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Salary Negotiation – Tips and Strategies
Article » Finance
Posted by : thedesk   Aug 28 2006
Tips on understanding the salary negotiation process and on evolving a negotiation strategy
How do I Begin
Negotiating with Employer
What does negotiation mean to you and the employer?
How to Negotiate
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What is it that makes all of us sit up and take notice whenever there is any shard of information available on salary? What is it that makes us wonder our next probable salary? Why is it that information on our salary figures results in our most expressive moments? Either ecstasy or disappointment or relief. It is because a salary is a quantifiable self-evaluation of our worth. The perplexing part then is why do most of us go into salary negotiation without half as much of a plan as in preparing for interviews or preparing resumes or planning for a job switch. Or to put it more bluntly, do many of us actually indulge in a process of planned negotiation at all. It is indeed confounding why salary negotiations are never thought of as a scientific process and are instead regarded as the closing remarks in an interview deal. Especially strange when you consider the stark fact that it is ‘salary’ that often results in your choosing to close the chapter in a company - unhappy and unrewarded.

With the increasing professionalism in the approach towards their career and their jobs, it is important that professionals appreciate the worth of salary negotiation as a skill that needs to be honed and sharpened. It is an exercise in the optimisation of a professional’s worth in quantifiable terms. It is a win-win situation as an employee gets his market’s worth and an employer is able to reap the dividends from a happy, performing employee. The employer is also able to retain a happy employee for long, thereby saving attrition, replacement and new induction costs.

How do I Begin?
The most difficult part in negotiating salaries is - How and where do I Begin? If you thought that the first part in salary negotiations began in one of the rounds of interviews, you are wrong. The first part is negotiating with oneself. Ask yourself how much you are worth. You can bargain effectively for yourself if you are aware of your priorities.

You may start by including the value of your current pay package and comparing it with the new employer's likely offer and the approximate market rate of pay for the job you're seeking. You must enter salary negotiations with a definite understanding of your expertise and your perceived usefulness to the company. How interchangeable are your skills. What are your strengths? Be sure to factor in the positives in your resume, years of experience etc when valuing your worth. Check the industry average commensurate with your profile. If you are relocating to a new place, you may take into account the relocation expenses, differentials in living expenses, if any, and other expenses you may have to bear when calculating a pay offer. Include savings and contingencies in your budget planning. These facts aren’t unchangeable but they will help you ballpark your initial expectations. You may find it useful to research the company’s hiring history from peers, fellow professionals, website of the company because they might advertise similar positions and mention likely compensation packages too.

Next you must list the factors that could affect your job evaluation and will determine how much you prefer the job and what it means to you. These factors could be:
Compensation and benefits - How much more than your current job should the compensation be, now that you have ball-parked your expectations based on calculations above.

Location of office and travel - How much do you want to travel and whether you wish to relocate. If you do, how much will that disturb your current life.

Job-security - How much do you value job security? Do you think this is the time to cast one’s lot with a smaller company and look forward to more challenges?

Level of Independence - This ties in with the previous point. Decide whether you want a combination of lower salary and greater independence (on comparative terms) or vice versa (again, on relative terms). Jobs might have more of one over the other. This is especially dependent on the size of the organization.

Reporting hierarchy - How much does the company value you? Whom should you report to? Are you ready to move up the management ladder or willing to wait?

Career growth prospects - How much career growth do you expect in the company you have listed. Is it compatible with your career growth or are you currently blinded by the cash compensation part of salary negotiations only? Determine opportunities for promotion. When you are deciding on salary, job progression is an important component. Another important component is the experience and learning you will get from the role, especially at a junior and middle management level. If a job ads to your experience, skills sets and overall learning then that will be beneficial to you in the long run.

Reputation of the company - Find out from various sources about the company. Check that out thoroughly. You may also want to find out what has been the HR practice in the company.

After you have assessed yourself, try to weigh your expectation on each of these parameters. Remember salary negotiation is the entire package of cash and non-cash compensation. We usually tend to ignore the latter, but one has to bear in mind that the salary that you can settle for will also be driven by some of the above factors. You can use more such factors for evaluation, those that you feel are critical to the job.

Try and see where company X rates in each of these above parameters compared to your aims. Does it fulfil any of your aims? How many does it fulfil? Are you okay with it? Do you think there is anything lacking in the organization with regard to these parameters that can be substituted by greater financial compensation. If there are such issues, note them down, assess how many needs (from amongst the 7 given above) does this job fulfil and then decide your course of argument. Add this argument to the points you formulated (in the earlier paragraph) in terms of quantifiable levels of qualification, years of work experience, living costs and bingo, you are ready with a constructive presentation to convince demanding employers about your professional worth.

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Negotiating with Employer
In the process of salary negotiation it is helpful to figure out at which level the final decision is likely to be taken. It is also important that you keep the salary negotiation towards the end. Wait for all other discussions to be over to indulge in salary negotiations. This is because you must give the employer enough unbiased scope and time to appreciate your worth in the interview and in understanding the usefulness of your potential. When the employer makes a job offer along with the salary, that usually means that the employer has found enough merit in you to want your services and is normally not likely to withdraw his offer easily. He might want to go some extra distance and after you have been made the salary offer, you should quickly bring your homework (that you’ve done earlier) into play and evaluate how much different than your expectations the offer is.

Sample questions
If posed the salary question early on you should approach it smartly. Sample these below: (Courtesy

Option One: Delaying Tactics
· Employer: "I assume you've seen our advertised salary range. Are you willing to accept a salary within that range?"
· Job-Seeker: "I applied for this position because I am very interested in the job and your company, and I know I can make an immediate impact once on the job, but I'd like to table salary discussions until we are both sure I’m right for the job."

Option Two: The Non-specific Response
· Employer: "What would it take for you to accept a job offer with us?"
· Job-Seeker: "As long as you pay a fair market value, and the responsibilities fit my skill level, we’ll have no problem."
· Job-Seeker: "I feel my salary should be based on the responsibilities of the job and the standards of the industry."

Option Three: Throw it Back to the Employer
· Employer: "If you were to receive a job offer from us, would you accept it?"
· Job-Seeker: "While I am very interested in the job and the company, it really depends on the offer. What would a person with my background, skills, and qualifications typically earn in this position with your company?"

It is important to provide correct information about your past salary. Having worked out your line of argument, taking into account your strengths and projected value adds, you could always argue about why it may have been lower and argue why you should be paid salary xyz. But just to reiterate it is important to provide correct information about your past salary.

What does negotiation mean to you and the employer?
Christopher Wood describes negotiation ‘as a problem-solving process in which two or more people voluntarily discuss their differences and attempt to reach a joint decision on their common concerns. Successful negotiations generally result in some kind of exchange or promise being made by the negotiators to each other. The exchange may be tangible (such as money, a commitment of time or a particular behavior) or intangible (such as an agreement to change an attitude or expectation, or make an apology).’

Wood suggests conditions why people negotiate. These include willingness of parties to negotiate and interdependence among them, which means each party has the leverage and influence over the other party’s decision. In this case, you have the skills and potential and the employer has professional growth and salary as the leverage handles. For a negotiation process to roll forward there has to be a belief amongst both parties that the issue is negotiable, which in turn helps the process to move forward. This also means that there is a will to settle the negotiation at some point.

Wood believes that people also negotiate because the outcome of not negotiating is unpredictable. It is truer here in the case of an employer; especially when a candidate is found fit to fill the professional requirements. Then it becomes harder to look beyond the professional usefulness of the candidate. It is important therefore that a negotiation is engaged in such a manner that has possibility of a favourable outcome. Some suggest that you offer an expected range. Remember that an employer, in such a case and assuming he is very convinced by your line of argument, might still treat the lower value of your range as the upper limit of an expected salary figure.

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How to Negotiate
Negotiation is both a science and an art. It begins with the scientific process of structuring your facts and constructing your line of argument. It continues as a science when you proceed with the negotiations. This is because you need to objectively gauge how far the employer can go and how far you can go for the negotiation to succeed. This depends upon how much you want the job (based on your assessment of the company on the 7 listed factors) and how much the company wants you (based on the number of rounds of interviews, the general interest shown, the offer proposed, the urgency of the company to fill the position and compatibility of your skills with the position in consideration etc).

It is important to therefore quote your expectations that have a chance of success. Here negotiation becomes an art as at the end of the day, you are dealing with humans and you should be able to hold your line through a mix of structured arguments built on articulate communication and a polite and pleasant demeanour that doesn’t sully or sour the negotiation process. Timing and pace of your line of negotiation is important. Remember that professionals negotiate while unprofessional people bargain!

If you take the negotiation process as a straight line with the employer on the left side of it and you on the right side of the straight line, then in order to have a successful deal, it is essential for both parties to move towards the centre or core. Which means sacrificing one’s initial position. You must ask yourself how much you can move. What is your bottomline? Ask yourself what is the lowest salary acceptable to you? Ideally you should be above this to count your negotiation as successful. Also, consider possible targets and bottom lines of employers as you move forward in the negotiation process. It will help you ballpark an approximately realistic figure for yourself. Your future negotiations can then be driven by the level of flexibility on both sides.

There will be a time when the movement along the straight line is nil. That may be a good time to take stock and assess whether you want the job at that salary. It is always useful to not commit immediately upon announcement of altered offers, if possible, but re-assess in terms of the factors we worked on before (assess whether the new deal works for you professionally and financially) in the light of the changed position of argument of both sides. If you have done all these and then reached a decision, more often than not you would have taken the right decision of taking up/not taking up the job.

Salary negotiation is a conscious process that can either be successful or unsuccessful as it depends on two parties who may have different interests, perceptions and limitations. However, understanding the process logically and evolving a strategy assists us in increasing our chances of getting a better compensation package and more importantly, helps us in knowing where we are, who we are and how employers perceive us. This process can help us immensely in our future career decisions too. However uncertain the process of negotiation is, with its great dependence on human perceptions, conduct and temperament, you cannot go wrong most times if you have planned your strategy towards it. At the end of it all, you must remember that a company offered you the job and a favourable salary because they were impressed with you on the professional front. After you have clinched the deal, it is time to pay back - by living up to the expected level of professional competence in the job.
That, interestingly is called fulfilling the job negotiation deal!

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