Know What to Expect
Employers resort to a variety of tactics when they negotiate salary and benefits. Common tactics to counter a candidate’s demands are conveying the impression that other candidates will work for less, that the candidate’s skills and qualifications are less than expected, or that the job in question does not warrant the demanded salary. Companies may also try to fix the salary based on the existing or previous salary that happens to be low. Another tactic employed by unscrupulous employers is “bait and switch” or promising something without the intention to honor the promise.
The common strategies to counter these employer tactics involve engaging in the negotiation after proper research to quantify one’s worth, developing BATNA, and adopting the correct approach to negotiations.
The cardinal rule for success in salary negotiation is research. Talk to present and ex-employees regarding what the company pays employees in a similar position. Talk to contacts in other companies, refer to trade journals, approach professional organizations and access websites, such as salary.com and bls.gov, to identify industry standards and what competitors offer for similar positions. Background research establishes a reasonable expectation to start the negotiation.
Identify the list of duties and responsibilities associated with the job and jot down instances of performing similar duties previously. Quantify the experience. Use figures, such as the amount of new business generated or the cost savings resulting from the action, that relate to the new job to convince the employer of your potential value. Negotiate the salary as a percentage of this value. Use the findings of the background research to reinforce the employer’s expectations and drive home the reasonableness of the claim.
Setting expectations beyond industry standards or the value one can bring to the company is unreasonable. Companies rarely pay beyond the market value of a position, and definitely do not pay more than what the new hire brings to the organization.
BATNA stands for “Best Alternative to Negotiated Agreement.” This is the breaking point of negotiations, or the point at which making further concessions becomes unviable or unaffordable. Candidates indulging in salary negotiations need to identify their BATNA, or the lowest figure they would accept, before the start of negotiations. The candidate’s BATNA depends on how much they need the job or the alternative arrangements in place if they do not land the job.
When fixing BATNA, do not go by the salary figure alone. Consider other factors such as benefits, bonuses, work hours, work title, working conditions, and more. For instance, company policy may make the salary unacceptable, but other elements of compensation, such as eligibility for benefits or paid COBRA, tuition assistance, paid vacations, signing bonus, severance pay, stock options, sales commissions, car allowance, paid cell phone, relocation expenses and others may be up for discussion.
When making an offer, do not start with the BATNA level. Allow some margin to concede to the employer. At the same time, do not come down from a higher level without reason. Make the employer give good reasons on why you should accept lesser compensation than demanded.
Continue to page 2 for more tips on how to negotiate salary and benefits.
Allow the employer to make the initial offer when negotiating salary and benefits. As a rule, do not accept the offer straightaway, even if it exceeds expectations. Seek clarity on the terms and conditions, such as the deductions from the Cost to Company (CTC), the proportion of variable pay, the standards of performance to become eligible for performance related pay, whether pay is subject to achieving milestones or completing probation and other details. Look at the entire compensation package rather than salary alone. If the offer is favorable, make sure to get it in writing before confirming acceptance. Such probing reveals the true picture of the salary offered and may unearth “bait and switch.”
Provide a counter-offer if the compensation package is below expectations or when you suspect “bait and switch” has occurred. It is a good idea to provide a counter-offer anyway as most employers expect the employees to negotiate and keep a margin in these situations. Specify the separation details, such as bonus, stock options, benefits, and other details, in counter-offers. However, do not be overtly aggressive.
Researchers at George Mason University and Temple University studied five popular salary and benefit negotiation approaches: accommodating, avoiding, collaborating, competing, and compromising and concluded that individuals adopting the collaborating and competing approach increase their starting salary by $5,000 on average, whereas individuals adopting the avoiding, accommodating, and compromising approaches remain less successful in negotiating higher salaries.
The collaborating approach is similar to the “win-win” negotiation strategy and involves openly discussing issues and perspectives to reach a common ground. The competing approach also involves a similar open discussion of issues and perspectives, but aims to identify the issues that matter rather than reach a common ground. The accommodating, avoiding, and compromising approaches entail one side giving up for the sake of the other, and remain synonymous with a “win-loose” negotiation salary. Such approaches rarely succeed, and even if they do, sow the seeds for mistrust and resentment.
- Trinity Washington University. “Salary Negotiation Strategies." Retrieved May 13, 2011.
- George Mason University. “Study Reveals the Secrets to Negotiating a Higher Salary.” Retrieved May 13, 2011.