Today we welcome Dave Hahn, author of Career Wizard, to discuss increasing your salary through negotiation.
There are many components to a compensation package offered by an employer: health, life & disability insurance; vacation; bonus & commission plans; retirement, 401[k]s & other savings plans; sign-on bonuses; and relocation assistance to name several. But, none is as important as base pay.
Duuuh! Everybody knows what goes in your paycheck is important. True, but you may not understand the multiplier effect of just a little more in your original base pay.
Let’s say you got an offer of $40,000 per year and you were able to negotiate to $41,000 [2.5% more]. That’s less than $20 extra per week in your pocket, but over 10 years it’s more than $14,000 extra. Also important, you can contribute more to your 401[k], get more life insurance, and receive a larger bonus at the end of the year—all because they are calculated as a percent of your larger base pay. And, when you get that promotion, the pay increase will be larger for the same reason.
Sounds good, doesn’t it? Sure, and if you’re original offer was $80,000, you can double the other numbers too.
But, how do you get an employer to increase the offer? First, recognize that employers expect you to ask for more and very often make the original offer lower than their limit to give room for negotiation. Even if they won’t budge off their original offer, they won’t get mad at you for making a reasonable counterproposal.
So, even if your reply to the offer is, “I was hoping for a little more.” you might get something extra. And, if you’ve done your homework, you may be able to negotiate for even more.
Here are four websites to help you find what other companies are paying. Make sure you find a good match for the job, and look at data for your region and the appropriate company size.
Also, if there is a professional or trade association for your work, look for salary surveys they conduct. You may find it at a library, or get it from a friend who is a member, or you may have to become a member to get it.
A highly valuable piece of information is the company’s actual salary range for this job. You may be able to find out just by asking the HR person who interviewed you. It’s not inappropriate to ask, but they may not be willing to share the information. Or, perhaps you have a friend who is an employee [or former employee] and is willing to share the information.
The salary range—minimum, midpoint, maximum—is important. Without an act of Congress the offer won’t be above the midpoint. That defines the pay for a person doing a fully acceptable job over a sustained period of time. The more experience you have, the closer the offer should be to the midpoint. [NOTE: if you find yourself convinced you should be paid above midpoint, be aware of the consequences of winning. Your pay increases are likely to be below average until the pay range shifts upward sufficiently. It may be better to pursue other options.]
Now that you know the importance of base salary, and you know it’s OK to negotiate, and you know how to arm yourself with information, you’re ready to be an effective negotiator. Tell them, “All I want is to be paid fairly for what I’m being hired to do.” Then, share your information and tell them what you think is reasonable based on the facts. You’re very likely to boost your base, and your benefits will benefit too.
By Dave Hahn, author of Career Wizard
Career Wizard is a blog about the exchange of good ideas for job search. The author launched DASA Services in 2008, a firm offering career transition consulting and administrative support for executives, managers and senior professionals. Prior to this, he was with Right Management, the world’s leading career transition consulting firm, for 17 years where he was Vice President, Senior Consultant and Practice Leader for Career Transition in the Great Lakes Region.
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