3-6 months. I like to ensure that I have six months of my most basic expenditure in liquid assets. An emergency fund will give you the mental space to find the job you desire. Here’s a great article by Ramit Sethi on how to think about emergency funds and automate them.
People often ask me what the best time to apply for a new job is?
The day you start your new job is when you begin searching for other opportunities because this is the time when your confidence is riding high. I am not asking you to make job hunting your primary endeavour. But set alerts for any new job that piques your interest. And write emails to hiring managers from time to time. Remember, it is better to be proactive than reactive.
Moreover, if you walk into a negotiation with a job or an offer letter in hand, you have nothing to lose. You can also anchor your salary negotiation around your current offers, which is a great tool to secure a healthy hike.
‘Salary pays your bills but does not advance your career’
These are words of gold by Chris Voss. He suggests considering salary as the third item on your list when you walk into the negotiation. So what are the first two items on the list?
- Think and ask your boss about how you can be involved in projects that are critical to the company’s strategic future. Most of the discussion must revolve around this topic.
- How can you advance everybody’s welfare and get promoted in the future? In simple words, what is my career path in the company?
- And finally, close the discussion with the salary negotiation.
Defining your objectives
Now that your mindset is sorted, it is time to work on your objectives.
Most job descriptions these days do not mention a salary range. So it would be best to use a tool like glassdoor.com to find the salary range specific to your role in the location of concern. Or you can just use a simple google search.
What are the other perks listed in the job description? Are there perks that you would like? Here’s an exhaustive list of extras that you might want to consider. I prefer paid time off, a budget for online courses and ensuring severance pay in my contract. Hold perks close to your chest till you arrive at the dollar amount. I will tell you more about this later in this article.
Who sets the reference point?
If the job description mentions salary range, the work is half done. It is possible but difficult to negotiate a figure above that range. If you nail down the principles and steps mentioned in this article, you might stand a chance to do even higher.
However, the job description does not mention any salary range in most cases. In that case, you have to decide who sets the reference point. Anchoring is the most prevalent cognitive bias in negotiation, and it is the tendency to give too much weight to the first number put on the table. I like making the first move with an extreme anchor when I know the upper limit. If I am unsure about the extreme anchor, I let the other party set the reference point.
This section will discuss several tactics you can use interchangeably during the negotiation.
It is natural to feel anxious and stressed out right before a negotiation, and this is the fight or flight response triggered by the amygdala in the brain. It is easy to forget everything you read in this article and your preparation when stressed. And like I mentioned earlier, stress of any kind would set you up for failure, and that is why it is essential to relax. Practice the physiological sigh when you are stressed, which involves two inhales followed by an extended exhale. Here’s a short video by Andrew Huberman explaining the science and mechanism of the physiological sigh:
During the first part of the interview, you mirror your interviewer and connect with them. Mirroring is a potent tool. Combine mirroring with a pleasant and playful voice during the first half of the interview where you discuss points 1 & 2 that I mentioned in the section ‘Change the conversion to company’s and team’s welfare’ discussed below. The most effortless mechanism to mirror somebody is repeating the last one to three words spoken by them. This might seem odd, but it works. Here’s another video by the master negotiator, Chris Voss, explaining this simple tool and how you can start using it right away:
Labelling your interviewer’s emotions/thoughts is another simple yet ridiculously potent tool to show that you care. It will help you become instantly likeable in any conversation. Moreover, asking questions might not always get you the best information. For example, instead of asking ‘What are your concerns?’ you should say ‘It seems like you are giving it a lot of thought’ and pause. In the following video, Chris Voss explains how to label effectively:
Here are some simple templates to help you label your interviewer’s emotions:
- ‘It feels like…’
- ‘It seems like…’
- ‘It looks like…’
Change the conversion to the company’s and team’s welfare.
While maintaining the playful voice, you continue to speak about the company’s and team’s welfare. Make salary the third item on your agenda during the negotiation. Instead, focus the conversation mainly around the other two things in the list mentioned in the pre-negotiation section, i.e.,
- How can I contribute to the strategic progress of the company and
- How can I contribute to making your life easier, and how will it help my career path?
The actual negotiation
Latenight DJ Voice
After spending a good chunk of time on the two critical questions, it is time to move on to the actual salary negotiation. This is when you switch from a playful tone to a midnight DJ voice, and Chris Voss describes it as a slow and heavy voice that will help you take control of the conversation.
Never accept the first offer.
If the other party sets a reference point, then never accept the first offer given to you. But also be mindful of declining politely. You can use the following template to reject the first offer:
- ‘I am sorry, but I can’t do that.’
- ‘How am I supposed to do that? My expenses will be 150% of my salary.’
- Simple label the amount inquisitively and pause- ‘45K?’
After you decline, wait for the other party to give their explanation. After which they will ask you what you had in mind. And that’s when you use an extreme anchor.
An extreme anchor is a double-edged sword. So start your extreme anchor ideally at the ceiling of average salaries for that role in a given area. For example, a simple google search as shown in the Salary range section above tells me that the ceiling for growth marketers in Philadelphia is $103,411. Therefore, I would place my extreme anchor around this number as this can easily be justified if asked why you gave that number. If you are an exceptional candidate, your hiring manager might accept the counter. However, there is a chance that they might decline this offer. In that case, you move on to the tips mentioned in the next section.
Final precise offer along with perks
Suppose they decline the extreme anchor proposed by you. Then respond by asking them for some time to think. Then pause, think and give a precise number. For example, if your extreme anchor of $ 105K was declined. Then wait for twenty to thirty seconds and seem like you are deep in thought calculating an acceptable figure. After that, give a precise number that does not end with zeroes. You could say that the best I can do is $ 96755. An exact number like this would seem non-negotiable. If they accept this, then well and good. If not, you mention all the perks that you are looking for. Mention severance pays, personal development, paid vacations and everything you would like to be mentioned in the contract.
Starting the negotiation
- ‘Before getting to the salary, I would like to discuss how I can contribute to the company’s strategic progress.’
- ‘How can I contribute to making your life easier, and how will it help my career path?’
- ‘It feels like you are giving it a lot of thought.’ [Wait]
- Repeat the last 1-3 words spoken by the other party back to them
If you are setting a reference point
- ‘My research tells me that growth marketers are paid $X, and that’s what I am looking at.’
How to decline the reference point set by the other party
- ‘I am sorry, but I can’t do that.’
If you have an existing offer that’s higher than their offer
- ‘I currently have an offer on the table for $[insert value]. But I see myself aligning with your vision better, and I am keen on working with you. I was looking for $[insert extreme anchor].’
Setting extreme anchor
- ‘My research tells me that growth marketers are paid $X, and that’s what I am looking at’ (Same as if you are setting the reference point)
Final precise offer
- ‘The best I can do is $ 96755 with a quarterly budget of $1000 towards online courses that will help me contribute more towards the company’ [You can also mention other perks here]
That’s all, folks. I hope you found this article useful to help you with the pertinent question ‘how to negotiate salary’, and I will be writing more such articles on how to secure your dream job.