You could earn an additional $600,000 by engaging in one business practice: negotiating.
A study published in the Journal of Organizational Behavior found that new hires who chose to negotiate salary gained an average of $5,000, which, over the course of a career, could mean earning an additional $600,000+.
For professionals at all levels, salary negotiation often elicits panic and discomfort. Several factors are often at play, including the fear of being disliked, the fear of rejection and a lack of self-confidence. But when you don’t negotiate, you’re likely leaving money — often a significant amount of money — on the table.
The best time to negotiate salary
The most effective time to negotiate salary is after you’ve been offered a new job, but before you officially accept it. You’ve impressed HR and the hiring manager and they want to hire you — they don’t want to keep interviewing. This is the point at which you have the greatest negotiating power.
The second best time to negotiate is during a performance review, particularly after a period in which you performed exceptionally well, or at the close of a very successful project. Can’t wait until then? Keep in mind your company’s fiscal calendar: The beginning of a new fiscal year brings a fresh budget to spend, so your best bet is to approach your boss a month or two before that point.
Also, when deciding when to approach your manager, keep in mind that it’s not as much about how long you’ve worked at the company or held your current position; it’s more about the number of “wins” you’ve achieved and the impact of your contributions.
Whether you’re interviewing for a new job or seeking a raise from your current employer, here are the top 10 mistakes to avoid when you negotiate salary.
- You undervalue your work. So many of us rationalize why we shouldn’t ask for more money — we haven’t been in our position for that long, or the rest of our team hasn’t gotten raises this year — but have you taken the time to compare your salary to that of others in your industry and position? Do your homework by consulting websites like Salary.com, PayScale.com, Glassdoor.com and O*Net and annual publications such as The Creative Group’s 2017 Salary Guide (for creative, marketing, advertising and PR professionals). This information can help significantly strengthen your case for an increase.
- You only prepare on paper. While it’s essential to create a list of your accomplishments, including any metrics that illustrate their impact, it’s just as important to prepare psychologically. In front of a mirror or with a friend, practice what you will say out loud, as well as how you will respond to potential pushback. This will help soothe your jitters and desensitize yourself physiologically.
- You worry that you’ll offend your employer. If you think you deserve a higher salary, you have evidence to support it, and you present your request in a respectful way, it’s extremely unlikely that your employer will hold a grudge against you for trying to negotiate salary or that a company will rescind your job offer.
- You don’t set the foundation for an effective request. Before entering into the conversation, keep these three points in mind in order to make the most effective request: 1) Don’t start the discussion when you’re feeling anxious or fearful; enter into it with a mood of possibility and positivity. 2) Use deep diaphragmatic breathing right before addressing the topic with your employer; this is the fastest way to reduce anxiety. 3) Do your best to ensure that you have a committed listener. Begin the conversation at a time when you will have your boss’s attention, not when you’re passing each other in the hall. Consider scheduling a meeting, and if your employer asks what you would like to talk about, be honest.
- You start the conversation focused on your needs. Your manager doesn’t care that you want to make more money so you can buy a car or take a trip — and she shouldn’t. Make your case based on your work, not your financial situation. Instead of jumping straight to what you’re seeking from your employer, start by reviewing what you have accomplished and the additional responsibilities you plan to take on (or, for a new job, the value and skills you will bring to the company). Then, while maintaining eye contact, state your target salary: “Based on these contributions, I need and deserve [amount].” Be sure to set a hard number, never a range, because your employer will, of course, want to stay as close as possible to the bottom of the range.
- You don’t make a powerful request. Pay close attention to the words you use — do not undercut your achievements and weaken your request with phrases like “Is it OK with you …,” “I’d like to ask for …” or “Would it be possible …” Use clear but respectful language.
- You ask for exactly how much you want. When it comes to numbers, where you start determines, in large part, where you end up. Your employer will naturally try to negotiate down, so ask for a figure that’s higher than your target salary. And if you’re someone who fears being disliked or rejected, chances are you’re undervaluing your work, so start with a number that makes you a little uncomfortable.
- You talk your way out of a “yes.” Silence is an incredibly effective negotiating tool. After you’ve stated what you need from your employer, don’t say another word. Often, the words that would follow sound something like: “I know I haven’t worked on the project as long as John” or “I know I already got a cost-of-living increase 6 months ago.” Don’t present your employer with ammunition for a “no.” As uncomfortable as it may feel to sit in silence, hold out until the other person responds.
- You stop at “no.” No matter how well-deserved a higher salary may be, there is a distinct possibility that your employer will say “no.” But that doesn’t have to be the end of the conversation. Ask if you can revisit the discussion in 3-6 months and whether there is anything you can do during that time to strengthen your case for a raise. Also, before the meeting, give some thought to the non-monetary compensation you’d accept as a compromise, such as a more flexible schedule, work-from-home privileges, additional vacation time, or reimbursement for education or conferences.
- You make demands or threats. A negotiation is not a debate, even though it might feel like it is. Arguing will get you nowhere; instead, keep your request as simple and focused as possible and, above all else, remain calm. This conversation is not about winning; rather, it’s about finding a solution that’s mutually beneficial to both you and your employer. You should absolutely ask for what you want and deserve, but don’t present it as a demand and don’t lead your boss to believe that you won’t work at your full potential unless your compensation is increased.
In the end, the biggest mistake you can make is choosing not to negotiate in the first place. Most employers expect you to negotiate and some even view those candidates who do as high performers. Keep in mind that the ability to make big requests often earns the respect of others.
Take an honest look at the quality of your work and the impact of your contributions. If you truly feel that your salary doesn’t reflect the value of your work, don’t let fear keep you from asking for what you deserve.
How one client doubled his salary
A client of mine was making $60,000 a year working as an IT project manager. He had the skills, experience and drive to make much more, but he undervalued his work and lacked the confidence to ask for a higher salary. When he started interviewing for new jobs, we talked about what other professionals with his experience were making and took a long look at the quality of his work and the market to determine a target salary.
In an interview, he mustered up the courage to ask for double his current salary. It wasn’t easy for him to make such a big ask, but coaching helped him prepare and believe in his worth. Not only did he get the job, he also got his target salary: $120,000. This is just one example of the power of negotiation and how tapping into self-confidence can help you get the compensation you deserve.