Mastering the Art of Negotiating a Salary Increase and Improved Benefits: A Basic Guide for Employees/Candidates
Your Path to Negotiating a Better Salary and Compensation Package
Negotiating a starting salary, a salary/hourly wage increase, and/or improved benefits can be a challenging and nerve-wracking experience for anyone of any experience level; however, deciding to negotiate is a crucial step in securing a better financial future for yourself.
The following insights and strategies will be helpful, whether the negotiations are for executive-level compensation, a starting hourly wage for a part-time job, or a raise during an annual performance review.
In this article, I’ll explore a few fundamental negotiation strategies for employees to negotiate a better compensation package. Each compensation-related negotiating situation can vary; sometimes, advanced negotiation advice, strategies, tactics, and tips will be required to optimize your outcome.
Countless blogs, articles, posts, videos, books, and tips on various social media platforms don’t consider important factors that impact outcomes. One of the most important factors that employees and employers must understand is the intentional and unintentional impact of ‘situational power.’
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‘Situational Power’ in Negotiations
Unfortunately, almost all the information about basic salary negotiations fails to thoroughly explain to people the significance of ‘situational power’ in any negotiation – especially in a negotiation involving compensation.
‘Situational power’ impacts almost all negotiations – whether it’s a sell/buy negotiation where a retailer holds most of the power over a supplier – or a sell/buy negotiation where the seller has nationally recognized, high-turning, high-profit margin brands that a retailer needs to have available for their consumers. A simplified example of ‘situational power’ is when a person pays $8.50 for a bottle of water at a sporting event – you’re trapped in the venue, you’re thirsty, and in this situation, the venue can charge what they want for bottled water.
A person’s failure to carefully understand and diagnose whether ‘situational power’ is in play in a negotiation can be a catastrophic mistake. I could write an entire article about the importance of ‘situational power’ in negotiations.
There is a simple rule to follow. Suppose either side in a negotiation has ‘situational power’ over the other side and decides to use it. In that case, the negotiation will not go well for the side with little or no ‘situational power.’ It’s also important to have alternatives or options when negotiating – such as another employment opportunity with another company that might be more willing to meet your salary expectations and benefit requirements. As an employee, having in-demand skills, specialized expertise and experience in a limited talent market can provide you with ‘situational power’ when negotiating with a current or prospective employer.
People frequently write to me and ask for tips on negotiating or re-negotiating their salary. In this article, I won’t be able to address all the variables and moving parts involved in a compensation negotiation.
I also won’t be able to address the commonly used and predictable phrases, scripts, and questions that recruiters, HR professionals, hiring managers, and management may ask a current or candidates. In our negotiating coaching sessions, we provide our clients with proven phrases, powerful responses, questions, questioning techniques, and secret answers to counter the typical questions that employers ask employees/candidates.
Know Your Value/Worth: Research and Preparation
Before diving into negotiations, it’s essential to be very well-prepared:
- Research Industry Standards: Research salary ranges and benefits offered in your industry and location. Websites like Glassdoor, LinkedIn, or PayScale can provide valuable insights.
- Assess Your Value/Worth: Evaluate your skills, experience, and contributions to your current company and be ready to answer the questions about how your skills and experiences can help meet your new employer’s requirements. Understand your unique selling points and how they align with your employer’s goals.
- Opening Negotiating Positions: Understand that an employer’s stated or published salary range, hourly wage or the salary offered for employment is their Opening Negotiating Position – not their Desired Outcome. Usually, there is some flexibility, and more can be done – if you know how to manage the process and ask. Remember – the employer’s job.
- Set Realistic Expectations: Based on your research and self-assessment, set realistic expectations for your desired salary increase and benefits improvements. Each side’s opening negotiating position must be based on Maximum Plausible Position (MPP). Too many times, people take unrealistic and unattainable positions in their negotiations.
- Understand the ‘Net’ Financial Impact of What You’re Asking For: You need to be mindful of the net gain when negotiating a salary, salary increase, or financial bonus. Understand the tax implications of source deductions. Also, never use percentages – always use real dollars when negotiating. Using percentages in negotiations is a bad practice if you’re an employee.
- Understand Each Side’s Personality Type and Corresponding Negotiation Style: There are four personality types (Amiable, Analytical, Pragmatic, and Extroverted) when it comes to negotiating. Each negotiating personality type has a corresponding negotiating style. Example: The Amiable personality type usually gets along poorly with the Analytical personality type. Amiable people generally view Analytical people as “uncaring” – with too much focus on facts and numbers. To improve your outcomes, you’ll need to learn more about the four negotiating personality types and corresponding negotiating styles.
Timing is Everything: Choose the Right Moment
Timing plays a significant role in compensation negotiations:
Choose a Strategic Time: Request a face-to-face meeting with your employer at a strategic time, such as after a successful project completion or during a favourable performance review.
Company’s Financial Health: Consider the financial health of your company. Trying to negotiate during challenging financial circumstances for your employer may not yield the best results (unless you have “situational power” working to your advantage.)
The Art of Negotiation: Effective Communication
Negotiation involves effective communication:
- Practice Active Listening: Listen carefully to your employer’s responses and concerns during negotiations. Acknowledge their perspective and address their questions.
- Quantify Your Achievements: Highlight your accomplishments and their impact on the company’s success. Use concrete examples to demonstrate your contributions and value/worth.
- Express Enthusiasm: Show enthusiasm for your job and commitment to the company’s growth. A positive attitude can make a significant impression.
Be Flexible and Patient: Finding Common Ground
Negotiations often involve compromise:
- Be Open to Alternatives: If your employer can’t meet your initial requests, be open to exploring alternative benefits or performance-based incentives. Learning to broaden the scope during all your negotiations is critical to success!
- Stay Patient: Negotiations can take time, and multiple discussions may be necessary. Stay patient and persistent in pursuing your desired outcome (goals.)
- Document the Agreement: Protect Your Interests
Once you’ve reached an agreement, it’s crucial to document it:
- Get It in Writing: Ensure all agreed-upon salary and benefits changes are documented in writing. This avoids potential misunderstandings in the future.
- Review Company Policies: Familiarize yourself with company policies regarding salary increases, benefits, and any additional agreements.
Conclusion: Seize the Opportunity
Negotiating a salary increase and enhanced benefits is not just about your immediate financial gain; it’s an investment in your future. You can increase your chances of securing a more favourable total compensation package by conducting thorough research, choosing the right timing, mastering effective negotiation skills, and learning the powerful verbal phrases, scripts, questions, and questioning techniques to use.
Both sides can effectively use these verbal phrases in the negotiation (the employee/contractor and the employer’s representative) – the side that best utilizes these tools will often do better in the negotiation. Remember, your skills and contributions deserve to be rewarded, and by taking the initiative to negotiate, you can achieve the financial recognition you deserve.
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