Note: This is an article I published in 2011, which I have posted here in hopes that it is useful to those in or about to enter salary negotiations. It was originally written for a women’s professional magazine but the principles apply to both men and women. While men are more likely to negotiate than women, many men do not or could do so more effectively.
I am posting this now because I am currently reading Sheryl Sandberg’s new book Lean In, on women, work and leadership, and she discusses this issue, among many others.
On average, women make 73 cents for every dollar that a man with similar education and experience makes in the same position. This “wage gap” is well documented and somewhat mysterious in light of the social and political gains women have made over the last few decades, including the 1963 Equal Pay Act and 2009 Lilly Ledbetter Fair Pay Act. There has been much speculation on the root cause of the wage gap, with all of the suggested reasons coming up short until the 2007 publication of the ground-breaking book “Women Don’t Ask: The High Cost of Avoiding Negotiation” by economics professor Linda Babcock and journalist Sara Laschever. The book presents the argument that the wage gap is almost entirely explained by the fact that very few women compared with men (1 to 8) negotiatiate their starting salaries. Let’s look at why this is the case: Suppose an equally qualified 22-year-old man and woman apply for the same job and she takes the $25,000 offered without negotiating but the man successful negotiates his starting salary up to $30,000. Now assume that each makes an identical 3% annual raise, despite his gender’s propensity to negotiate, By the time they are 60 years old, he will be making $93,000 and she will be making $76,000 . Her lost potential lifetime earnings of not negotiating for $5,000 more up front costs approximately $500,000 over her career!
You have to ask. By electing to negotiate, you already raise yourself above most of your competition. A Society for Human Resource Management survey found that 9 out of 10 recruiters were willing to negotiate salary and benefits with job applicants. Yet, only 1 out of 3 applicants surveyed said they felt comfortable asking. While the current economic milieu may dissuade job seekers from negotiating, consider the lifetime cost in the example above before you sign the initial offer.
Set your sights high. Most scientists do not ask for enough. Employers typically make an offer, waiting for the candidate to argue for a higher salary, only to be surprised with a meek acceptance. One of the most significant ways in which employers judge your ability is through your confidence. If an employer is presented with 3 candidates with roughly similar CV’s, and 1 says that she’s worth more, who are they going to trust the high risk all important project with? A higher aspiration communicates confidence, and with it comes a higher salary. Another way to increase your confidence is to make sure you have more than one offer on the table.
Don’t give away too much. In many job applications, an employer will ask for your salary history and/or desired salary. When they ask you for that figure, respond that you do not know what you would require until you have a clear picture of the job requirements and potential for advancement over the next five years. On application materials, it is perfectly acceptable to write “competitive”, “open”, or “negotiable” and leave those salary history numbers blank. Writing down those numbers pigeonholes you, and reduces your negotiation power. Companies typically look at current earnings and offer that salary plus 8 to 10 percent. If you’re currently earning $75K but a job posting lists a salary range at $80-120K, you could end up getting placed at the low end of the range.
Do your homework. Use your network and the web to determine the worth of your skills, experience and the position. Remember to factor in variables such as cost-of-living which varies regionally – the same salary in Houston will not go nearly as far in San Francisco. Good resources are www.salary.com and www.payscale.com. Professional societies often research and publish pay scales in their field, and government job salaries are typically available to the public.
Know your minimum salary requirements as well as what you hope to make. You shouldn’t mention these in your response to the salary history question, but you need to give this some thought for negotiation. Remember that it is unlikely to get the exact amount of money you want. You will probably have to compromise. The trick is to figure out how much you are willing to compromise and what you will do if your boss doesn’t offer you a salary you find acceptable. For example, are you willing to take less money for more vacation, flex-time or other perks?
Sell your value. Stress what you have to offer the employer. Explain why you deserve a good salary by pointing out your accomplishments. State your sources from your prior research. The interview chair is not the place to become shy or timid.
Show your passion and interest. There is a real danger in focusing purely on negotiating effectively. The company may not know just how keen you are to join their organization. Let them know that the reason you’re negotiating is that you’re interested in joining them. This will increase your appeal, and may cause them to stop looking for others for the position – thereby increasing your negotiating power.
How to deal with rules and policies: If the employer is refusing to negotiate by stating that something is company policy, challenge it by asking the basis or reason for the policy. Ask what exceptions have been made, and the rationale behind these. Find a situation or context that would make you exempt from the policy. For example, if the policy isn’t applied to contracting staff, then ask them to change the position to a contractual one rather than a full time role. Most every rule has its exceptions.
Skip a grade. “We can’t pay you more than X, as this is the maximum allowed for your grade.” Heard this before? Insidiously effective if left unchallenged. To counter this, create a convincing argument as to why you are exceptional. Start by writing out all the ways in which you stand out from the run-of-the-mill competition. What is the difference between the grade they want to cast you into, and the next grade or two higher? Make a case for your fitting into a higher grade with more appropriate pay.
Make mutual concessions: When an employer is insisting that you are going to have tomake a concession, why not ask for one in return? For example, “If I accept this salary now, then would you be prepared to discuss awarding me a performance-related bonus plus a performance review in 6 months instead of 12 months?”
Look at the whole package. Do not limit yourself to money. Be sure to look at the whole package on offer. Consider sign-on and other bonuses, salary reviews, stock options, relocation expenses, medical and disability plans, professional memberships, profit-sharing plans, day care, tuition reimbursement, vacation and sick days, overtime policies, flextime options, etc. These are all intangible factors which have worth to both you and your employer.
Take your time. When an offer is made, resist the urge to respond immediately. Take time to digest the salary offer. If necessary, say you will respond within 1 or 2 days in response to the offer. If it is less than what you were expecting, bring up your own research to move them upwards. Again, be prepared to illustrate your research with the resources at your fingertips. You are at your most powerful when responding to their offer. So take your time and make a good case.
Get all offers in writing. You do not want to commit yourself or turn down other positions without first knowing exactly what is being offered. Avoid making a decision before it is in writing. This doesn’t mean the offer is carved in stone; view it as a starting point for negotiation. Compare their written offer with your meeting notes.
Accepting the offer - Once an offer is given, you have the right to ask for a clarification on it. Asking “Is there any flexibility in this offer?” may help to open a discussion of increasing the offer. If it does, do not expect a large boost in base pay, but rather, an extra week of paid vacation, a signing bonus or other such perks.
This process is not all about arguing or claiming some prize. It is about creating a trusting, long-term relationship. Negotiation is a collaboration that is mutually beneficial to you and your future employer.