All jobs have formal or informal salary ranges. Your goal is to receive an offer and negotiate for the high end of the range. To do so you must know the salary range for your geographical area. Your primary information will come from people who are knowledgeable about the field and industry. To get top dollar you must also clearly be the top choice.
As a rule, if you have a solid background and are making a job change rather than a career change, go for a 20% increase in salary. You can do this based on the fact that the employer has decided to look outside rather than promote from within and expects to pay a premium for your experience, fresh ideas, and potential.
Know What You Need
Knowing your worth as well as your financial and psychological needs is crucial. If you are currently paid well but are miserable in your job, you would probably be willing to take a pay cut if you could get greater job satisfaction. The question becomes how much of a cut you could accept.
To determine your financial needs, establish three budgets. If you kept track of last year's expenditures it will be easy. In the left column you would list all of the categories of expenditures that you have. The next three columns would consist of:
- last year's expenditures;
- a level of spending that is less but still comfortable; and
- a bare bones budget that enables you to keep your car and home, but slashes other nonessential items.
Next, examine and define what you need in a job regarding your psychological needs. Ultimately, this should lead to producing an ideal job description. The right job is one that enables you to utilize your top skills and strengths. It also allows you to be and express what you already are, without trying to squeeze you into some pre-existing mold. The right job should closely match your temperament, values and motivators. You should also define the type of organization you want to work for. The organization you work for is tremendously important and can often make the difference between a good job and a great job. Once you have created an ideal job description, ask yourself the lowest salary you would accept if this dream job was offered to you. Assume you are currently working. How much less than you are now earning would you accept?
Create a checklist to help determine how close a particular job is to what you want.
When the Interviewer Supplies a Salary Range
If the interviewer gives you a salary range for the position and asks whether the amount would be acceptable, you owe it to the inter viewer to say yes or no. Some managers want to know immediately whether your salary needs can be met and may pose this question to you during the first ten minutes of the first interview. Their rationale is that they neither want to waste their time nor yours. If the range is acceptable you may want to say something as simple as "The range seems adequate." You would not want to sound elated or concerned.
Plan Your Strategy
The goal of all good negotiations is to allow both sides to gain most of what they want-this is the well-known win-win concept. During the first interview and immediately after, you will begin determining what you need to feel like a winner in this situation. You will learn a lot about the job, your prospective boss, and the culture of the company. If the job, boss, and company seem relatively undesirable, you might be unwilling to accept it for anything less than 30% more than you currently earn. With a much more desirable job, you might accept only a 5% pay increase. Before deciding whether to accept an offer, many factors will be considered; money will be only one of them. Take notes immediately after the interview, jotting down what you learned, observed, and felt, as well as issues that were raised and questions you would like to have answered.
Between the time you are invited back for a second interview and the time you actually attend the interview, you will continue to research the company to determine how desirable it is. You should also formulate questions that will help you decide whether you would accept an offer. If you have detected some undesirable aspects of the job, determine whether they could be altered, and if so, how. Keep in mind a key concept in negotiating-everything is negotiable, not just money. There is no guarantee you will get everything you want, but everything is fair game for discussion. The worst thing that can happen is that the employer will say no. Raising an issue, even one that ultimately gets rejected, can cause the employer to give in on another issue that otherwise would also have been rejected.
At the end of the first interview, you should ask about the intended process, including how many interviews are anticipated, and how soon they expect to fill the position. That way you'll know when to expect an offer. You'll also know when you need to be fully prepared to negotiate.
Benefits Are Important
You won't know if you want the offer until you know the full range of benefits and perks. As you look at the financial value of a job offer, you must consider its total value. Take into account salary, stock options, bonuses, profit sharing, insurance, tuition reimbursement, and determine the total value for you. In other words" tuition reimbursement may be nice, but it's of little use to you if you have no interest in entering another classroom. Likewise, if your kids are grown and married, orthodontic insurance will have little value for you.
A fairly complete list of benefits and perks includes: vacation pay; bonuses; stock options; profit sharing; health, dental, orthodontic, vision, disability, and life insurance; company car or payment for mile age; tuition reimbursement; expense account; professional member ships; country club or health club memberships; relocation expense; free parking; deferred compensation; pension funds; severance pay; outplacement assistance; physical exams; use of corporate plane or vacation property; estate and financial planning; tax and legal assistance.
You Are Worth What They Are Willing To Pay
While negotiating, keep in mind that neither you nor your prospective boss knows your true worth. Your worth is whatever someone is willing to pay you. Your challenge is to make the employer want you badly enough so he or she will offer you what you want.
People Want What They Want
The psychology of salary negotiations is important to understand. A key psychological factor is that people want what they want. Once people decide they want something, they are virtually always willing to spend more to get it than they originally intended. In 1990 a Van Gogh painting called Portrait of Dr. Gachet sold for a record $82.5 million. Art appraisers had assumed it would sell for about $60 million, based on the sale price of a similar Van Gogh the year before, which set a record of $53.9 million. When the bidding got started, it quickly exceeded the $60-million level. The painting was finally sold to a wealthy Japanese businessman. No doubt he had hoped to spend only $60 million, but he really wanted the painting. As the bidding kept rising, he undoubtedly said to himself, "I don't care how much it costs, I'm going to have that painting."
Most of us don't go around buying expensive art, but we go through exactly the same process when we shop for a new car. Almost everyone ends up spending more than was originally intended. So, even if your prospective boss says he or she simply can't go over a certain amount, don't accept that too quickly. Managers have budgets, and if they are willing to cut the budget somewhere else, it may free up some money.
Determine the Causes Of Roadblocks
If you reach a roadblock in your salary negotiations, try to determine the true cause. You might ask the employer, "What do you think is the main issue? Is it a problem with your budget, or will the wage-and-salary-administration folks feel that the job's structure doesn't warrant a higher salary?" By asking a question you will at least get a response. This will also give you something different to discuss for the next few minutes. Once you have a response, even if it's not the full truth, you can begin dealing with that issue. Get the person to agree that your worth is greater, and then help her come up with a creative way to find the money. If the human resources department is the problem, then suggest rewriting the job description to give you more responsibility. This would place you in a higher pay bracket. By helping to clarify the issue, you are also helping the manager decide how badly she wants you. She is psychologically committed and does not want to lose you.
Furthermore, she's come this far in the process with you, and she does not want to lose you over $2,000 or some other fairly minor sticking point.
