Art of Salary Negotiation

By: Jonathan Lewis


Many candidates view the process of deciding their salary one which they should not be involved in. But having in mind a salary comparison with similar jobs could be the most valuable thing you've done.

If you saw a nickel on the sidewalk, would you pick it up? Perhaps not. Especially if it was raining.

If you saw a $100 bill on the sidewalk, I'm sure that you'd pick it up. You probably wouldn't even notice the weather!

Now if you saw a briefcase, stuffed with hundred dollar bills, which promised to pay out EVERY YEAR, you'd think that you need your eyes checking!!

But that's exactly what thousands of candidates do every year, by not knowing the salary they are worth.

So where do you begin in getting a salary increase?

There are a number of bits of homework you need to do first

  • Salary comparison - To get a salary increase, you need to know what others in your job are being paid. There are a number of online salary comparison tools which you can use to get an idea of what you are worth. You can also get a reasonable salary comparison by talking to recruitment professionals or by scanning the newspapers for similar jobs (if they disclose the salary they are offering!)

  • Salary increase negotiation strategy - When and how should you 'show your hand' as to what salary increase you want?

    Salary comparison

    A salary comparison is vital if you are going to be in a strong position in any kind of salary negotiation.

    There are a range of resources open to you when conducting a salary comparison. Our advice is to use them all to triangulate on a central estimate of what you are worth.

  • Online salary comparison - There are a number of online salary comparison engines. Salary.com is probably the most developed of these, and actually 'drives' a lot of the salary comparison calculators you see on other websites

  • Recruitment professionals - Recruitment professionals can be a useful source, but remember that recruitment professionals don't work for you! They have their own interests in mind, and they get paid by employers. Therefore, they will always have an interest in convincing you that you should take the job which they are being paid to fill.

  • Newspaper research - In some fields, it might be possible simply to review similar jobs in the newspapers to see what other companies are paying for similar jobs. Beware though to make sure that the jobs are truly comparable, that you take into account any other benefits which are mentioned in the job advertisement, that you consider the location of the job (New York City pays higher than Des Moines!) and also the width of the salary range (don't just take the top end!).

    Salary increase negotiation strategy

    Many people feel very uncomfortable about negotiating their salary. After all, isn't it going to show your prospective employer that you care more about money than working for them?

    While that might be partially true, imagine how it might look from the other side. If they are hoping for a go-getting bright young thing to join their team, and they offer a salary which is on the low side of what they think they need to offer, and you accept it straight away, then what will they think? They might think that even at this low salary, that this is the best offer you've been able to get. Even worse, they might think that if you can't negotiate for YOURSELF, how successful will you be in negotiating for THEM!

  • Step one of your salary increase negotiation strategy is to estimate your and their 'Next Best Alternative' (NBA). Your NBA is the point at which the package they are offering is below what you are certain you would be able to get elsewhere. Their NBA is the point at which they know that they would be able to get a better candidate than you for that package. A deal can only be struck between your NBA and their NBA. So keep this in mind before you ask for a salary which encourages them to find another candidate!

  • Step two of your salary increase negotiation strategy is letting them declare their hand first. This is likely to be at the low end of what they hope to pay. In other words, the salary offer will be pitched near to what THEY think is YOUR NBA. Not so low that you will walk out of the room in disgust, but not so high that they feel they didn't get a 'deal'.

    There are occasions, however, when you might be asked what your salary expectations are. A response you could use in this situation could be "I am looking for a meaningful increase in responsiblity compared to my current role, and would expect my salary to reflect this".

    If you are pressed for a number, then you can fall back on the work you did on your salary comparison. At this point, keep the discussion high level with a response like "Similar positions with other companies are offering salaries in the range of $40,000 to $50,000, and I would expect the person you want to fill this role to require a similar salary"

    The whole point of this part of the negotiation is to allow you to get to the offer, while making it clear that you regard salary as something you will be up for negotiation rather than something you accept as given.

  • Step three is to up the pace a little by making yourself a 'must have'. At the second interview, it is time to sell yourself as hard as you can. It is far more likely for your interviewer at this stage to have some influence on your salary, so make them think that your NBA is as high as possible - in other words that your options are extremely well-paid!! Do this by showing how able you are to add value to their company, and implicitly other companies if they don't produce a satisfactory offer. Now is a good time to mention the upper end of your salary range, which should be within your salary comparison range, and just inside your estimate of their NBA.

    What happens if they say that you had previously given the impression of being happy to accept a much lower salary. Now is another opportunity to sell yourself. Show them how you have found out more about the responsibilities of the position and that you think the lower figure in the range you discussed is no longer appropriate.

    And remember, be polite but be persistent. You don't want to find yourself in the position that you love the job so don't want to leave, but you wish you were being paid a few thousand more each year. Don't leave the suitcase of hundred dollar bills on the sidewalk!!

    © 2005, Jonathan Lewis. All rights reserved. Jonathan Lewis is the founder and CEO of the Careerfriend website (http://www.careerfriend.com), committed to helping people succeed in their dream careers. The site provides a wealth of free articles and resources covering career and employer selection, through resume and cover letter writing, to interviewing, salary negotiation and ongoing career development.