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How to negotiate your salary even in a tough economy

This is a very long post. But I promise you, it is filled with tons of good information. If you are not planning on negotiating your salary any time soon, please send it to others who might be able to use this information or click the tweet or +1 button. Thanks!

I was really bad at negotiating my salary. In fact, I get really nervous when I have to negotiate anything. I have attended 7 interviews in my life. Except my first interview out of college, I have read up on salary negotiation every single time. But somehow nothing I read offered me any confidence to actually do the negotiation.

So, before my last interview, I went back and read some more. This time instead of trying to memorize the same 10 tips most of the career guides gave me, I sat and learned more about me. I also skipped the big career blogs and read up on the psychology of negotiation. I did negotiate my salary and got what I wanted, even though I was desperate for the job (they didn’t know that).

Now that I am learning more about the human mind and psychology, I have put together this powerful, negotiation step by step guide using tips I have found very useful along with new research.  This guide should help you successfully persuade a potential employer into offering a higher salary.

Step 1 : Know your barriers for negotiating your salary

This was the major major step that I missed the first 6 times. I kept reading all these tips, but I didn’t realize I was the barrier for using any of them.

By barriers, I mean some assumptions or preconceived notions I had about myself, the job and negotiation itself.

  • I assumed, as a relatively inexperienced candidate, the employer is doing me a favor by hiring me.
  • I assumed, I shouldn’t be asking for a raise in a bad economy.
  • I assumed, not satisfying every single requirement in the job posting means I am not a good fit, so I don’t deserve to get paid higher than their offer.

Essentially, I failed to realize that they need me as much as I need them.

  • I also assumed that talking about money with a stranger is as easy as reading 10 tips on how to do it. I never tell anyone how much I make except my family. Not even close friends. So an already nervous situation was made worse by my awkwardness in talking about money.

Step 2 : Know what type of negotiator you are

I like to avoid negotiation. I don’t know how I ended up like this. In India, where I grew up, everything from vegetables to cars to flowers are haggled over. But now, if possible, I like to avoid negotiation. Salary negotiation is too crucial to avoid.

There are 5 types of negotiators -avoid; compete; compromise; accommodate or collaborate.

Every negotiation situation has to be handled in a different way. And if you are a negotiator who avoids and if you end up with someone who is an aggressive competitor, how do you hope to end up with a situation favorable to you? I didn’t, I ended up accommodating whatever they asked for instead of collaborating and coming up with a win-win situation.

Negotiate salary

Step 3 : Collect information about you, yes, you!

Make a list of all you accomplishments in your last job. Make a list of all the skills you have learned on the job, in school or other extra curricular activities that will directly translate to the job you are looking for. The key to any salary negotiation is to show them how much value you are providing the company.

Throughout the interview, you should highlight how much value you can bring to the company and how you are the best candidate for the job.

This step also ensures that you are not lying to yourself on what type of job you are looking for. Sometimes we want to escape a horrible job situation, look for another job in a hurry and end up in another horrible job situation. Knowing what your strengths are will make you think about what kind of job you will enjoy doing.

Step 4 : Collect information about your occupation and the company

I had no clue what the correct range for my position was. Additionally I needed the company to sponsor my work authorization and the  job was on the other side of the country. So even though the default recommendation of salary.com left a lot to be desired, I had no idea how much more I could ask for.

After I got the job, to my horror, my job description and salary were posted in the lunch room. Why? Because it’s the law. To apply for my work visa, the company had to post the job and how much they were paying in public to avoid any immigration fraud. So I decided to take advantage of this “public information” when applying for my next job.

 

Here are some places you can find pretty accurate information on salary

Find the exact salary information :

  • Jobs in public/private companies. If they have ever hired a foreign worker for your position or a similar position, they will have to disclose the salary. Lets say you are interviewing for Google. They have 1000s of software engineers and many of them are visa holders. You can find how much Google is paying them, you can see who negotiated and who didn’t (there is no personal information, so you can’t associate it with any particular individual. ) The file is a huge text file, you will have to download it and then search for the company/position.
  • Federal Government Jobs
  • State Government Jobs : You need to search for the State’s controller office. For example, here is California State Government compensation information.

Find rough but pretty accurate data :

Step 5 : Come up with 3 offers

Based on the information you collected in Step #4, come up with 3 offers

  1. Absolute minimum that you will take if you end up in your dream job
  2. A number that you will be pretty happy with, in most jobs
  3. If you had the authority to name-you-own-salary, how much would you pay yourself? Think about why you deserve this as well.

I believe you need to have these 3 numbers because it forces you to think about what you feel you are worth and subconsciously makes you practice the pitch about why you are worth it (esp. with offer #3)

Step 6 : Come up with 3 packages

Compensation doesn’t start and end with salary. What other perks do you value that will make you relax the salary a bit. Working from home? Extra week of vacation? Japanese style toilet at work?

This is an important step because HR likes to discuss the whole package and they throw numbers that could make one of their benefits seem very attractive.  In that euphoria you might sign on the dotted line, but any perk is worth only what YOU value it to be. I like that my company provides free non-alcoholic drinks. That perk might be worth it for someone who spends $50 a week on buying soda. But for me, that is worth the $2 a month I spend on buying a bottle of Coke from 7-eleven.

Another advantage with thinking about all the perks is you can get creative with the negotiation of perks itself. During one negotiation, the offer included a fixed amount for relocation. I was going to relocate anyway and had already been shipping stuff to the new place, so I asked them to skip the relocation amount and add that amount to the base pay. For them, it came out to the exact same amount they budgeted for the first year. For me, my raises, bonus and 401k match depended on the base pay. So it was a win-win.

Step 7 : Practice negotiating salary with a not-close friend/family

As I said in Step #1, this was a psychological barrier for me.

I am a very private person, so talking about money makes me very uncomfortable. I don’t talk about my salary with friends, and anytime the topic of salary comes up my inherent “should-not-talk-about-money” cliche kicks in. How many of us are comfortable talking about money and salaries to strangers? I have no idea why I assumed talking about it with HR would be a breeze and I would just have to follow the “tips”. Nope, doesn’t work that way.

It was uncomfortable. Before I started interviewing for my second job a colleague of mine was also looking. So we took turns playing mean HR person for each other. She was not a close friend, so that helped a lot as well.

I assume naturally talking about salaries will be awkward for a lot of people, even if they don’t realize it.

Step 8 : Practice again

Confidence is a powerful factor in negotiation. Practice again, and again.

Step 9 : Believe that you’re worth it

If you have done all the above, you will have a very clear idea of your strengths and weaknesses. You will know why you are worth as much as you are asking. When you believe your worth, you will have more confidence to get what you want.

Step 10 : Do it

Most of the tips you read online will fail in this step. I purposely have it as the last step, because if you do all the preparation and practice well, this is just a technicality.

You won’t freeze and stumble for a random number to throw at them or try to remember what you read about how to answer the “So what is the salary range you are looking for?”.  You will smoothly defer it for the “Yes-if” stage or you might be relaxed and joke about how you would like to earn [very high salary range in your field] or if you know the company always gives their best offer, you know you are all set.

When the time comes for “Yes”, you will be armed with information on the going market rate for that city and your value to the company, so you can get what you are really worth!

The only hurdle now is to remind yourself that you are worth it, not just stopping with “knowing” all the information but actually doing it.

 

 

{ 13 comments… read them below or add one }

maria@moneyprinciple

i have never negotiated my salary and even worse – I have never been to a job in terview. This is because I have been lucky enough to be offered jobs and I work in organisations where for all level except the top one(s) there are payscales (these are not negotiable). However, I think that the step you have come up with work with all kinds of negotiations (contracts, for instance). Hence, I have used most of these at one time or another when negotiating a project. Two of those I found particualrly important: three offers and three packages.

Great post, Suba, and some great points.

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Suja

Great post!

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Daisy

Great post. Do you have any tips for negotiating with somebody you know? That can be awkward.

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Young Professional Finances

These are great tips. I agree that it can be really tough negotiating during an interview. I tried to do it but didn’t get anywhere – I was still happy because I got the number I initially asked for. Of course, now I wish I had asked for higher but for all I know, they wouldn’t have been willing to pay that much. Negotiation is a great skill to have – even in non-salary situations.

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Jenna, Adaptu Community Manager

Research, practice and believe you are worth it! Couldn’t agree more.

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CultOfMoney

This is a great article, and very complete! I’ve always negotiated my salary, and generally have done quite well (at least in my opinion). Even in organizations with pay scales, you can often get bumped up to a higher one or negotiate for an early review. Your tip above about practicing is very important. You want to be natural and not thinking about how to negotiate as you do so.

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Dannielle @ Odd Cents

This is one thing that I’ve never tried. As soon as I’m finished studying, I will ask for a raise. I know the chances are very slim, but it’s better to try that to wonder “what if.”

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Dr. Dean

Suba, Very good article. It takes condfidence to be able to negotiate effectively. You covered all the ground to prepare to be a condfident negotiator. Those are useful stratefies whenever someone is going to be involved in five and take.

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Newlyweds on a Budget

these are great! I’m trying to negotiate a raise, but I think a few of these will apply as well!

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Ella

I have to confess I ahve never negotiated my salary :-( But now that I am looking for a new job I will definitely do and your tips will really come handy. thank you!

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Sustainable PF

When I won the senior position @ my work place late last year I negotiated the start date of January 1. That way I got the cost of living increase and then the pay raise on top of that new salary figure.

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American Debt Project

This is thorough advice, I hope I can implement some of it. I’ll let you know in about a month!

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101 Centavos

You’re right, this is uncomfortable territory for most people, on *both* sides of the table. On the hiring side, I’ve seen some people take further negotiation from the candidate side as a form of mini-rejection, as if the candidate doesn’t *really* want the initial offer. But you’ve got to be the one, no one else will negotiate for you.

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