You Can Always Negotiate Your Salary. Here's Why.
What you'll learn:
- The naysayers are wrong, just about every situation is negotiable.
- You can't count on others, like your recruiter.
- Trusting your company to pay you what you're worth means you're leaving your compensation up to chance.
- Negotiating makes a big difference in the long term.
- Bad things DON'T HAPPEN when you negotiate.
Want to learn how to negotiate your salary effectively? Click below.
I’ve been spending the last several months putting together a book on salary negotiation for veterans. It’s one of those critical skills that doesn’t get talked about when you transition. And it’s a big mistake, because salary negotiation can make a big impact to your bottom line, and it’s not difficult to do.
Of all the concepts in the book, the most important one to me is explaining people why, 99% of the time, you should try to negotiate your compensation. I dedicate a whole chapter to it. I wanted to write more, but I could only devote so many pages to it. So in this post, I want to convince you why you should negotiate. It’s all the things, and then some, that I wanted to include in the book, but couldn’t.
First, let’s delineate something. There’s a difference between a negotiable situation and being successful in a negotiation. I am arguing that just about every situation is negotiable. Whether or not you are successful isn’t entirely up to you. The other party has a say. But that doesn’t mean you should leave your compensation entirely up to chance. Don’t take the advice of, “Just work hard and let your company take care of you.” If you do that, you’re leaving your career in the hands of others. Fight, fight, fight for what you deserve.
OK, let’s start dispelling all the naysayers who say you shouldn’t negotiate:
“Unless you have a superstar track record, in today's job market, you'll lose the job if you hold out for too much.”
This is a statement made by someone wracked with self-doubt. He doesn’t expect to be a superstar, nor does he expect to be paid adequately for his talent. Here’s the thing. Companies spend millions of dollars recruiting new hires. It costs a company even more to retain someone who is a good employee. As a veteran, you should feel confident that you can be a superstar. That what you should drive for, regardless. And secondly, no one is saying you should hold out for “too much.” Hold out for what you can reasonably get. A survey of the top companies in the country showed that most employers discount their initial job offers. Why would you expect a below average offer if you’re not a below average employee? You can figure a reasonable range by doing research into the industry, company, and position.
“You can only prove your worth after a certain period of time on the job within the company.”
Have you ever noticed that in professional sports, athlete salaries generally trend upward? Why is that? They haven’t proven themselves on their new team, yet. Shouldn’t they get paid more after they’ve put in the work? Go in with this mindset, and you’re giving your company a “hometown discount.” It’s more difficult to convince your employers to give you more money for work you’ve already done than it is to pay you adequately for what you will do. Use your history of success as the grounds for why you deserve to be paid more, right now.
“My company doesn’t negotiate salary.”
So what? Even companies that say they won’t budge on salary are willing to be flexible in other areas of your compensation. This can include everything from providing more paid time off to allowing you to telecommute. A salary negotiation isn’t just about the money. It’s about making sure the contract is fair to you. Be creative and think about things that are important to you — work location, job title, corner office — it’s all up for negotiation, if you think of asking about it.
My book on negotiating your salary is out now.
“I get regular raises. I’ll just wait until the end of the year.”
The average annual pay raise in America for the last several years running has been around 3%. I see a much higher percentage when people DON’T WAIT and negotiate the initial job offer or during each performance review. 8% is common, although 15% isn’t unreasonable. You might think this sounds high. It’s only high if you don’t deliver. Think about all the work you do and add up how much that saves your company or makes them money. If your salary doesn’t justify what you do, you’re probably going to be out the door soon, anyway. More likely, you make a whole lot more for the company than they pay you. A 5% raise is better than losing an excellent employee. Now, think about how big of a difference this is. Your bonuses and raises build on each other over time. If you just wait to be given a raise (and a small one, at that), you’re falling far behind on what you could make.
“I’m working with a recruiter. He’ll help me negotiate so I don’t have to worry about it.”
Sorry to say this, but your recruiter isn’t looking out for you. The only person who will want to negotiate your salary is you. If you, like many transitioning veterans, work with a recruiter to get your job, you might assume that he will work to get you your highest salary. It would be reasonable to assume this, since oftentimes, the recruiter’s commission is based on the salary you receive from the employer. But the incentives for recruiters to get the highest possible offer for you are not aligned. In, Freakonomics, the authors detail a similar relationship between home owners and their real estate agent. Studies showed that real estate agents, on average, accepted lower offers for their homeowners compared to when agents sold their own properties. This is because the extra effort required for agents doesn’t result in a significant enough difference in commission to do so. After all, they only make a percentage of the deal. That extra effort isn’t it worth it if they can make more closing more deals. In no way am I saying that recruiters or real estate agents are being dishonest. But realize that you have much more at stake when it comes to negotiating a salary offer than the person working as your agent. If you have a recruiter as a buffer, you have to push him to get the best offer for you.
“I’m afraid of what will happen if they say, ‘No.’”
I’ll tell you what happens if your company tells you they won’t negotiate. Nothing. Nada. You just move on. I compare this to dating. If I ask a girl out, the worst that happens is she says no. Now, I’m not a jerk when I ask — in fact, I try to be polite and make a good impression. I suggest you do the same when you try to negotiate. Forget about the fear of losing the offer or your job. This happens in worst case scenario’s if you’re an idiot, or your company is an idiot. You don’t want to date someone or work for someone who is an idiot. So you dodge a bullet if your company’s reaction is nuclear for no good reason. Think of the upside. You need to negotiate your salary if you want any chance at making more. Take it from me — the woman of your dreams doesn’t normally ask you out.
“I’m happy with what I make.”
The most important reason to negotiate your first offer is to look at the opportunity cost of not negotiating. Your initial salary will be the basis for all future bonuses, increases, and negotiations. When you look at the math over the long term, one could argue that in a worst case scenario where a company retracted it’s offer and you had to spend a few months to find another job but could negotiate a better starting salary, you would be better off.
“Not negotiating, however, can be more costly than you think. In their paper ‘Who Asks and Who Receives in Salary Negotiation,’ researchers Michelle Marks and Crystal Harold found that employees who negotiated their salary boosted their annual pay on average of $5,000. According to the researchers, assuming a 5% average annual pay increase over a 40-year career, a 25-year-old who negotiated a starting salary of $55,000 will earn $634,000 more than a non-negotiator who accepted an initial offer of $50,000.”
Imagine that. Over a half a million dollars in your lifetime. Still think you shouldn’t try to negotiate?
Find out how you lose out on over $500,000 in earnings if you don't negotiate in my new book
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