How many of you have gotten hired and then realize that others have gotten a higher compensation package for the exact same role?
How many of you have gotten hired and realize that there are other forms of compensation that the company is more than willing to negotiate on but will never advertise so you miss out during the initial offer stage?
If you don’t ask, you will never know, you’ll never receive. That is the lesson I wished I learned early on in my career.
Of course, I’m referring to that other candidate that has the same level of experience, hired around the same timeframe, and in the same region which obviously can impact your compensation package.
As an employee, you figure this all out after being hired and try to re-negotiate and you’re told “salaries are reviewed annually”
So, you work really hard all year and look forward to that year-end review only to receive a yearly 2% to 3% budgeted increase, even as a good performer.
How many of you experienced how difficult it is to negotiate a higher increase or any other forms of compensation once that offer has long been signed?
Sounds familiar?
If so, you understand why it’s so important to negotiate as much as you can in good faith, prior to signing your offer.
It’s your best opportunity to increase your compensation package because you are negotiating from a position of strength even if you have limited experience.
Starting as high as possible initially and getting your worth is so important because once you are an employee, your year-end increases will never fully catch up to the external market pressure so you are often negotiating from a weaker position as an employee.
A year or two from your hiring date it’s quite common that new candidates hired with the same level of responsibility and role, will often get a much higher salary especially based on how the market has gone recently. That’s including your yearly increases as a current employee.
I would say most, if not all the time, it’s not your manager’s fault, it’s just how most organizations' policies are designed. Tough to predict the market.
Does this mean you should leave every 2-3 years to match the market rate? Sometimes but not necessarily, especially if you have built a good reputation and might be on your way to a promotion or even a great career lateral move.
There are so many other incentives as to why you may want to stay or leave. However, every situation is personal but leaving and starting from scratch is not always the right move.
Although there are so many other variables that may impact your initial compensation package, here are 3 important tips that you should consider to help you get off to a great start and maximize your offer.
This way, a year or two from your hiring date, while it will still be difficult to match the market as an internal employee, you can get as close as possible to the market before you make the decision to exit the organization or continue your journey.
Understand the Market
This is a very important aspect of negotiating. Negotiation is all about leverage so the more salary data you can accumulate about your industry and role, the better equipped you'll be for a successful outcome.
Do your research, sites like Glassdoor.com and PayScale.com are great but don’t stop there. It’s a good idea to speak with others in your community, friends, and ex-coworkers that are in the industry.
This is one of the many reasons why it’s important to maintain a network, especially those in the same field and industry. LinkedIn is an amazing tool for that but there are so many other ways to stay up to date with folks in your industry.
Of course, some people won’t feel comfortable discussing their salaries but this is where you should leverage your close contacts and ask for a bulk park figure rather than their specific salary. Ask something like: “what can I expect in terms of salary for someone with this number of years of experience within this industry and role?”
For some, this might be a daunting and uncomfortable conversation and that’s perfectly fine. Take small steps to expand your network even if it's with family and friends.
I suggest getting your data from multiple sources, not just one. I aim for at least 2-3 solid sources within the specific industry and the role I'm targeting.
Another source that a lot of people may not think about are staffing firms and agencies. You see, earlier on in my career a lot of the jobs I was offered were from headhunters and this gave me a great understanding of the market.
It’s a great idea to register with staffing firms even if you don’t take their first offer because agency recruiters typically support various roles across many industries so they have great market insight.
As a bonus, working with recruitment firms gives you an opportunity to prepare for future interviews especially if you are new in the job market or have limited experience.
Alternatively, if you are able to time your interviews and are lucky to draw interest from multiple companies, try to narrow down your top 3 companies and get an understanding of their compensation structure for the role.
That is another source of data - Imagine the leverage you have if you can tell another competitor that you have interviewed or been offered a role, and the market seems to be demanding a higher salary than what they have quoted you.
Be truthful, polite, and always professional in your delivery. You never want to come across as cocky or a worse, a liar. Words spread around faster and further than you think and most companies have a good understanding of the market already.
Be transparent and understand that the other company may not be able to match the market but it will definitely open the door to other forms of compensation if you are still interested in that particular organization. I’ll discuss this next.
Think Beyond Base Salary
Many companies will sometimes have flexibility with vacation, bonuses, and/or development programs such as certification and course reimbursements to name a few.
Of course, not every company will be able offer or have the flexibility to change any of these, however, I'll mention it again, if you don’t ask, you will never know, you’ll never receive. Simple.
The idea is not to ask for everything at once but to give you some points on what you can potentially use during the negotiation process. For example, if a company is not able to meet your desired base salary perhaps ask if there is flexibility to increase your vacation time.
Another example is that if you are leaving your company at a time where walking away means forfeiting the hard-earned bonus from the previous year, ask if they can factor that in your base salary or perhaps a signing bonus. Be prepared to show supporting documents if necessary.
Again, these are not always available but being aware where there is flexibility by asking the right questions is key!
What’s Most Important
What’s most important to you?
Sometimes you have to take a little bit of a ‘step back’ or make a lateral move to take two steps forward in the future. Look ahead!
While it’s not always the case, a higher salary may mean a higher level of stress and/or a cultural miss-match with your leadership team. Evaluate all aspects holistically and stick to what you value most.
I remember earlier on in my career while I was working partly on commission + base salary for a staffing firm. Fresh off an incredible year of work, I was set to receive one of the highest commission checks the company had seen at the time.
The dilemma? I received a career opportunity job and had to make the tough decision to forfeit my commission bonus if I elected to leave. For me, what was most important was the career opportunity. It’s exactly what I wanted, a lifetime career opportunity but the timing was just unexpected and not ideal.
Regardless, although it was a difficult decision to give up a lot of earned commission money upfront, I found solace in knowing that this was a career move that will allow me to transition to the next stage of my career.
While I utilized the commission loss as a negotiation tool to increase my base salary, there wasn’t a lot of room for flexibility considering I had limited experience at the time.
What I could have honed in on was other forms of compensation to compensate for the commission loss and that’s what I want to emphasize.
Looking back, I would, at the very least ask for the possibility of a sign-on bonus or increased vacation. I later found out after working there for a few months that the company doesn’t budge on sign-on bonuses but they have flexibility with vacation.
Every organization is different but I could have easily gotten an extra week of vacation had I simply inquired. Again, if you don’t ask, you will never know, you’ll never receive.
Once I was hired as a recruiter, it was literally part of my job to negotiate when hiring new candidates and giving that extra week of vacation when we felt short on base salary. Ironically, I saw this scenario way too often.
Based on this company’s policy and many others, it was too late for me to re-negotiate at that point but I was reminded every so often just by the nature of my job.
Either way, while this happened many years ago, I still feel this was 100% the right move – A career, life impact role which later expanded my experience and led to a higher salary potential beyond this job.
The point is, knowing your worth and what’s important to you and then looking ahead, 2-5 years from now. How can this role help you advance in your career?
Don’t focus so much on the base salary unless it is the most important thing for you. If it is, that’s ok as well but understand the organization and industries that are designed to offer what you value most so you are not wasting your time and the companies as well.
The goal? maximize what you can earn and are worth now but look at the bigger picture.
Let’s Recap
It’s extremely important to maximize and negotiate your offer as much as possible in good faith before you sign on the dotted line, even if you feel it’s a generous offer.
Why you may ask?
As an internal employee, most organizations can probably only offer you 2%-3% yearly increases on average, give and take the circumstances for a good performer.
As the market continues to evolve, new employees hired for the same role and responsibility often get a higher salary than what you would of came in as, and that's including the yearly bonuses you received after.
As a result, this is your best opportunity to get as close as possible to the market by negotiating firmly but in good faith in your initial offer.
In order to maximize your initial offer, I focus on 3 tips to get you off to a great start.
First, you need to understand the market and I share some tips on how to attain this information. I would look for 3 solid sources.
Second, I discussed other forms of compensation to think beyond base salary which gives you some great negotiation starting points when a company falls short of your expectations.
Finally, and maybe most importantly, it’s crucial that you understand what you value most in an organization. Is it only salary? career growth?
In my opinion, it will be tough to always find everything within one organization, especially early on in your career so I invite you to think 2-5 years down the line.
Think about all aspects, direct and indirect compensation. If career growth is the most important aspect for you, ask yourself: how can this role help me grow my career down the line regardless of my base salary?
Utilize these 3 tips and you’ll be off to a great start with your negotiation and be well on your way to maximize the initial offer you get.
How many of you plan to use these tips?
Are there any that you have already successfully implemented?
Full Disclosure: The link below is an affiliate link so I may receive a small commission at no cost to you if you purchase the book using my referral link below. If you found the information in this blog useful and looking for a great book on negotiation, go ahead and check it out - It will help support for more content.
Here is a great book on negotiation, "Getting to Yes". One of the books that I have read that will help you in various negotiation scenarios including salary negotiations.
Comments