How to Negotiate Salary Like a Pro (Contrary to Popular Wisdom)
We build and manage our careers one conversation at a time. Some of those conversations are easy, some hard, but few cause more stress than negotiating an offer.
In fact, salary negotiations can be so stressful that many people avoid them altogether. According to a recent PayScale study, 57 percent of those surveyed have never asked for a raise in their current field.
What’s stopping you?
There are a few reasons why people avoid or fail at salary negotiations. Perhaps you’re asking yourself things like, Should I just tell them what I want, or wait until they make an offer? Is the offer fair? Should I ask for more, and how much is too much? There are no easy answers. And then there’s the “am I worth it?” psychological barrier to break through.
You can find a lot of advice about salary negotiations, and some of it is valuable (you can check out ours here). Yet, the conversation is complex and there isn’t a silver bullet list of tips that will make this conversation easy. Your situation is yours – this stuff is hard because it’s subjective.
When we advise SoFi members on career strategy, we provide them with “frameworks” rather than tell them what to say or not to say. Given the complexity of the negotiation process, we’ve developed frameworks for all the related issues, such as how to evaluate an offer, when to ask, when to counter and timing it right. A good example is our framework around one simple but tricky issue:
In a salary negotiation, who goes first?
In short, it depends on your particular situation.
You’ll commonly hear that “best practice” is whomever goes first will negotiate the best offer. This strategy is supported by the anchoring bias – once the anchor is set, there is a bias towards that value. By this logic, if you state your salary requirements first, you increase the likelihood of getting the offer you want. If the employer thinks your number is too high, you’ve saved time in pursuing a job that doesn’t pay. No harm, no foul – right? Not exactly.
Before you name your price, ask yourself:
-Do you have alternatives or another offer?
-How urgent is your situation – are you unemployed, underemployed, employed but want out ASAP?
-Does the opportunity have significant upside, or give you that long awaited chance to switch careers?
-Would you take this job at a discount (because money doesn’t buy everything)?
Depending on your answers, there may be a lot of harm in going first – especially if you’re asked about salary requirements early on in the process. At this point, employers already know what they want to pay someone for a particular role, and they’re only asking to screen candidates in or out. So while the “best practice” may be to go first and go high, you could be self-selecting out of the process before they’ve had a chance to fall in love with you – based on a number that doesn’t necessarily represent your bottom line.
To solve for this conundrum, it’s usually best to try to put off talking real numbers until you get to the offer phase. Tell the employer you’re looking to get paid “market rate” and leave it at that. If they press, consider your answers to the above questions before providing a number, and use benchmarking resources like our latest Return on Education analysis – focused on salary trajectory by degree type – to help determine what “market rate” means for you.
Whether you’re still at the pre-offer stage or you’ve made it to the final round, there’s another reason that going first can hurt you. Go too high, and risk getting eliminated. Go too low, and limit your ability to negotiate later.
So does that mean you should always let the employer go first? Not at all. Deciding whether to anchor or not depends on your particular situation. Here are two ways to help make your decision:
-Anchor if… you have alternatives and/or the job doesn’t offer any difference in upside (personally or financially)
-Let the employer anchor if…you are unemployed, don’t have alternatives or the job offers non-monetary upside (or other things that money cannot buy). Once the offer is made, try to negotiate a better deal. If it’s too low and you can’t improve it, walk away and chalk it up to interview practice (and a confidence booster that you can get an offer).
Using these guidelines can help give you some power in a situation where people often feel powerless. Hopefully, it can also mean landing the job – and the salary – you want.