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Salary Negotiation – How to Win

Written by Matt Jabs - 30 Comments

The art of salary negotiation is a touchy but crucial matter that rarely receives adequate attention. With all the economic certainty that we’ve been facing, many people have increasingly focused on reducing expenses and leading a frugal lifestyle. There are, however, two sides to the “spend less than you earn” coin…

When is the last time you stumbled across proper techniques for negotiating your salary and increasing your top line? While frugality is an important component of a healthy financial lifestyle, salary negotiation is also an important skill to master.

Think about how much time, money, and energy you’ve spent earning a college degree, sculpting the perfect resume, seeking employment, and interviewing for countless positions. Given this investment, why not spend a bit of time properly preparing to negotiate your pay?

Consider the following scenario…

You walk into a prospective employer’s office. You’re dressed to impress, portfolio and resume firmly in hand. You meet Mr. Employer, make some small talk, and answer the typical cheesy interview questions to ensure you’re the best candidate for the position. And then…

WHAM! You’re asked, “So… What sort of salary are you looking for?”

What do you do?

Rather than freeze and stumble around for the right number you should follow the first rule of salary negotiations which states: there is one time and only one time to discuss your salary expectations, and this IS NOT IT! Sidestep the question like your life depends on it!

Jack Chapman, leading career consultant and author of “Negotiating Your Salary: How to Make $1000 a Minute,” suggests two essential rules.

Two must-follow rules for salary negotiation

1. Discuss money only after they’re ready to hire you.

This rule applies to the Human Resources screening interview, as well as the main interview(s). Anytime someone asks something like “What is your current/previous salary?” or “How much do you want to make?” — dodge them.

Why? If your past salary was too low, you run the risk getting a lowball offer. Conversely, if it was too high, you might blow past what they’re willing to pay. A premature disclosure of your previous salary undermines your bargaining power.

FYI: Focusing on salary during the interview process is the employer’s way of getting the most competent person for the least amount of money. Don’t relinquish key information early in the process.

In order to evade the question, you need to respond confidently, but remember… There’s a fine line between confident and cocky — make sure you don’t cross it!

Here are a few examples of what to say:

  • “I’m sure we can come to a good salary agreement if I’m the right person for the job, so let’s make sure I am!”
  • “Well, so far the job seems to have the right amount of responsibility for me, and I’m sure you pay a fair salary, so let’s hold off on the salary talk until you know you want me. What other areas can we discuss?”

Do this for the first and second requests alike, but if they continue to probe, you’ll have to defuse the situation. If things get tense or awkward, try softening your statements with one of the following:

  • “I get anxious when talking about money.”
  • “When we discuss money, I’m afraid that I’ll be screened out or boxed in so could we hold off on that?”
  • “I’ve noticed that we’ve come back to salary again. While I’m happy to talk about money, I’m not sure why we need to discuss it now.”

If this doesn’t work, and they insist that you divulge your salary requirements, you can cave in, but it’s not recommended.

Now that you’ve positioned yourself for optimal negotiation by side-stepping their requests, you’ll want to make sure you follow the second rule…

2. Make them go first!

Because you’re so awesome, the job offer is now on table and — if you exercised your skills from above — your salary requirements are still unknown. After the job has been offered, the salary talk could come next, last, or somewhere in between.

Regardless of when the topic comes up, as soon as Mr. Employer asks “How much would it take to get you to come aboard?” Do whatever you can to avoid answering with a number!

Instead… Make them go first! Once again, why would you want to risk being too high or too low. You never want to price yourself out of the job, nor do you want to undercut your true value.

Nine times out of ten, they’ll already have a budget set aside for the position. In most cases, it will actually be a range, and you want to land at the high end. At this point, your goal is to find out exactly what that range is!

Reply with one of the following:

  • “I’m sure you have something budgeted for this position, what’s your range?”
  • “I have an idea of the market, so let’s start with your range.”

If you can get them to divulge their range, then you have them exactly where you want them. As soon as you know your target, start giving them solid reasons why you should be near the top of the range. And remember… If they’ve offered you the job, chances are they think you belong there too!

One final strategy

I’ll leave you with the most surprising and unnatural yet most effective tactic:

SILENCE.

For example: Let’s say they extend an offer, saying “We can offer you $XX,XXX/year and would like for you to start as soon as possible.”

What should you do?

NOTHING! Repeat the offer in a quizzical tone “$XX,XXX?” and sit in silence for 30 seconds or so. This could very likely make them squirm, wiggle, or feel uncomfortable enough to up the ante without your ever really responding to the first offer.

I actually gave this advice to my buddy Fred when he was on his way to an interview a few years back, and it worked! Fred was offered the job, but remained silent when the first number was given. He said that after about 10 seconds of silence, the prospective employer came back with, “Well, we could go higher if that isn’t going to work for you.”

Fred ended up getting $5,000/year more than originally offered! I’m still trying to get him to give me a cut of that since it was my advice that got him the money!

Closing thoughts

Remember… I’ve only highlighted a few of the most powerful concepts introduced in Chapman’s book. He actually covers much more, including how to get raises, and how to arm yourself with industry salary standards to justify the salary you deserve.

I highly recommend this book. It has empowered me tremendously, and I’m confident that it can do the same for you. It’s an easy read, and if you insist on working for other people, it will be a very helpful tool.

What are some of the salary negotiation tactics that have worked for you?

Published on October 15th, 2009 - 30 Comments
Filed under: Working

About the author: is a thirty-something IT manager and blogger who wants to help himself and others get out of debt. He writes about personal finance and debt-free living at Debt Free Adventure.

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30 Responses to “Salary Negotiation – How to Win”

  1. 1
    DJ Says:

    I am applying for a new position within the agency I currently work for. It is actually a state agency position, so all of the salary bands have pre-disclosed salary ranges. My current salary is public knowledge to anyone with access to the internet (since any salary above 50,000 has to be made public), so I don’t know where to go with this one. I could dodge the salary question, but then it might be foolish as they already know what I make anyway. Should I just go ahead and put down my salary in the pre-screen questions, or resist the urge and remain elusive? Any opinions would be greatly appreciated.

  2. 2
    Mike Piper Says:

    “I get anxious when talking about money.”

    Hehe. I can just imagine how that would have gone over in any of the positions I’ve ever interviewed for (all either financial advising related or accounting related). :D

    The silence bit is a sales tactic that’s been used for ages–because it works. Only catch: It doesn’t work as well on people who also have a lot of sales/negotiation experience.

    Great summary of suggestions. :)

  3. 3
    MH Says:

    As a business owner, I can tell you that anyone who follows this advice during an interview with me, will get a quick escort to the door for wasting my time.

    I may decide that salary needs to be discussed at point X in the process for any number of reasons, and would consider the risk that anyone who repeatedly insists on hijacking my hiring process might just decide to later hijack other processes I’ve developed for my business.

    You are advising people to try to identify and reach the top of the employer’s “range”. I believe that’s the wrong approach, and carries a high probability of starting a relationship on the wrong foot (if it starts at all). In my experience, people who are more concerned with the relative, than the absolute, have a tendency to be generally unsatisfied.

    The right approach would be to come to the interview having done your homework, and having determined your worth in the market, deciding if you’re content with that worth, and then making a well-supported case for it.

    You may not end up at the “top of the range”, but you’ll likely end up at a level you’re happy with, and which you consider fair and equitable. And, I would expect, you’ll begin a far healthier relationship with your new employer.

  4. 4
    CK Says:

    I see MH’s point, but of course that is the point of a buisness owner. I think anyone applying for a job has a good sense of what they are worth and essentially would be happy with a salary at that point. BUT you as the employer have some salary cutoff that you can afford, why not use these tactics to try and get as close to that top of salary range as possible.

    Isn’t this just kinda like buying a house. Your house is worth whatever someone is willing to pay for it. Same with my worth to you as an employee. I’m worth as much as you are going to pay me, so why wouldn’t I try and squeeze as much as you can afford out of the deal.

  5. 5
    Matt Jabs Says:

    @MH: You elude to deceit in this article. I just don’t see it friend. Remember that you are the employer here… consider the perspective of the employee.

    You should be aware that there is nothing wrong with an interviewee being cognizant of and prepared for the all-too-common “salary bottom hiring” situation. It’s not about “hi-jacking your process”… it is about individuals knowing their worth in the market and intelligently negotiating to realize that worth – which is the point of this article.

  6. 6
    Brad Says:

    “…if you insist on working for other people…”

    What a pompous, arrogant comment. Have you forgotten all of the reasons why it is good to work for someone else?

    It’s not always lollipops and leprechans working for yourself. My employer provides awesome health insurance, life insurance, disability, 2:1 403(b) match, huge spending account allowances, dental, and a host of other financial perks. What perks do you get?

  7. 7
    Matt Jabs Says:

    @Brad: The printed page did not rightly convey the proper message from me to you. Suffice to say, that is not how it was intended – I work for someone else too. :-)

  8. 8
    JB Says:

    I agree wtih MH to a point, some of these may alienate the interviewer. I think a better way to dodge the question is to mention the complicated nature of compensation. Maybe you make $XX,XXX at your current job but it offers pension, 401k, stock options, excellent insurance, great vacation, etc.

    Your response may be: “I’m looking for something around $XX,XXX to $XXX,XXX, depending on your total compensation package.”

    Of course this assumes you know the range going into an inteview (which may be difficult with some jobs).

  9. 9
    MH Says:

    @CK, I guess there are two separate issues here:

    1. The article author’s recommendation to essentially hijack the employer’s hiring process, and

    2. The employee’s desire to maximize his earnings.

    If the employer wants to discuss salary early in the process, and you refuse to do so as a negotiation tactic, I think 9 times out of 10 you’re ultimately going to lose out, in terms of getting the job, much less getting the salary you’re after. (You certainly would with me.)

    Regarding the second, you are right; there’s nothing at all wrong with someone seeking to maximize their economic self-interests.

    I think, however, there are some subtle but important differences between a salary negotiation during a hiring process, and the purchase of something like a house. In a hiring process, you and the employer are mutually considering a potentially long-term relationship.

    Consider the following (and these are just honest, personal observations):

    1) I’ve been operating businesses for close to 12 years, and have seen a strong correlation between those who strongly seek to squeeze the most out of salary negotiations (and would apply diversion tactics like those recommended in this article), with those who tend to be unproductive, generally unsatisfied, and (relatively) transient job-hoppers (always seeking to move to the next, better opportunity.)

    2) Also in my experience, the individuals I really want to hire (i.e. the talented, productive ones) are usually far more interested in the work they are performing and improving themselves professionally, than maximizing their compensation. That doesn’t mean they necessarily end up financially exploited; On the contrary, the competitive demand for such individuals tends to naturally drive upwards the salaries they are offered.

    Given my past experience, during a hiring process with me, anyone following the advise of this article would, simply from these past experiences, be very unlikely to get the job.

  10. 10
    MH Says:

    @Matt Jabs: I’d be curious how I’ve alluded to “deceit” in anything I’ve said here.

  11. 11
    Matt Jabs Says:

    @MH: It is nothing short of obtuse to assume that someone negotiating their salary using these methods are both lazy and manipulative. I am sorry this is your experience… but for you to assume them the norm I must request some sort of statistical proof.

    If not, thank you for clearly stating your opinion.

    Per your request concerning “deceit”: to “hijack” means to engage in stealing or seizing.

  12. 12
    MH Says:

    @MattJabs

    How many times must I write, “in my experience”, to make it clear I’m not making general assertions, but rather communicating my experience?

    Anyway, if you attempt to take over control of my interview process, insisting that certain things are discussed when you want to discuss them, and not when I want to discuss them, you’ll be shown the door, and then you can go home and blog about how “obtuse” it all was.

    I don’t think one has to work too hard to see how an interviewer, faced with such a situation, might have concerns about the individual’s general willingness to do what he’s asked.

  13. 13
    John DeFlumeri Jr Says:

    Right all the way! Discuss salary after they indicate they want you!

  14. 14
    Nickel Says:

    I think JB has an excellent point, and it leads to a possible way to defuse the salary issue without being in any way confrontational. Your salary expectations will naturally vary depending on the overall compensation package. So instead of trying to openly evade the question, it might be better to defer the discussion with something like:

    “Well, salary is only one consideration. I typically evaluate opportunities based on the overall package, including benefits, opportunities for advancement, etc. Thus, I really can’t provide a specific answer.”

    To me — as someone who actually does hire people — this is a very defensible (and sensible) response to a potentially awkward question.

  15. 15
    MH Says:

    These days, my particular approach is simply to tell the candidate upfront what our budget is for the position, and state that its non-negotiable. I do this for a number of reasons:

    1. If what I can pay doesn’t meet the requirements of the candidate, it’s better to know that early, saving us both a lot of time.

    2. I’m not that concerned about possibly paying the right candidate more than they were expecting. I know what I expect to benefit from this position (and at this cost to me), and with the right candidate, that’s usually likely to be far greater than any potential increment I could have saved exploiting their lower expectations. (This might not hold in a large organization.)

    3. It’s really not in my interest to underpay someone. If I insisted that a person settle for a lower than market salary, based on their past salary history, I’d likely be unable to hold on to that person for very long.

    4. In my experience, salaries are sometimes discussed among staff in an organization. By ensuring they are consistent (within certain roles), I don’t risk the instability (and potential sense of mistreatment) of a person discovering that they are relatively underpaid.

    So my approach is to discuss salary early, to speak first, and pretty much avoid a negotiation altogether. It’s worked very well so far. But, again, if someone came into an interview, and strongly insisted on deferring the topic of salary, thereby hijacking my process, they likely wouldn’t be hired.

  16. 16
    Ethan Says:

    There are always a lot of different perspectives on this topic. For a long-running comment thread on exactly the same thing, check out: http://blog.penelopetrunk.com/.....-question/

    As an interviewer and hiring decision-maker I agree with Nickel completely. Why? Because most job-seekers are not prepared to have this conversation at all, let alone to have it on someone else’s terms. I know this because I use the question myself all the time.

    I ask the question with these exact words: “What are your salary requirements?” There are no quibble-words in there like “range” or “ballpark”. There’s nothing to push them to the high end like “looking for” or “want”. This questions puts most candidates on their heels. Most answer it hesitantly, but end up giving me a number that represents an acceptable, moderate salary to them, rather than an extravagant one or a big step up. If we decide they are worth more, great. There’s nothing stopping us from going higher. But this is where the hiring company prefers to start the discussion every single time.

    My advice to candidates:

    - If you aren’t prepared to set your salary range then and there, or your feel you would be at a disadvantage, don’t be afraid to avoid the question. Avoiding it is better than handling it badly. To create the illusion that you are fully prepared to respond, start nodding as the interviewer finishes the question. Then immediately dictate that you won’t be answering it right now, and turn it back on them for good measure: “I’ll need to consider total compensation, so let’s make sure I leave today with all the benefits information.” [scribble a note to yourself] “What do you pay your current top performers?” [poise your hand to write] Whatever they say, just write it down and nod. Then immediately move to one of the questions that you’ve prepared ahead of time – the topic doesn’t really matter, but this closes the subject for the time being.

    - Realize there is no “one fair salary”. You aren’t screwing them over if you talk them up, and they aren’t screwing you over if they talk you down. The two of you are coming to an agreement – don’t agree to something you aren’t happy with, and don’t expect them to, either.

    - Have other options. Nothing creates confidence in bargaining like having alternatives. You can’t always manage it, but you can certainly try hard. Whatever your other options are, even ones that don’t involve employment, make sure you have run the numbers and thoroughly considered them. You don’t want to make your decisions under any more or any less pressure than is reasonable.

    - Realize that not all employers are willing or able to negotiate much. Try to go in knowing the territory. You aren’t going to talk a government employer out of more money than the job category they listed.

  17. 17
    MikeS Says:

    I agree that people need to think more in terms of total compensation as opposed to just salary. I know that my salary in my current job only represents 85% of my total (401k matches, pension, benefits, and salary) compensation. This doesn’t include bonuses either. A company may have a lower annual salary, but potential for a larger bonus.
    I guess what I’m saying is that salary just makes up one portion of the compensation. I know if I ever change companies, that I want to look at the overall package, not just salary. Probably didn’t do this much in the past, but I was much younger and didn’t know any better.

  18. 18
    Richie Proud Says:

    I think the advice given in the article is good in theory & bad in practice…especially in our current economy.

    There is a fundamental flaw in the discussion:

    (1) People who are unemployed and lucky enough to get a job interview are not in the position to play coy with an interviewer. It is almost laughable to advise someone who has been struggling for 6 months to get a job interview, that they should repeatedly reject an interviewer’s request for salary discussion. The negatives of this practice certainly outweigh the positives.

    (2) People who are currently employed, and are being recruited by another company, should have a strong idea of what they are worth. They have the ability to play coy with the interviewer because…at the end of the day…the interviewer is trying to pull me away from my current employer. So the onus is on them to make ME an offer that I can’t refuse.

    Just my thoughts…

  19. 19
    Rosa Says:

    The current economy just makes the power imbalance in these discussions more stark – all of the advice for negotiating higher salary involves taking back some of the power the employer has (such as information only one side has access to) and of course if employers can block that, they will.

    Of course, it’s also obvious that if employers abuse that power too much, as soon as the economy gets a little better their employees will all jump ship for something better – even in this economy, I have a friend who was recruited very actively for her current job, and then lowballed on the salary. As soon as she found out what other people in her office were making, she started pushing her boss about a raise and if she doesn’t get it, they’re going to lose an employee they worked very hard to get, just for a few thousand dollars a year.

    I wonder if, if people really take this down economy to heart and get and stay out of debt, if the employer/employee power balance will even out a little – one of the joys of frugality for me has always been the freedom to leave my job if I want to.

  20. 20
    Ethan Says:

    “It is almost laughable to advise someone who has been struggling for 6 months to get a job interview, that they should repeatedly reject an interviewer’s request for salary discussion.”

    Actually, one of the key points here is that the candidate’s situation is irrelevant to what the employer is willing to pay. This is exactly how many candidates sell themselves short. Just because you have a weak poker hand doesn’t mean you should always fold.

    The other point being made here is that when an employer asks you what your salary requirements are, especially at the first interview, that is generally not a good faith “request for a salary discussion”. It is a request for you to show your hand, with no guarantee they will not change theirs under the table before reciprocating.

    As for how a bit of coyness will be taken… it obviously depends on the employer, and depends on how well you pull it off. You don’t want to appear coy – you want to appear confident in your own timeline for the discussion. No one at my company would look askance at this. When a candidate handles this question artfully it raises my opinion of them. Sure, it could be risky with some employers. But being paid less than you could have been is a risk as well.

  21. 21
    Robert Says:

    This is a tough one, but never go too low. It’s difficult to back out once you’ve set the bar at a certain point.

  22. 22
    Financial Samurai Says:

    The #1 cardinal rule really is to ALWAYS let them come out with a number first.

    Take it from someone who’s hired multiple people, and whose been able to successfully negotiate one’s salary higher by double digits many times. NEVER go first in telling them what you want.

  23. 23
    Petey Says:

    I agree with you on the SILENCE thing. Let them sweat it out. You know you are a good employee, they will come back

  24. 24
    Bodark Says:

    Ethan and MH(the entrepreneur) are some bright individuals. If you’re going big shop (e.g. over 15K employees) Get square, and be prepared to earn your salary – as you aren’t the only lion in the jungle.

    If you’re going small-private money shop, same rules apply. But, for different reasons – private money rewards results (If I were to guess, this drives MH’s observations)

    If you’re shooting somewhere in the middle… it’s all on the hiring manager – you may find a sensible person, you may find a Sadist who can compete in a big shop and can’t produce enough for a small shop.

    In the end, pay is a product of what YOU bring to the table. Get that out of equilibrium and you are a RIF-Magnet (RIF = Reduction in Force. The HR way of sending you packing, and making it not worth the time or money to sue about it).

  25. 25
    Julia Says:

    @DJ–My salary is posted online too and it kind of sucks. That said, if you’re moving to another job in your agency, then I assume that the salary for that job is posted as well? That was the case when I moved jobs. I was making about $60, and my new job offered me $65k. I knew they were lowballing me and that the position could pay up to $85k. I said I was looking at something more along the lines of $85k. They countered with $75k plus bonus, which I accepted, so I ended up with about $85k by the end of the year. Having salary transparency can really work in your favor if you use it.

  26. 26
    GE Miller Says:

    Ethan has some great tips. Turning the question around on them is the way to go. Any time you give numbers or a range, if you get an offer and the range is lower than their range, you will get the bottom number of the range. This has happened to a number of people that I know. “What do you pay your top performers?” is a great question to ask.

  27. 27
    Steve Says:

    Another tip that worked very well for me. 20G bump in salary and 5G bump in moving package. The offer was done verbally over the phone as we were in talks coast to coast. After they came out with their offer, I paused giving 30 seconds or maybe a little more of silence. Then asked if they would be willing to email me the offer as I would have to look over the full package including benifits that they were providing, and then I would get back to them. This I think di two things. One it showed I wasn’t jumping at it, so it couldn’t have been that tempting of an offer. But I showed interest by asking for all the benifits information as I was including that in the full value of the package. They then said they could send it to me, but then didn’t. Instead they called back upping the dollar figure hoping for a verbal YES I’ll take it. But I stuck to my guns and asked for an emailed offer. They agreed again, but called back a couple hours later with more money. This happened a few times before we settled on a dollar figure.

  28. 28
    In the Money Says:

    This is really good advice. Information is the key to leverage and power in a negotiation. It is so important to get more information from the other side before you give out any information.

    Also, make sure you get as many offers as possible. The more alternatives and options you have, the stronger your negotiating position.

  29. 29
    DavidV Says:

    Here’s a slightly different scenario. I’m a second year lawyer, and I found out another lawyer at my firm who was just hired (also second year) makes 8,500 more than I do.

    In general my firm gives a set raise each year, so it’s likely we’ll both get the same raise, and he’ll still be paid more than I will.

    In January we have our salary / yearly reviews. How do I address the difference in salary?

  30. 30
    Michael Says:

    That’s awesome… never heard of the 30 seconds of silence tactic. I like it but confidence is absolute key to pull that off without it back firing…

    Mike

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