Once you've established your personal market value, how do you actually make sure you get it? It can be easier holding out for more money when you're in the process of being offered a job than trying to get a raise when you actually have one, but the negotiating process is essentially the same.
Negotiating a salary for a new job
If you're being offered a new job, don't rush things. If specific salary numbers are discussed directly at an interview, ask for time to consider any offer made to you. If your interviewers ask what you think the role is worth, be ready to turn the question round and ask what range they had in mind. If you expect your new employer to beat your existing salary package, be sure to include all your various benefits in your calculation and then add on a bit extra for bargaining space.
If you're not absolutely crazy about the job anyway, you could consider turning it down to see whether they come back with an improved offer that might tip the balance. Be aware that this can be a risky strategy if you're desperate for work.
Negotiating a pay rise in your current job
If you are already in a job and trying to secure a pay rise, you need to go in well prepared. Your boss is certain to question why you think you're worth the extra money, so be ready to argue your case clearly and persuasively using specific examples to prove your worth. Make sure you have a good idea of what other people with your experience and responsibilities are earning, presenting evidence of your research if appropriate.
Whatever your situation, here are some of the key things to consider:
- Positions of power - Who's holding the cards? Each side has something the other wants - you want their job and salary, they want your skills and experience. The eventual winner of the negotiation will be to one who holds more positions of power so make sure they know just how much impact you can have on their business.
- Bargaining tools - Is there anything extra either side can add or remove from an offer that is of value to the other side? Would you be prepared to forgo a company car allowance if they were able to get a salary closer to what you desire? These tools may not have a specific monetary worth, such as having the option to work from home, but can be of great value to the negotiation process. Added extras to enhance your overall package that could be extracted from the employer include extra holiday, an increased pension contribution, health care, flexi-time working or even your own office. Think about things you could offer such as essential business contacts or insider knowledge on a competitor. You could also suggest a guaranteed increase in salary after a certain time period once you have proven your worth. This makes the employer aware you will put in extra effort to achieve goals during that time to get the reward.
- Consequence of non-agreement - What happens if neither side is happy? If you're negotiating for a new job there may be another candidate who is just as good that they could offer the job to instead at a lower rate. Or you may be the only suitable interviewee and they are desperate for you to join the company. If you're asking for a pay rise, if they don't give you what you want would you leave, meaning they have to go through the cost and effort involved with finding a replacement? Whoever stands to gain the most from completing the deal will generally lose out in the negotiation.
Unlike more straightforward transactions, such as buying a car where all the cards are on the table, many of the factors to salary negotiation are hidden or implied. This makes it very difficult to judge who is on top in the negotiation so you may need to be more flexible than you would usually be.
If you approach the negotiation in the right way, your employer or potential employer will be impressed, regardless of whether you eventually win or lose, and see it as another skill which you can bring to their business.
Closing the deal
Make sure you have a record of the agreement down on paper which is signed by both parties. There's no point winning a negotiation if you allow the other side to go back on their responsibilities at a later date.
Particularly when negotiating a salary for a new job, be sure not to overlook anything that needs to be factored in. Will you need to relocate? Will the company make a contribution to your costs?
If the job is really your dream role, you might find you're willing to be more flexible. But if they ask you to accept a lower salary than you currently enjoy, always check to see how regularly you can expect a pay review.