Salary Negotiations in 3 Easy Steps

Congratulations. You received an offer from one of your target companies! You aced the interviews, the chemistry between you and your soon-to-be boss is solid, and you are passionate about the company’s products and services. Now take a deep breath and pat yourself on the back. It has probably taken you a few months to reach this point in your job search – savor the moment!

Ok, time’s up!

Now it’s time to negotiate a compensation package that is competitive, meets your financial needs, and falls within the company’s budget. And you thought the hard part was over! Salary negotiation is difficult, but once mastered, will take your earning power to new heights. Here are the first 3 steps to increase the likelihood of securing a competitive salary.

Step 1 – Research and spend time gathering comparable numbers. Think of salary negotiation like buying a house – you wouldn’t make an offer unless you knew what similar houses in the same area were selling for. Your salary is no different. Ideal sources include other open positions, colleagues who are in a comparable role, compensation consultants and recruiters.

Sometimes it can be difficult to get an “apples to apples” comparison since the composition may be different from company to company. As an example, we have a client that is offering a base salary that is 20% below market, however their bonus structure is 30% above market. The key is to consider the entire package, and then break out each piece (base, bonus, equity, benefits, car, commute, on-site perks, expense account, etc.). If possible, also connect with current or former employees of your new employer to learn more about the company’s negotiation practices. Some companies extend an offer at the high end of their internal range, making it clear that they are unable to negotiate. Conversely, other businesses prefer going the “low-ball” route, expecting the candidate to negotiate a higher package.

Step 2 – Calculate your “3 Numbers” – your dream number, your walk-away number and your comfort number. In other words, know exactly what would compel you to accept the job on the spot. At the other end of the spectrum, what number would be so insulting or ridiculous that it would drive you to walk away without ever looking back! This walk-away number is equally important post-negotiation, as you work to develop a compromise offer. If they are not willing or able to accommodate your financial needs, then they may not appreciate your value and the position probably isn’t a good fit for you.

Hopefully, you’ve discussed some ballpark numbers during the interviewing process to eliminate any surprises, but it’s important to be prepared for anything. It is also during this step that you want to weigh the pros and cons of the position. Consider everything including, your daily commute, the people you would be working with, your potential boss, the business model, and the opportunity for advancement. If you don’t do it now when the level of emotion is low, it will be very difficult to do it after the offer it made. Money changes things and you don’t want to deviate from your “ideal job criteria.”

Step 3 – Don’t make the first move. If you’re asked to provide a target salary, offer a range rather than a specific figure. Do not state your salary goal while other candidates are still being considered. Ideally, the company will make the initial salary offer so you can negotiate in confidence knowing they want you on board.

Generally speaking, the company will allow 10%-20% of “wiggle room” depending on the candidate’s specific qualifications and the level of the position. This is especially true for sales, marketing and general management positions that will directly affect the top and bottom line. In fact, most employers expect to negotiate salaries for these types of positions. As a result, you’re final salary will likely wind up somewhere between your counter and the company’s original offer.

Remember, you must maintain a positive attitude throughout the salary negotiation process. Continue to demonstrate your excitement and enthusiasm for the position even if things don’t go exactly as you planned. After all, assuming you come to an agreement, you will be working alongside the very same people you negotiated with. It’s important that you start out on the right foot.

In Part II, we will talk about the art of dialoguing, sticking to your decision and keeping the door open at all times.

Contact Ken C. Schmitt at [email protected] for additional insights