Winning salary negotiations

The nail-biting doesn’t stop once you’ve been offered the job. Professional positions usually offer some opportunity to negotiate your salary package. Here’s a power guide to help you negotiate from a position of strength.

It's important to recognise at the outset that not all jobs provide any opportunity to negotiate terms and conditions, including salary. If you've ever applied for a job at a supermarket on the check-out, then it's unlikely there was any negotiation over your hourly wage!

So what sort of jobs do provide an opportunity to bargain? "We see far more negotiation of salary than we have in the past," says Ray Hince, Western Australia's Managing Director of Management Recruiters Australia. "It now extends to junior levels, from sales reps and account managers upwards. For example, an account manager on $35,000 with a car will have some element of salary negotiation opportunity."

Research the company

Andrew is a good example. He is a commercial manager at a major oil and gas company, and began at the company as a senior business analyst two years ago — the type of high-level executive position where salary negotiation skills are required. "I did a lot of research on the company," he recalls. "The key efforts were contacting recruitment agents, one of whom put me in touch with someone at the company. That enabled me to find out solid information on what people were earning in the sort of position I had applied for."

Andrew was wise in schmoozing a recruitment consultant — it cost him a lunch but it was money well spent. Consultants are extremely good sources of up-to-date information and as sources for other contacts. He also spoke to industry colleagues and peers, and fired up his web browser to find out information about the economic performance of the company and its recent staff movements. This information helped him establish what his salary might be worth. Talking to specialist journalists is another useful strategy. A good business or financial reporter will know industry trends and people in their area, and can frequently suggest useful contacts and avenues of investigation.

"Trust me, salary research pays off handsomely," says author Richard Nelson Bolles, in his best selling job search guide, "What Colour is Your Parachute?" There is a financial penalty exacted from those who are too lazy, or in too much of a hurry, to go gather this information."

As an example, he says you might spend three days on research. If you are in the interview and your salary is being negotiated and you ask for — and get — $4000 a year more than you expected thanks to what you have learnt through your research, that means an extra $12,000 over the next three years. "Not bad pay, for three days' work!" he notes. Put plainly, if you don't do this research, it's going to cost you.

Timing

"This is a power few people realise they have when they receive a job offer," says Nick Corcodilos in his book, Ask The Headhunter. "If you have used information effectively, and you proved you can do the job, the ultimate outcome of your job search will depend on how you exercise the power of the job offer." Don't feel excited or relieved that you've been offered the job, he cautions: instead, use the power you have in areas like salary negotiation.

Andrew used this timing to his best advantage. After his interviews, his prospective employers faxed him a job offer worth $90,000. The offer went back and forth six times before Andrew accepted a package worth nearly $105,000.

"Towards the end they said they couldn't pay any more, but I asked them to try again and they managed to add a little extra," he remembers. "I understood the leverage I had, but kept in mind the degree of freedom they had, and kept my expectations realistic — there was no way they could offer $120,000, for example. It can be a risky process, but you must see how far you can push it — no way would I accept a first offer from an employer."

Indeed, it can be a risky process. Not everyone will turn down the "final offer", as Andrew did, in the hope of a comparatively small amount of extra salary. You don't want a dream job to slip through your fingers over an extra $40 per week — especially if your negotiating skills have led to an offer above your expectations.

Going first

Andrew was lucky — his employer made the first move when it came to talking turkey. This brings us to another important rule in salary negotiation: don't be the one who first raises a figure. "You want the employer to be the first one to mention a figure, if you can manage that," says Richard Nelson Bolles. "Never mind the reason why, what has been observed over the years is that in this contest whoever mentions a salary figure first, generally loses."

"Lead with your requirements," recommends Nick Corcodilos. "What does your past salary matter if you won't accept an offer below $X? (Understand that this cuts both ways: you've got to be willing to figure out what your abilities are worth.) If you decide to divulge what you've earned in the past, do so by firmly stating that your current salary is one thing; your required salary range is another. This is how you level the playing field: by getting them to divulge the range they're willing to spend."

A cunning interviewer/employer knows that it's not to your advantage to mention a figure first, and an interview can be like verbal arm-wrestling. They will float leading questions, like "What kind of salary are you looking for?", or "What do you think this job is worth?"

SEEK's resident expert Philip Garside, in his book The Secrets to Getting a Job, also recommends not negotiating salary conditions until you have been offered the job. "It is not always possible to avoid this negotiation," he says, "but if you negotiate without having been offered the job the pressure to go low is enormous. If the interviewer asks, 'What salary do you envisage if you were successful?', you could reply, 'I'm happy to start on the industry standard, perhaps with a review built in for when I have demonstrated that I am worth more than that.'" Of course, the interviewer is likely to immediately reply, "and what do you believe is the industry standard?"

Philip Garside counsels putting forward a range of salary levels, and not tying yourself to a specific figure. And, as you've done your research on what the position will be worth, you can confidently aim at the high end of the scale. "If you believe a fair salary for the position is $42,000 but you are prepared to accept $39,000, the range to put forward would be $39,000-$45,000," he says. "If offered the position, you are much better placed to negotiate the deal you want. It is your task to get the starting salary as close as you can get to $45,000, and theirs to get you as close as possible to $39,000."

This is where the role of a recruiter changes the situation. A recruiter is given a lot of responsibility from their client, the employer; the recruiter can negotiate with the employee on the employer's behalf. "Our role can be quite strong in that area," Ray Hince confirms. "We represent our client, but we also help the candidate put their best foot forward. We know the salary range on offer, so an employee should identify their minimum salary level but aim higher, giving themselves space for negotiation."

A recruiter will also know the past earnings of a candidate, so both parties have a pretty good idea on what to expect from each other. A recruiter wants to deliver a value-for-money quality employee to their client, but usually their fee is a percentage of the employee's salary.

There is still room for negotiation when a recruiter is in the picture, even when the latter has indicated the employer's expectations — usually, there is still a salary range to explore. "Provided the lines of communication are kept open between the candidate and the employer, then there are no surprises when it comes to salary negotiation," says Ray Hince. "When an employee is making a direct approach, then it's a different environment. Through research they should identify the likely range, determine their minimum salary level — and negotiate from there."

Salary history

When it comes to establishing a salary range or starting with a figure for negotiation, a prospective employer might bring up that hoary old chestnut: previous salary history. The theory is that what you were most recently earning will have a strong bearing what your new salary will be.

Nick Corcodilos doesn't buy that theory. "Employers have no business asking for your salary history. It's confidential. It has nothing to do with hiring you. Imagine what they'd say if you asked to see the history of salaries they've paid for this job over the past ten years. Or, if you were to ask the manager what his current salary is. In fact, your new salary is a judgement of your present (and future) value. It's the employer's task to work out what your job is worth, and it is completely unrelated to your past earnings."

Andrew agrees, and takes a positive view of the past-salary question. "I told them what I thought I was worth, which was a different figure to what I was earning in my previous job. But if you can't avoid it, the past-salary figure enables you to put the first stake in the sand and argue, 'If I'm earning that currently, why would I move to a new job with you?'"

When you divulge your salary history, you put yourself in a corner that's very difficult to negotiate your way out of, Nick Corcodilos says. "I agree philosophically with that argument, but in practice your recent salary is going to be an indicator of what you're worth," counters Ray Hince. "These days there are strongly established market ranges within professions — food sales reps, for example, earn a certain salary with standard conditions. Talking about past salary isn't a big bogey, and by and large, your past salary history will be clear to a prospective employer."

Are you wondering why you have to learn all this stuff about salary negotiating? If you like the employer, and the employer likes (and wants) you, aren't they going to try and make you a happy and productive employee with a wonderful salary? "The employer will rarely tell you the most they are willing to pay," Richard Nelson Bolles says. "The employer's goal is to save money, if possible. Your goal is to bring home the best salary that you can. Nothing's wrong with the goals of either of you. But it does mean that salary negotiation is proper, and expected."

It was expected in Andrew's case. "If I had rolled over and laid down with the first figure they offered me, then my employer wouldn't have had confidence in the work I was doing for them. Obviously, if you're a hard but fair negotiator for yourself then you'll also bring those qualities to the job."

"Employers respect a person who can negotiate well," confirms Ray Hince. "But they also like people who will pursue realistic goals in negotiation."

Some names have been changed to protect privacy.