Money Follows Value
A fundamental rule about money is: To earn more money, you must produce more value (turn a department around, create the best ad, eliminate two steps in the production process, and convince the big customers to come your way). This is when money starts to flow.
Money Isn't All of It
In considering what you are paid, you must consider total compensation. Although many items in the compensation package may not be negotiable (e.g., the employer's health plan, work schedule, etc.), these benefits should be considered when you tally up the offer. For example, a company may offer you a higher salary but fewer benefits, so when everything is considered, you could be making twenty percent less.
Components of a total compensation package to consider include:
- Insurance: health, dental, optical, life, accidental death, work men's comp, disability
- Bonuses and profit sharing
- Stock options
- Paid sick leave, maternity leave, and emergency leave
- Pension plans
- Educational and training allowances
- Memberships
- Company car, car allowance, parking space
- Relocation package
- Discounts
- Job discontinuation policy
In addition to the more tangible aspects of a compensation package listed above, there are other less obvious ones that are being negotiated by an increasing number of employers. These include work scheduling, adjusting hours to fit child rearing or educational needs, planning sabbaticals for leave with/without pay, doing part of your job at a home computer with a modem, or job sharing.
These "soft benefits" can also include opportunities to upgrade your skills and capabilities. Many companies are reputed for their career development and training programs; working for such a company can help you move toward your career goals. Look for companies with a strong commitment to developing their people through formal training programs, tuition reimbursement policies, on-the-job training, and personal coaching.
Fast-Track Companies
Some companies are definitely on a fast track, growing rapidly at the forefront of an expanding industry. In a small, growing firm, you may start at a lower salary and compensation package, but as the company expands, your role and salary will expand along with it. On the other hand, the company could falter and decline, so there's a risk to consider.
More Is Better
We know compensation is not everything. Personal satisfaction and self-expression are enormously important. Making more money does not ensure greater satisfaction in life. People can be as dissatisfied with seven-figure incomes as with five-figure incomes.
At a higher salary, however, you will usually have more interesting work and stiffer challenges. Continue to do everything you can to increase compensation to the top ranks in your field; both the standard of living and quality of your working life will be improved.
Building Earning Power
- Think value. Describe your capabilities in terms of the value they can provide the organization. "I understand the contracting process thoroughly. I see some areas where we can increase the profitability of our contracts and the way we position our services."
- Speak about the results you know you will produce for the employer. Don't allow your previous low income to limit your expectations.
- Continue to expand your capabilities by taking courses, reading books and articles in the field, getting close to people who are recognized in the field. This ongoing process of self-improvement translates into future bargaining power.
- Be willing to take on more responsibility.
- Talk accomplishments, not duties. "At the APEX Company, I led a team that reduced quality defects from an average of 750 per vehicle to 100 per vehicle. If I'd stayed there longer, I'm sure we could have brought it down close to zero."
Don't settle for what's being offered. Your willingness and ability to negotiate for yourself demonstrates your personal effectiveness. There are a few risks in negotiating. Your requests may exceed the employer's resources, or the employer may have a smaller picture of the possibilities in the job than you do, and someone else might be chosen. But more often a higher salary is won. Don't cave in to what you know is a low offer. Build your case in advance.
- Know what you can deliver in tangible terms. Write it down.
- Investigate current salary ranges in your field using salary surveys prepared by the College Placement Council for entry-level jobs or using earning figures published by the Department of Labor. Scan classified ads in newspapers from around the country to see what salaries are advertised in your field. Check with trade associations and seek out people who are established in the field and ask their opinions. Consult with executive search firms and placement agencies.
- Know the competition. Talk to other companies to know the current salary ranges.
- Know your strengths. Steer the conversation toward what you can do better than others.
1. Let the employer name the salary figure first. Never answer the question "What is the minimum salary you would accept?" Respond by saying: "Frankly, I'm not looking for the minimum; I expect that I'll receive two or three offers before I decide, and I will probably take the offer that gives me the best opportunity to make a contribution and the best salary. What salary range are you offering?"
2. When a salary range is presented, acknowledge the top of the range. Employer: "The range for this job is $25,000 to $30,000 per year." You: "Thirty thousand seems in the ballpark."
Employer insights: "I'd rather pay more for the best candidate than settle for someone who is willing to accept a lower salary range. We have too much invested to go bargain hunting/'
3. Give value to what you offer whenever you are speaking of salary. Emphasize your contributions: working better, reducing costs, increasing margins, etc. Avoid talking about your needs and obligations.
4, Negotiate for the future, not from the past. When the employer asks, "What did you make on your last job?" and you feel it's not relevant to what you want from this job, say something like: "In my last job 1 was paid below the market price for my skills. I was willing to accept this for a while because it gave me the opportunity to learn and develop; now I am very clear about the value I can offer to an employer and I want my salary to be competitive,"
5. Never accept an offer at the time that it's given. You may be tempted to breathe a sigh of relief and accept the first offer. Don't do that. When an offer is made, take a deep breath and say, ''Thank you for the offer. I know I can make a contribution to this job. I need to take a few days to consider this offer in the light of my future plans. Can I get back to you next Tuesday? By showing that you are going to make the decision, you change the game entirely. The employer is now waiting for you to accept him, which gives you a psychological advantage. The employer might respond that she needs an answer sooner. You can negotiate the time frame, but under no circumstances should you accept the job at the moment the offer is made.
6. Consider the offer and then get back to the negotiation. Take the time to decide whether this is the job you want and whether the salary is commensurate with what you need. If you decide you want the job, call the employer to see if you can boost the offer. "I've been considering your offer and appreciate it. My target for this job has always been $30,000 per year, and I wonder if you could match that number?" The employer may object or defer the decision. Just listen and hold to your position.
Salary negotiation is naturally uncomfortable. There may be moments when you think you might have gone too far. Check it out without apology: "Is this within the budget?'' If you haven't turned the offer down, you can backtrack: "I do understand that you were unable to raise the salary figure. Would you be willing after ninety days to review the salary?"
7. If it's not going to happen, find out soon. If the negotiation is going nowhere, ask questions to move it along. You: "What would I have to be able to do to be worth $35,000 a year to your company?" Employer: "I can't think of any way that you could make that as a starting salary." You: "I appreciate your frankness. I really do need to take another day to consider whether I'm able to accept the job."
8. Don't accept the usual argument: "I'm sorry; the salary ranges are set by corporate policy" if you think there is room to negotiate. You: "Is there someone else to whom I could speak to negotiate the salary, or is there another suitable job in a higher salary range?"
9. Make sure that both sides win. Negotiations should never be angry or emotional, no matter how much pressure there is on either side. Assert your value so that the employer will view you as a highly worthwhile addition rather than someone who is overpriced.
