So you’ve finally landed that dream job? The new year has come about and businesses are finally opening up to bringing in new employees… Can you now put your feet up and relax? No. Or perhaps you’ve already been working at the same company for a while and just want that raise to make you feel a bit more comfortable and have been waiting for the new year to bring it up. Let’s talk about money!
We all know how awkward that situation is… how guilty you feel… you finally got this job you desperately needed or you don’t want to lose this awesome job you already have. All you want is just a little bit less month at the end of your money. And, with the economy the way that it is right now, you’re lucky to have a job to go to at all… right?
It’s not personal, it’s just business and, trust me, your boss is not losing sleep overnight by taking that extra 5% out of your salary. It raises the bottom line and puts more money in his or her pocket at the end of the day. You need to know your worth and make sure that you’re getting paid what you deserve. Here are a couple tips on how to do that:
Do your research
If you skip this step, you may as well go out and work for free. You NEED to know what you’re worth and to be going into your job interview or into a salary renegotiation with a specific number in mind. If you fail to do so, you’re at the mercy of the hiring manager. Determining your value generally comes down to a few different factors, such as:
- Job title
- Industry standard
- Qualifications and experience
- Current/Previous salary
Now it’s hard to evaluate what your specific company’s budget is or how much value they place on your role, but it’s smart to ask your friends (perhaps somebody that you studied with) who are in the same industry. You don’t necessarily need to expect the exact same salary amount, but it gives you a good idea of what to expect.
If you don’t feel comfortable asking your friends about their income, PayScale is a fantastic website that will give you a survey with regards to the factors above (where you live, what you currently earn, how much experience you have etc.) and will generate a salary report for you to figure out what the earning potential is for people in your line of work and what the industry standard is. And once you have a number, you can move on to negotiations.
Don’t immediately accept the first offer
It’s pretty standard practice for a business to low-ball on the first offer. If you’re worth an annual salary of $30,000 (±R425,000), chances are they’ll be offering you a salary closer to $25,000 simply for the sake of prudence. As the employer, they start negotiations with all of the power, especially if you aren’t currently employed. That first offer is typically a case of “trying their luck” and seeing whether you actually know what you’re worth and they will take advantage of the poor souls that don’t.
So, whether you like the offer or not, you could probably get a better offer if you negotiate smartly. However, if you are happy with the amount, you can take it. Just remember that any future salary negotiations for the years or even decades to come will be predicated on the result of the first one. A 10% increase on your salary next year is very different if it’s 10% on $30,000 or 10% on $25,000 and that trend can carry on for a very long time. Many Millennials will go into a job under false pretenses that an employer is going to say “well, we started you off on a much lower salary, so we’re going to give you a larger increase next year.” Here’s some advice: Get it in writing. When everyone is getting 7.5% increases next year, you’re not likely going to get 50%…
And remember, you aren’t obliged to tell a new employer what you were previously earning. You can just say “I’ll be happy to discuss compensation details further once I’ve learned more about the position” or “I’d rather not discuss previous compensation; I’m looking forward to the future and this company and position is perhaps part of that.” Also, if they ask you to cite an expected salary, you can also say something along the lines of “I’d rather not discuss that now. If I receive an offer, I’ll consider the full package and all of the various factors that are built into it.”
Take your time
It really isn’t necessary for you to jump at an offer and say yes or no straight away. Even if the offer is higher than you expected, you might have an employer thinking that they could have gone lower if you accept it with too much enthusiasm – and you don’t want that. And it’s totally normal to take your time on important decisions like these, so employers won’t begrudge you for saying “give me a few days.”
Besides that, your salary itself is not the first and only thing to consider. What are the benefits like? When it comes to this, depending on the retirement packages, salary structures or medical insurance benefits, a $30,000 per annum salary may actually yield a higher income in a year than a $35,000 per annum salary – especially if there is a probationary period for the salary, as mentioned above, where a company will offer you a 50% increase after a year to incentivize you to stay. And, some benefits, like medical insurance, which require employee contributions, might actually end up saving you a lot more money in the long run, even if it isn’t immediately obvious. And sometimes there are hidden tax benefits. Read the fine print and make sure you understand all of the details in your offer.
Not to mention, some offers come down to things that don’t have monetary value, like paid leave, flexible working hours, being allowed to work from home or even just a nice workplace environment. You will need as much time as you can get to assess all of these factors and simply cannot do it in five or 10 minutes.
Negotiation skills are an art form – there’s no doubt about it. In many cases, some people follow more successful careers than others not because they’re better at their actual jobs, but because they are more skilled negotiators. There are plenty of books, blog posts, and articles out there that can genuinely give you some incredibly useful advice that will never go to waste. Do some reading, watch a few YouTube videos… do whatever you can to hone those skills. Stuart Diamond’s Getting More: How You Can Negotiate To Succeed In Work And In Life is a great book to read just to get yourself off of the ground. What’s more is that these skills won’t only aid you in your career, but also in almost every other aspect of your life… including getting your spouse to do tonight’s dishes!
Now when it comes to your counter-offer on your salary, a good bracket to target is anywhere between 10 to 25% higher than what was originally offered, depending on how satisfied you were with the offer. Even if you go a bit too high, your employer will always try to meet you somewhere in the middle. So if you want an offer that’s 10% higher, go for a number that’s 20% ahead and settle in the middle. However, there’s no set formula and counter-offers should be navigated differently depending on your circumstances and/or environment.
Justify your value
Before we wrap this up, let’s take a look at the biggest mistake made in any salary negotiation – discussing your expenses. Whether you’re living with your parents or have five kids’ school fees to pay, it doesn’t matter how you spend your money or what you need it for. We ALL have bills to pay and, quite frankly, nobody gives a fuck. The best that discussing your personal living standards or outstanding debt will get you is a bit of sympathy. It doesn’t justify why you deserve a better salary. Rather than using your personal life as a negotiating card, use your outputs.
Show your boss how you are raising or can raise their bottom line and why you deserve to be compensated accordingly. For example, perhaps you were at the forefront of an effort to land a $1 million sale towards the end of last year or you concluded a project two months before its deadline and saved the business a large amount of time. You need to show your employer why you deserve a big increase, why it’s less about them honouring a request and more about keeping you happy in case someone comes about with a better offer for your services (although, be careful about hinting at the idea that you’re talking to other companies because it could land you in a world of trouble that simply isn’t worth it). You need to justify your value in monetary terms and your proposed salary should be reflective of that. This is where your research will truly reflect in your negotiations.
To walk or not to walk?
So what if our tips haven’t helped you? You made your counter-offer, but your employer isn’t budging. What do you do? Walk away and try your luck elsewhere or settle for what you’ve got, save and wait another year before you move out of your parents house?
Your decision here is very much a personal one and you have to ask yourself which seems to suit you better. Accepting or declining comes down to a bunch of individual factors, such as whether you have received an offer from another company, whether company culture makes up for the lower salary, how close the original offer is to what you really wanted, whether the job can still set you up for future success or even just simply how desperate you are for the job.
At the end of the day, remember that accepting or declining a salary offer comes down to whether it’s right for you at this specific moment in your life.