If the thought of negotiating your salary makes you break out in a sweat, you’re not alone. According to a survey by compensation software company PayScale, only 43 percent of respondents asked for a raise in their current field.
Salary negotiations can be scary. Even the most seasoned professional can blanch at the idea of marching in and demanding more money from their boss. However, there will come a time when your current compensation does not reflect the value of your work.
When the time comes, it’s important to do your research before asking for more money.
Not asking for a raise can cost you dearly. Your current compensation level sets the tone not just for how much you get paid today but also for your future compensation. Learning how to negotiate for a raise successfully will help increase your lifetime earnings.
The survey by PayScale also found that the higher your compensation, the more likely you are to ask for - and receive - a salary increase. Therefore, it’s important to do your due diligence before making the ask.
Here are some tips to get you started.
When it comes to negotiating your salary with your boss, one of the most important rules is to come prepared. There is nothing worse than asking for a meeting with your boss, only to come in with little research and a long list of wants.
Ready to negotiate your salary? Here’s how to do it the right way and increase your chance of success.
Before you even think about walking into your manager’s office to ask for a raise, you need to know the current market rate. Go to sites such as PayScale.com and Glassdoor.com and do some preliminary research on salaries for your position and in your part of the country.
You can also ask others in your field for feedback to get an idea of the going rate. Since most people shy away from discussing their own compensation, frame the question differently. Try asking, “What would you expect the salary to be for X job in X size company?”
At the end of your research, you should have a good range that represents your market value. While you may be more comfortable going with something in the middle, don’t.
It’s very likely that your employer will negotiate down from that figure. You want to start with a high number to allow wiggle room for negotiation. That way, you are more likely to end up with a salary increase closer to the middle of the range.
Most people end up throwing out round numbers for ease of negotiation. For example, they may ask for a salary of $70,000 since it’s a nice, whole number. In his book Never Split the Difference former FBI negotiator Chris Voss makes a case against this practice.
In his experience negotiating with terrorists, the more exact the number, the better position you are in for getting a final offer close to it. Why? Your boss will assume you’ve done extensive research into the market value for your position to reach this specific salary number.
Instead of setting up a meeting with your boss out of the blue to ask for a pay raise, it may be a good idea to set the scene. Three to four months before you plan to talk about it, start dropping hints about an increase in pay.
Ask for more work and do a great job on every project. Show your manager you’re responsible and can be trusted with added responsibilities. When you ask for a raise a few months later, you will have a much better chance of getting in.
Even if you do everything right but pick the wrong day and time for the meeting, you stand a poor chance of getting a pay increase. If your boss is buried under a big project, or the company just announced a huge loss, bide your time and wait to ask for more money.
Try to schedule a meeting when the waters are mostly calm. Pick a time when you know your manager is not on a deadline and won’t be stressed out about a million other things. This will greatly increase your chance of success.
Switching positions or taking on more responsibility in your company are great opportunities for increasing your pay. Keep an eye out for new job postings that may fit your skills and use this as leverage to negotiate higher pay.
Many people know exactly what to say until they’re in the meeting. Sitting down across from their boss can make even the most seasoned worker tongue-tied. The solution? Practice your pitch until you have it down.
This doesn’t mean memorizing and parroting a speech. Instead, write a few high points you want to emphasize to your manager during the meeting. Use them to practice your pitch and show to your manager why you deserve a raise.
Don’t walk into the meeting empty-handed. Prepare a one-pager that highlights your contributions to the company over the last few years.
Be as specific as possible. Rather than saying, “Increased sales for the Southwest region,” go with “Increased sales for the Southwest region by 25 percent by decreasing response time to customer complaints.”
Showing how you helped the company’s bottom line increases your value as an employee and your odds of getting a raise.
Before walking in to that meeting with your boss, make sure you feel both physically and mentally ready. Put on an outfit that makes you feel confident. Get coffee, hit the bathroom, grab your notes, and so on.
When you walk in the meeting, your thoughts should be on the conversation and not on how much you need one more cup of coffee.
No matter the outcome of the meeting, be thankful for the opportunity. Your boss is willing to take the time to listen to your reasoning and negotiate your salary. Be gracious and understanding, no matter what happens.
When you are in a negotiation, put your game face on. This is where coming prepared is very important so you can focus on the delivery. Be firm and businesslike but leave room for negotiation.
Being confident sends a subconscious signal to your boss you are sure in your abilities and can deliver on the deal you strike.
In negotiations, many people shy away from being the first to throw out a number. They think by going first, they are going to miss out potentially on more money if the other party has a higher figure in mind.
Here’s the thing: the first number thrown out serves as an anchor. It will be the basis for the rest of the conversation. If it’s too low, you’ll end up with a lower final offer. When you name the number, you’re in control of the negotiation.
Therefore, it’s important to do your research well and get a good estimate for your value to the company. Go with the highest number in the range that your research yielded so you can negotiate down from there.
Rather than talking about you and what you want out of the negotiation, shift the focus to the market. Based on the research you did, talk about what the market is paying for people in similar positions to yours, i.e. market value.
When going back and forth about numbers and percentage increase, reframe it as market value. By shifting the focus away from yourself and toward the market, you show your manager you know the value of your skills.
When you meet with your boss, keep in mind it’s a conversation and not just a negotiation. Instead of trying to hammer your point during the discussion, try to sit back and listen attentively.
Respond to each point your manager makes thoughtfully and respectfully. Show you are listening and understand the issues facing the company so you can offer yourself as the solution.
One of the most powerful tools in any negotiation is silence. When you hear your manager’s counteroffer, don’t just say “Ok.” Instead, give yourself some time to think about your answer. Silence makes people nervous and could net you a better offer just in those few seconds.
Remember to approach this meeting as a conversation and not just as salary negotiations. Pay attention to body language. If the other person reacts negatively or flinches when you throw out your number, don’t let it stop you.
Use this as an opportunity to learn more about your boss’s position and ask open-ended questions. Show you’re willing to work together to find a solution that will work well for both of you.
Your boss will appreciate your willingness to discuss and be flexible with your ask.
Chances are, you will get a counter offer when you first throw out your number. It’s good business practice and standard in just about every negotiation conversation. Be prepared and know what you want to say when that happens.
Just because the other person says no, doesn’t mean the conversation is over. Make sure you emphasize that you know where they are coming from and that you love the position and your team.
Use this as an opportunity to reiterate how your skills match up well with the demands of the position and align with current market value.
If you approach the discussion from a place of cooperation rather than as an ultimatum, you have a much better chance of success. Realize that your boss is also facing pressure from his superiors and from the company.
Showing empathy and remaining gracious will help you win your case. As they say, you catch more bees with honey than with vinegar.
Reiterate that you love your job and your team and are willing to negotiate a figure that compensates you fairly for your skills but is in line with the company’s budget.
At the end of the day, you need to be willing to walk away. This may mean walking away from the negotiation and asking to revisit in a few months. It could also mean walking away from the company for a better offer somewhere else.
Keep the conversation positive and don’t make threats. However, if you make it clear that you’re willing to walk away if you don’t get what you want, make sure you follow through. If you stay after you get denied a promotion, your boss may not take you seriously.
If you have an offer from another company, you can bring it to the table during the negotiation. Just be prepared to take the offer if your boss can’t meet your demands. Otherwise, you may end up at a new job you don’t want just for the higher pay.
Negotiating your salary is an important step in increasing your earnings over your lifetime. This could give you a significant boost in your earning power as you increase your salary with every new position you take.
When you get a higher paying gig or more money from your current employer, make sure they’re helping you reach your financial goals. Talk with a qualified financial advisor who can help you make a plan for funding your retirement, paying off debt, and building wealth.
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This is a post from Clint Haynes, a Certified Financial Planner® and Financial Advisor in Kansas City, Missouri. He is also the founder and owner of NextGen Wealth. You can learn more about Clint at the website NextGen Wealth.
NextGen Wealth, LLC is a registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities product, service, or investment strategy. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, or attorney before implementing any strategy or recommendation discussed herein.
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