Notes to Self

Thoughts on psychology, spirituality and soft skill development for personal improvement


Salary Negotiation

"Let us never negotiate out of fear, but let us never fear to negotiate." - John Fitzgerald Kennedy

Prepare for the Negotiations

It is foolhardy to negotiate on assumptions, so make sure you have some specific facts in hand. Some of these information can only be learnt during the interview process; elicit them from the interviewer when an offer is made, before starting the negotiation.

  1. What is your worth in the market? Changes in the job market is constant due to a globally competitive economy. So the first thing you should find out is the current salary trend for your job profile.

    Salary Negotiations - sample salary report
    • There are many free and fee based online resources on salary surveys like, and that can give you a ballpark range.

    • Research salaries at similar firms in the same job function and the same industry. Call similar companies directly and ask their salary ranges for the type of job you seek.

    • Ask recruiters, employment agents, other professionals and your own network of friends and associates.

    • Other places to research are professional trade journals and business magazines and newspaper and online job listings.

    Remember to consider factors like location and experience that play a huge role too.

  2. What is the offer package? In case an offer has been made to you, get specific details on the following facets of the offer -

    • Job Responsibilities: The specific job responsibilities and the first assignment you'll be working on is one of the most important aspects of the offer. If the assignment is to your liking, you might be more willing to be flexible.

    • The Signing Bonus: Some companies also offer an initial one-time bonus for start-up expenses like a new wardrobe or as an incentive to accept an offer over another (anywhere between 20% to 200% of the base salary). But keep in mind that since future raises are computed as a percentage of your base, it can be to the employer’s advantage to entice you with a signing bonus rather than a higher base salary. Also, most firm offering signing bonuses will ask you to commit in contract to work for a certain period. If you breach that contract, all or part of the signing bonus would have to be paid back.

    • Base Salary: It is best to present a neutral appearance and not tip your hand by any involuntary response like "Wow!". Some firms offer a higher signing bonus if you accept the offer immediately. Unless you've made up your mind, it is always better to ask for a reasonable amount of time to consider their offer.

    • Pension: A pension is a very important part of the pay package, especially if you intend to work long term for the same employer. Find out if they provide a pension to which the employer contributes. If they do, what is the pension scheme and how much is the employer contribution? Is this dependent on an employee contribution? What are the 'death in service' benefits? (Eg. a lump sum and a reduced pension for a spouse or nominated beneficiary.) What happens if you have to stop working due to some illness or disability? (Some schemes might pay you the pension you would have got at the end of your normal retirement age, other schemes might not be so generous.)

    • Relocation Package: If you are offered a relocation allowance, make sure you understand what is included - moving household goods, house hunting trips, and brokers' fees are examples.

    • Benefits Package: These are generally non-negotiable and are often standard for all employees. But they vary from company to company and so can be used to compare various offers before reaching a final decision.

    • Promotional Opportunities: Find out the promotional opportunities of this position, and the kind of salary progression to be expected in the first three to five years?

    • Tuition reimbursement: Organizations that want to encourage their employees to gain further education and training offer some form of partial or complete tuition reimbursement.

    • Future raises: Find out the methodology of the reviews and how future raises are computed and awarded. Are there performance-based raises and bonuses?

    • Profit sharing: If you are working for a growing and profitable organization, profit-sharing programs can offer you great year-end bonuses based on the success of the organization or your division.

    • Starting date: Some companies might want you to start immediately, and some might be more flexible.

    • Deadline: When an offer is made, the company also provides a time frame to respond. This is often negotiable; don't hesitate to ask for more time if you need it.

  3. What does the interviewer earn? This information can give you an extra edge if the interviewer is also the one under whom you'll be working. After all, you wouldn't like your subordinates to make more money than you, right? So keep that sensitive issue in mind when you start negotiating. Generally ten percent less than what he/she earns may be an appropriate figure to negotiate on, but proceed carefully to make sure that the interviewer doesn't feel personally threatened by your salary request. (If you can't find the exact figure, even an estimate can help - use step 1 to figure it out.)

  4. Who's the boss? As early as possible, find out who the final decision maker is with regard to hiring, determining your job title, and authorizing your compensation agreement.

  5. Who's the competition? If possible, determine how desperate is the employer to fill in the position, how many other candidates are being considered and how you measure up to them.

Be Realistic, This is How the Market Works

According to Jeanne Sahadi, senior writer, employers seem to have the better hand in pay negotiations. Some insights from her:

  1. Your pay doesn't necessarily reflect performance and seniority. Demand and supply in action - Managers will pay what the market demands to get the right candidate. So in a tight job market the starting salary of a new hire at your level may come close to or even match yours, despite your seniority and experience. And companies generally won't correct this discrepancy unless you raise the issue.

    Keep abreast of the going rate for people with your experience and education, especially if you were hired in a down market.

  2. Campaign for pay raises months before the review. Smart companies "always have a little something in their back pocket ... to use when they need it - say to keep an employee they can't afford to lose," said Dallas-based compensation consultant Rebecca Elkins. Say you fit that category, and you request an 8 percent raise when the company typically has offered you 4.5 percent. Smart managers would ask themselves, "Am I willing to lose this person for $500 a month?"

    The day of your review is not the time to negotiate a higher raise since your manager has already gotten approval for the increase he's budgeted. Your campaigning should start months before.

  3. When you're told they can't pay you more now, budget may not be the issue. If you ask for more money and your boss says the budget is too tight now, it might mean - your boss doesn't think you're that much, he doesn't have the authority to make that decision, he doesn't want you competing with him or that you are already paid at the top of the company's scale for your position.

    Ask around what it will take for you to reach your desired pay level or consider whether you want to continue working in that position at that company

  4. Bosses pay more if they like you. Bosses do have favorites. So it's easy to assume your manager sweetens the pot for his faves. But more realistically, chances are the employees he likes the most are also the ones who make his job easy and who make him look good to his managers.

  5. Yes, there is a blacklist. Some companies push select employees out of their jobs or layoff an entire department just to get rid of one or two people without incurring liability. One easy way to get on a blacklist is to insult the boss or be overly negative about the company on email, in a meeting, or at the water cooler. Then there are some employees who can do no wrong, or if they do, they're far more likely to be given some slack. They're the employees who are perceived as trustworthy, even if they're not the top performers.

Negotiating Tips

While every interview will be different here are some common pitfalls you should avoid while negotiating your salary package:

  1. Initiating Negotiations Too Soon
    Timing is very important. The best and appropriate time to negotiate is when a formal offer has been made.

  2. Only Negotiating Salary
    While the base salary or the money is the most negotiated piece of the salary package, don't ignore the other parts. These include signing bonuses, unpaid leave, relocation expenses, flextime, severance and predetermined timeframes for salary reviews. Be flexible.

  3. Mistrusting the System
    Many job seekers operate under the assumption that employers will, without exception, try to lowball and take advantage of them, no matter how well-qualified they are for a position. While some employers might pay employees below industry standard, you should never enter a negotiation with a them-versus-me mentality. Many companies have a predetermined budget for every position and an offer may boil down to a take-it-or-leave-it proposition, only because that's all the budget allows for the position, not because the employer is trying to take advantage of you.

  4. Assuming Your Degree Entitles You to a Higher Starting Salary
    Having an advanced education is nothing more than a threshold requirement that enables prospective employers to narrow down the pool of applicants to a manageable size. If you have relatively little real-world work experience, your degree may keep you in the running, but it won't entitle you to a higher salary.

  5. Believing Every Negotiation Should End in Your Favor
    It's naive to assume you'll always get what you want. Negotiating isn't a win-lose proposition; it's a compromise, and you should be prepared for that. That doesn't mean you should settle for any offer that comes your way, but sometimes an agreeable settlement just might not be possible.