The most important part of salary negotiations ISN'T the actual face-to-face, back and forth part.
What’s important is the setup. Nearly everyone thinks of a salary negotiation as that point in an offer process when you get to hammer out all the details, starting with salary, moving on to bonus and benefits and cars and cell phones and laptops, etc. That's actually the easiest part.
The following is a negotiations strategy is based on three steps:
Step 1 - Setup: Avoiding the Issue/the Right Mindset
The setup is not only the most important part of a negotiation; it’s also the aspect so many people find uncomfortable.
There is something about "making the ask" or pushing back that creates an urge to say yes to everything and just be done with it. Or there's a fear that if you don’t agree right away, the offer will be rescinded. (Whenever an offer is actually rescinded, which happens rarely, it's almost always a clear signal that something's wrong with the position and/or the organization.)
It's important to go into any interview situation, including a phone screen, with a positive mindset -- you feel like you've earned it, you have the background and skills, and you're qualified to not only get the offer, but also to be paid accordingly. You're prepared. Going in with a sense of desperation or urgency (You’re finally ending the search! You’ve hit your dream job!) will be counter-productive.
Whenever the subject of money is brought up, at any point in an interviewing process, the negotiation has started. That could include a five-minute phone screen, even if you haven’t had a formal interview.
Here's the hard part mentioned earlier: You must try to avoid the subject of money for as long as you can. The longer you defer the better. The longer you defer, the more opportunity you have to build value. The longer you build value? The better total compensation you will be offered.
If you don't set up an optimal situation for making the best deal you can, then you could easily get stuck later on during reviews with those dreaded COLA raises or some other organizational limitation.
There are many ways to avoid the topic.
For example: "Money is very important to me, of course. But, if it's ok with you, could we defer this discussion until we figure out if there's a good fit? I'd hate to knock myself out of contention because I'm coming in too high or too low early in our conversation. I'm confident we'd be able to work it out."
Or, if that doesn't work, how about, "Could you give me an idea of your range?" If the interviewer does respond with a range, and it's anywhere near where you think it should be, you just say there will be no problem working it out if you get to that point.
Or, if you perceive the interviewer getting impatient, you say you'll be looking for an "all in" (including benefits, bonus, 401K match, everything) of __________. That, of course, is if you're looking to bump your total comp up significantly. If you're seeking to keep it lower for other reasons, then you say you'll be looking for a base of ____________, which is close to what you're currently earning, or maybe an average of the last four years’ bases.
Or, if the interviewer is insistent, you'll have to give in and tell the real numbers. You cannot fabricate your history; it's easy to verify. All the interviewer has to do is ask you for a previous W-2.
Even if you have to give in, you've at least set a precedent where the interviewer will know you're not going to be a pushover in any subsequent compensation discussions. That's creating a strong brand.
This pushback, of course, will be continued in the actual face-to-face negotiations later on. Collegial and friendly, but still a pushback.
One note: Working with HR professionals or recruiters makes this much tougher. They're there to screen. It's why I encourage clients to do their best to get to decision makers, who will usually be far more amenable to the approach described here.
Step 2 – Defer: Don’t Negotiate at the Point of Offer
You’re in no shape to begin a negotiation at the point of the offer. No matter how well prepared you think you are, or how unemotional you may be in the interaction, your emotions of the moment will cause you to make mistakes, or forget critical questions. You need time to develop a strategy.
If the offer is low, say that you need some time to think it over, that you will have some questions about the position. Then mention that the offer seems a bit low, from what you’ve determined in your market, but you still want some time to think it over. On the other hand, you’re excited about the organization and think there’s a great fit; always make an employer know that you’re enthusiastic about the position. No one wants to hire a candidate who doesn’t seem to want the job. That way, you’ve planted the idea that there will be some discussion about comp. And you’ll have time to plan a strategy.
If the offer is in the right range, same response – except for the part about the comp being low. And the excitement is there, too.
If the offer is great - again, same response. You still might have other issues to clarify. You could even mention that there won’t be a problem with the compensation, but you’d like to be sure about all aspects of the new job, and look forward to closing the deal the next time you meet.
Do NOT negotiate via email. Tone is lost, and there will be problems.
If the offer is long distance, try to negotiate via Skype or Face Time. You want to be able to read the other person as well as possible. Phone is ok, but you prefer to actually see the other person.
Step 3 – Negotiate: The Actual Face-to-Face Negotiation
We hope that it’s face-to-face, because that provides the advantage of checking visual cues.
The balance of power has shifted once the offer is made. They want you, not their second or third choice. Keep that in mind. They do not want to start over or settle for someone else, and want the job filled.
If steps 1 and 2 have been followed, you’re in an excellent position to begin the negotiation. First, before you start, decide what your “drop dead” numbers and situations are. In other words, what’s your bottom all-in comp number? Does the job match up well with your expectations – or not? Don’t go into the negotiation without thinking those issues out. What is important to you? Be prepared to discuss every loose end.
Prepare a list, one that you can bring with you and place in front of you. It’s your best opportunity to not only set up the perception about how you conduct business, but to make the “ask” for every item that’s important to you.
My favorite words in negotiations are “we” and “clarify.” Never “I need.” We talk about what’s going on in the market, rather than what we “want.”
My suggestion is that the list of questions creates a “win-win” rather than “I won” or “they won.” For example, don’t start with the most critical items. Start with something easy like a job description question, addressing something that wasn’t clear during the interview process. Ask about the 401K or 403B, if that hasn’t been described. The #3 question should be your biggest issue.
For some, that tough #3 issue is base salary. For others, it’s bonus structure. Or perhaps reporting relationships. Or vacation.
If your “#3” is base salary, most of the time the organization will have more money to offer; most hiring managers or HR professionals will start as low as they think they can get away with. If the offer was low and/or you think you should be paid more for this position, discuss your research into what the market is for your level of experience, education, and expertise – and be prepared to discuss where that information came from, if pressed. Sometimes, it comes from salary websites such as Glass Door or any of the many other surveys, sometimes from peers, sometimes from previous and ongoing interview situations. They are all part of the research.
Do not expect that the person offering the position will be prepared to immediately respond. They may have to go back and discuss with others in the organization. This is part of the process, so don’t be concerned that there’s not a quick decision.
If the big issue is bonus, do not accept the word “discretionary” as a satisfactory response. Ask what a good year means for you and for the company, or a bad one, or just an average one, and what your upside might look like. Is there a formula for part of it? Take notes; you may need to refer back to those later on. (That’s also sending a message, too!)
Now’s the time to ask all of the questions you’ve been deferring throughout the interview process. Technology? Office space? Work culture issues? Reviews? Severance policy (yes, even that)? Start date? Anything goes on the table here.
By not negotiating, you are almost always leaving money on the table. Remember, it’s expected. Using these three steps should improve the outcome of most compensation discussions. Nothing to lose, plenty to gain.