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An Article For New Graduates In Transition — The Multiplier Benefit of Salary Negotiation

March 15, 2013

The Multiplier Benefit of Salary Negotiation

improved wallflower cartoon

Nearly every career expert will tell you that knowing who you are and what you need, as well as conducting diligent research on your target career opportunity, are factors which affect every stage of your career job search. Nowhere are these functions more important than in negotiating your job offer.

Before we discuss these factors in more detail, you may be wondering about the necessity of negotiating.  It is definitely wise to evaluate and negotiate every offer even if there seems to be very little “wiggle room.” It is not just about the money; it is how you are perceived by your new employer.

The way candidates handle this stage of the process often reflects how they will function in the job. You do not want to appear like a “wallflower” or a “door mat.” Most employers come to finalizing the contract with some room for negotiation.  You want to come across as standing up for what you value (including yourself) in a professional and diplomatic way. If you have been out of work for several months, you may be very grateful to be hired into a good career job. At the same time, no one is going to change their mind about hiring you because you made a reasoned effort to negotiate a better offer. In fact they will likely respect it.

While there is more to think about than salary, it is important to remember that every merit and cost of living increase is usually a percentage of what you are currently earning. This means that what you gain in negotiating your initial salary results in a multiplier effect on all future increases.  Even a small increase can be thousands of dollars over several years of employment.

Once you decide to negotiate, you may wonder how knowing about yourself and the position can make a difference. If you know what you need, it gives you a strong platform to evaluate the offer and negotiate effectively.

From a financial point of view, it means having a very clear picture of your current financial situation and what you hope to create for yourself in the future. This means creating a personal budget for when you are in your new position. This includes the major expenses such as student loan payments and other debts, communications, housing, heat, hydro, food, child care and other lifestyle needs. It is particularly important to know what your budget is for healthcare needs, medications, and dental care. It is also important to know how far you are willing to commute to work and how much it will cost. If a move will be part of the process, calculate its associated expenses.

While retirement may seem a long way off, you would be wise to take at least 15 per cent of each paycheque in addition to whatever your employer contributes. This should be an important part of your budget.

Once you understand your estimated outgoing expenses, you then know the lowest amount of money you can possibly accept in an offer without giving up something.

In addition to understanding your financial situation, you need to know the factors that will make you successful in a job. This means understanding the kind of work environment where you will thrive and if you work better as part of a team or on your own. The same kind of thinking can apply to the kind of management style you need, the type of workspace where you are most productive, and the values you are looking for or can’t accept in an employer.

As work and home life are becoming less distinguishable, be sure to consider the costs and benefits of being able to work from home, as well as flex time considerations.

Other factors include desired vacation allotment and knowing your professional development interests for your career goals.

Understanding your needs and hopes gives you a way to measure what the employer has to offer.

Next there is the research you need to do on the career opportunity. In order to make your argument for a better offer you must know what others in similar positions are earning.

If your field research included asking about salary ranges when you conducted your informational interviews, you will already have this information. Otherwise, you can conduct web research, talk to your field research connections, or visit your university career centre to get some help.  You can also speak with someone doing a similar job at another company. This involves explaining your situation, inquiring about their job, and then seeking their advice on salary negotiation.

Now you know what you are hoping for in terms of benefit and salary and you know what others are making in field. You can now create the salary range that you think is reasonable and you should know where you would place yourself in that range. You can now develop your arguments and you are ready to negotiate, but as Tara Weiss points out in a recent Forbesblog, there is an exception when the position has so much to offer that it should not be refused even if your analysis indicates otherwise.

“That’s true for programs that will teach you unique skills or employers that have exemplary records, when it comes to professional development and work/life balance. Some jobs and employers are so prestigious that having it on your résumé will help you get other, more lucrative offers,” said Weiss.

The next step is the negotiation itself. Most of the time many things are not negotiable, so the task is not as complicated as it seems. In these cases, your most important task is to listen and ask questions.

Once they have decided that they want to hire you, take the time to understand what they are offering. You do not have to decide right away. The employer will likely explain the wages, and benefit package which can be compared against your pre-negotiation research.

It is not unreasonable to ask for five per cent more than what they have offered (unless you find the salary surprisingly high). If the salary is firm, it is to your advantage to see if vacation, professional development, moving expenses are negotiable.  It’s helpful to approach it positively.  A useful phrase is “I am ready to accept the offer but according the research I have conducted, people in this field are making (state your range).  I am just wondering if you can bring the salary closer to this range?”  In tackling non-salary issues you can say, “I was hoping for another week of vacation. Is there room to negotiate?” You can also ask for more information on issues by asking, “Can you tell me more about the pension plan?”

It’s a great idea to talk with a career professional about salary negotiation. It is not a skill that many people are used to using, and yet, every future increase you receive is a percentage increase on this negotiated figure.

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