Salary Negotiation Skills and Strategies -
for Navigating The Tough Terrain
By Sue Campbell, 1st-Writer.com

Why do so many job candidates come unprepared to the salary negotiation table?

The idea of "winging" it seems to be a popular one, but not a very prudent course of action when you consider that the decisions made here, at the time of hire, will have a direct impact on your career for years to come.

For example, a loss of $1000 in negotiated annual salary at the start of hire will not only reduce your immediate income, but will reduce your income for the rest of your employment with this company, because all subsequent raises will be based on this lower rate. Over a career life this can mean a loss of thousands and thousands of dollars.

Salary negotiation may not present a life or death situation, but it certainly has a direct impact on the quality of one's life. So why do so few people adequately prepare themselves for this part of the job search process? And why do so many choose to navigate blindly, simply hoping for the best?

The Least You Need To Know

To begin, you need to understand the base figures you'll be working with in your calculations. These are your three key figures:

1. Your living wage - the minimum income requirements you need to survive. The income required to maintain your rent or mortgage, your utilities, car payment, groceries, fuel, clothing, etc. - the basic necessities. You need to know this number, but you share it with no one. To calculate this figure you need to have to 12 months of records: bills, utilities, etc. You can calculate this with six months, but your figures may not be entirely accurate. You want to add up each category, individually, and then add the categories together. Divide by 12 and you'll have your living wage. Keep in mind that this figure may not address luxury items.

2. Your current worth - at a man's pay scale (in this age of enlightenment, it's still not always equal, so make sure you know the correct figures): research pay scales for individuals at your current skill and qualification level; in this type of position; in this particular industry; in this specific location, and in the current business climate.

3. Top scale: for this type of position, in this type of industry, in this location, and in the current business climate - the amount that would make you jump out of bed on Monday mornings, even if you're not quite there yet.

There are several ways to research pay scales, and your best bet is to utilize all the resources available to you:

• Salary Research and Pay Scale Calculators:

• Recruiters, headhunters and temporary agencies in your location of choice.

• Professional Associations:

• Professional Journals

• Company Research

Keep in mind that location is a large factor in pay scale. Just as some locations have higher or lower costs of living (which need to be a factored into your research, in addition to your minimum pay requirements), some markets bear higher or lower compensation rates.

Once you have your three key figures in place (living wage, current worth, and maximum pay scale), disregard the living wage. You need to know and understand this figure, because it is essential to your survival, but you won't be using this figure in your salary negotiation with potential employers. This information is for your use and benefit, only. It is the card you keep close to your chest.

If you have done your research well you should have a clear picture of your current job market worth, and you should know what the highest pay scale is for individuals in your field who present the greatest amount of experience and expertise (the top level).

Between these two figures is your salary negotiation starting point.

So if you have determined your "current worth" at $45,000 (for your level of experience), and the highest compensation for someone in your field with the greatest amount of experience is $100,000, somewhere between these two numbers is your negotiating salary range.

It is always easier to negotiate down, rather than up, and it is practically guaranteed that the potential employer is going to want to negotiate down. Therefore, You want to be able to give the potential employer the room to do this without losing your negotiation advantage or ending up with a compensation that is less than your current market worth - or worse, lower than your living wage.

With this information (living wage, current market worth, and maximum pay scale), and with an understanding of the negotiation process (which we will explore in a moment), you now have the figures necessary to negotiate a fair exchange.

But Having The Figures Alone Isn't Enough

It would be great if it were that easy, but you are not done yet. Navigating a successful salary negotiation includes:

1. Understanding the position.

2. Understanding the company.

3. Understanding the competition.

When you are in a job interview situation, you may think the entire focus is on what you bring the table. And while it is true that this an essential aspect of the interview process, your ability to listen well and ask the right questions is equally important.

The more you understand about the demands and requirements of the position, the better you will be able to assess suitable compensation.

It is interesting to note that within today's economy, and with an ever growing pressure to downsize, employers are requiring more and more from the employees they hire and retain. So while you can assume what the normal responsibilities will be for a given position, the job may actually include responsibilities atypical of the job title. You may be expected to perform or master skills well outside the original job description. Therefore, it becomes even more important that a job candidate fully understand the role and responsibilities of positions he or she considers.

If the salary negotiation phase begins before you have achieved a solid understanding of the position's full requirements, back up the process a bit by asking questions, such as, "Before we discuss salary, may I ask you a couple more questions about the position? If I understand you correctly, the most important aspects of this job are..., but in addition to these responsibilities the position also requires..." Keep the dialogue going until you feel that you have achieved enough information to make a sound assessment.

Company research is also vitally important in an effective salary negotiation. It is important that you know the company's goals, that you understand their products or services, that you recognize their branding (and the message they are trying to send), what they are most proud of, who their competition is, what they consider their greatest problems, how well they are doing, and the types of candidates they hire.

Some of this information can be gained through the interview process by, again, asking the right questions. But a smart job candidate will have performed a detailed research on the company prior to the interview - prior to even the submission of a resume, if they are really on top of the game. 

How can you know the types of a candidates a company hires? Take a look at their corporate Web site, and read their annual reports. What types of skills and experience do their key players have? Who is currently working for them? What is written in the professional bios they post? Chances are you will see a pattern here.

Company research can also indicate the level of compensation they offer to current employees, giving you an idea of what they have budgeted for the position you are targeting. A company who is struggling may be less willing to negotiate a higher starting salary, but may be more willing to offer higher compensation for successful results (just make sure you get it in writing).

The more you know about the other player at the negotiation table (the company), the better you will be able to negotiate how well your salary requirements will fit within this particular organization.

You also need to know about the competition. And I don't mean the company's competition (although that can be a key piece of information, as well), but your competition. How do your skills, background and experience measure up with other candidates applying for the same types of jobs?

While it may be impossible to learn about your direct competition (for this job), it is very easy to learn what competing candidates are offering in general. (Really.) Just take a look at any resume database - what does your competition's resume look like? Take a look at various corporate Web sites in your industry and read the professional bios of individuals doing the type of work you are targeting. How does your history measure up to theirs? Talk to recruiters and headhunters and have them evaluate your resume. How do your skills and background measure up with similar candidates in your field and location?

If you look hard enough, you will find out that your competition has posted their information all over the Internet.

Let this information guide you. Are you being underpaid? Would it be prudent for you to acquire a new skill or polish those you currently possess? Would it be financially valuable for you to take a class, or get certified in a particular area? Are you competitive?

Show Me The Money!

Even with all the research and information on your side, you still have to talk about the money, and for many people money is an uncomfortable topic.

As I have already addressed, it is easier to negotiate down than up (and hopefully the salary range you have developed will give you the room you need to negotiate effectively without putting you at financial risk).

You also know the potential employer is looking for a deal. The employer wants as much of you as he or she can get for the least amount of compensation possible. This doesn't mean that the employer wants to cheat you out of fair compensation, but every dollar saved looks good on the company's bottom line.

And, finally, you can bet a budget has been established for the position. It may have very little flexibility, or it may have more. If you can find out what that budget is - you will have taken one big step in the salary negotiation process.

It all begins with the tough money questions:

• "What salary are you hoping for?"

• "What would you consider fair compensation for this position / for someone with your experience/background?"

• "How much are you looking for?"

• "What would it take to bring you on board?"

• "What were you making in your last position?

• "What is your current salary?"

Since knowing what the company has budgeted for the position is critical to your salary negotiation, getting this information early in the process is important.

The first four type of questions above leave an opening that allows you to ask, "Can you tell me what has been budgeted for this position?" It may not be a question the interviewer is willing to answer, but it is a fair question. Another way to phrase this question would be, "Can you tell me what the salary range would be for someone of my skills and background with ABC Company?"

To help keep negotiating options open, offer a salary range, as discussed previously, rather than a single, set amount. Present this range with a lead-in statement that helps to qualify the amount, and also suggests some flexibility. For example, "If I understand the needs and requirements of the position, and I believe that I do, I believe my level of experience would merit a starting range of $55K to $65K. This is, of course, negotiable." "Naturally, I want to make as much as my skills and background will allow, which I believe to merit a $55K to $65K starting range. At the same time, I truly want to work for ABC Company, and, therefore, I want to offer some flexibility in this negotiation." Open door.

If the interviewer states, "I'm afraid you're overqualified for this position (and this only became apparent after you gave your salary range)," or "That's above what we were hoping to pay for this position," or "That's outside of what we can offer you at this time," or any similar type of statement - and it is a job you want to continue to pursue - then the salary negotiation doesn't have to stop here. A simple "I'm still very interested in working for ABC Company. What did you have in mind?" or "Well, what has your company budgeted for this position? Because ABC Company is a company I truly want to work for." should keep the negotiation table open. If not, then take it to heart that they really can't afford you.

If the salary negotiation continues, the interviewer may ask you, "What would be the minimum salary you would be willing to accept?" If they have continued to avoid the budget question (and at this point it would be silly, as it would no longer be to their advantage to keep it a secret), then you may want to ask (again), "Can you tell me what has been budgeted for this position?" Failing that, you need to consider how much you want this position, how much you need this position, and what you are really willing to accept, financially, to consider the position - because, again, what you accept now will affect your compensation levels for some time to come.

Questions about previous salary and salary history are trickier issues. If your previous position paid less than your skills and experience warrant (compared to local and/or national averages), it can diminish the validity of the salary range you are presenting. However, this fact can also be used as one of the reasons why you are looking to secure new employment. Take a word of warning, however, and NEVER say anything directly negative about a previous employer. Instead, suggest: "One of the reasons why I'm seeking new employment is to gain the opportunity to be fairly compensated for my skills and level of experience. My previous position paid $10K less than the national average, not because my skills or achievements were lacking, but because that was as much as the previous company could bear."

When considering your previous salary, take into consideration any additional benefits and their financial value, such as insurance, 401K, profit sharing, bonuses, stock options, clothing allowances, etc., and include these as part of your total salary amount.

This information is important not only for stating previous salary to a potential employer, but also for your ability to compare offers. For example, If you do not already know what these items would cost you if you were to pay for or purchase them yourself, find out. A company that offers you $4K more in salary, but offers no medical insurance, may actually be a raw deal when you learn that covering your own insurance plan will cost you $5K or more per year.

For handling the salary history or salary requirement prior to an interview, see my article on salary history and salary requirements.

Once you have reached an acceptable offer, get it in writing. You do not want to quit one job only to have a verbal offer withdrawn on another.

You also do not want to burn any bridges. Give appropriate notice to the company you are leaving (see resignation letter), contact any and all companies you were in negotiation with (you may want to renew these options later) to show your appreciation for the opportunity and for the company, and contact every one who has helped you in your job search campaign, such as contacts, references, etc., and thank them for their efforts.

If you would like to see more tough interview questions and their best responses, e-mail me and I'll be glad to send it to you. It's free!

Good luck in your job search! Sue Campbell, 1st-Writer.com - over 15 years experience helping clients achieve their career and business goals. Feel free to e-mail me with any questions you may have. I'll be glad to help!

1st-Writer.com ® P.O. Box 1128, Keystone Heights, FL 32656-1128 ® (904) 248-2493 ®  E-mail Sue Campbell

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This page last updated: 12/30/2008