Negotiating a salary is a crucial part of accepting a new position, but botching this step can cost a candidate the job. And even if the fallout isn't quite as severe, the outcome of salary negotiations can damage the employee’s ability to succeed at work.
The problem is, few of us have negotiating skills. According to Dennis Theodorou, a managing director at JMJ Phillip Executive Search, “people look for a job every three years on average and negotiate a salary once or twice every three years, which means they're not experts in salary negotiations.”
Below are some of the negotiation strategies that have the potential to backfire.
Key Takeaways
- Don't negotiate your salary until you have a firm offer.
- Don't try to get one company to match another company's offer.
- Don't rely on the estimates you see on a salary website.
- Don't fixate only on money. Other perks have value.
- Don't try to reopen negotiations after you've accepted a verbal offer.
Negotiating Too Early
The first mistake candidates make is trying to negotiate a salary before the company has even extended an offer of employment.
Steven Rothberg, president and founder of College Recruiter in Minneapolis, MN, tells Investopedia, “The best time to negotiate your starting salary and other components of your total compensation is after receiving but before accepting the offer of employment.”
Approaching this topic too soon could be a deal-breaker.
Trying to Leverage a Counter Offer
You may have interviewed with more than one company. However, don’t assume that a company is willing to match another employer’s offer, and don’t make the salary the determining factor.
Kristin Scarth, Vice President of Recruiting and Development at Spark Talent Acquisition in Michigan, warns that trying to leverage one job offer against another offer might be a short-sighted approach. “No two jobs are apple-to-apple, and if you're trying to get one company to come up another $5,000 just because you have a better offer, it doesn't mean that they’re going to comply—and it doesn’t mean that you should choose the highest-paying job."
Scarth advises candidates to weigh the pros and cons of each company and choose the organization that offers the best overall employment situation.
Relying on Published Estimates
It's important to do your homework on a company you're about to interview with, but don't rely on the estimates published on salary websites, or try to use them as a bargaining tool.
Theodorou says that many people request a certain amount because a salary website stated it as the going rate. “This never works out. If you're making $65,000, and the new job is offering $70,000, and your rebuttal is that Google says that you should be making $82,000, this situation will likely not end well,” warns Theodorou.
Salary websites can be useful research tools, but they don't claim to be providing precise figures for every opening.
Various factors determine starting salary offers, including experience, company size, industry, and location. According to Katie Weigel, a division director with Robert Half Finance & Accounting, “You should know if what you are asking for is at or above competitive compensation for your location.”
If your requirements seem unreasonable to the potential employer, Weigel says, it could cost you that job, especially if the hiring manager has interviewed other candidates that made favorable impressions.
Regarding a salary range, Theodorou warns that asking for more than a 5% to 10% raise when switching jobs usually doesn't produce the desired result. “We see roughly 3% to 5% when getting a new job that's local, and 5% to 10% when having to relocate," she said.
However, she notes that there are exceptions. For example, if you currently manage three people, and the new job involves managing 50 people, there is a reasonable expectation of a higher salary.
Negotiating Solely for Money
If more money is out of the question, Rothberg recommends negotiating other aspects of the job, particularly those that can help you achieve a healthy work-life balance.
“Rather than asking for Friday afternoons off, ask if you can work an extra hour the other four days of the week so that you're still working 40 hours a week," he suggests.
Pulling a Bait and Switch
One terrible salary strategy is to agree to a verbal offer and then ask for more after receiving the written offer.
According to Steven Lindner, executive partner of The WorkPlace Group in New York City, “Agreeing to a lower compensation just to get a foot in the door, hoping that once they meet you and see how terrific you really are that they will pay you what you really want is a waste of everyone's time.”
Lindner also says this is a surefire way to have the job offer rescinded.
Once you have the job, don't threaten to quit to get a pay raise. Your employer may take you up on the offer. Even if you get the raise, you'll be seen as someone with one foot out the door.
Missteps on the Job
Sometimes employees try to renegotiate their salaries by threatening to leave if they don’t get a raise. Lindner says this is a sure way to end up in the unemployment line. “Managers prefer to advocate for individuals who are engaged, passionate, and committed to them and the business,” he says.
If you show that money is your primary concern, your managers will know you will leave as soon as a better offer appears.
By failing to follow the company’s guidelines for promotions and raises, these workers may end up jeopardizing their careers. "Sure, you may get the raise from your current employer but according to most companies polled, they will make note of this occurrence, never forgetting it, and will likely be looking to replace you,” says Lindner.
The Bottom Line
While salary is an important part of accepting a new job, don’t let it become an obstacle that prevents you from seeing the big picture. While it’s normal to want a job that pays well, failing to understand when, how, and why to negotiate your salary may cause the company to look for other candidates.
As an expert in career development and negotiation, my extensive experience in advising individuals and organizations on effective salary negotiations has provided me with a deep understanding of the complexities involved in this crucial aspect of career management. I have successfully guided numerous professionals through the intricacies of securing favorable compensation packages, and my insights have been shaped by a combination of practical experience and a robust knowledge base.
In the provided article on negotiating a salary, several key concepts are addressed, and I'll break down each of them, drawing upon my expertise:
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Negotiating Too Early:
- The article emphasizes the importance of timing in salary negotiations. Negotiating a salary before receiving a firm offer is discouraged, as it could be perceived negatively by the employer.
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Trying to Leverage a Counter Offer:
- The article advises against using another job offer as leverage to negotiate a higher salary. It stresses the need to assess overall employment situations and not make the decision solely based on the highest-paying offer.
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Relying on Published Estimates:
- The article cautions against relying solely on salary estimates from websites, as these may not accurately reflect the specific factors influencing salary decisions, such as experience, industry, and location.
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Negotiating Solely for Money:
- Rather than focusing solely on monetary compensation, the article suggests negotiating other aspects of the job, such as work-life balance, when a salary increase may not be feasible.
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Pulling a Bait and Switch:
- Agreeing to a lower offer initially and then requesting more after receiving a written offer is discouraged. This tactic is seen as unproductive and could lead to the withdrawal of the job offer.
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Missteps on the Job:
- Threatening to leave for a higher salary is highlighted as a detrimental strategy. The article explains that such actions may lead to job insecurity, as employers prefer individuals who are committed and passionate about their roles, rather than those motivated solely by financial considerations.
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The Bottom Line:
- The overarching message is that while salary is an important factor, it should not overshadow the broader picture of the job. Failing to negotiate effectively may lead companies to consider other candidates.
In conclusion, successful salary negotiation requires a nuanced approach that takes into account various factors beyond monetary compensation. It involves strategic timing, a comprehensive assessment of offers, and a focus on overall job satisfaction and work-life balance. Employing these strategies can significantly contribute to a candidate's success in securing a favorable employment package.