Salary Negotiation Done Right

You passed all interviews and tests for a cool company — Congrats! The recruiter just gave you a call saying they were very impressed with you and want to offer you a contract, then she will ask you the biggest question of all — a big question with no single true answer — “What are your salary expectations?”. Hopefully, this story will help you answer this question in the best way possible, and maximize the salary in the next contract you sign.

Important disclaimers:

1. My perspective is tainted, as I come from a rapidly growing high-tech market in which the candidates have the upper hand.
2. The content in this article is not scientifically or empirically proven. It is a collection of tools and tips I have learned as a recruiting employer, a candidate looking for his next challenge, and as a curious fan of the game theory.
3. In this article, I will focus only on salary negotiation with a new employer, not on how to get a raise from the current one.
4. Obviously, the salary is a key factor when choosing your next challenge, but not the only one, and I would even add — not the most important one. A compensation pack can have multiple factors (e.g. bonuses, stock options, RSUs) which can outweigh your monthly salary in the long run. And most importantly — the position, company, and your personal growth.

Preparations

Before starting the interview process, you should have a number in mind so you’re ready when asked about your expected salary. This can even be asked on the first phone call with the company representative.

Understand Your Value

The key here is that your value is a very vague thing — so you need to first take the time to answer this with yourself.

Let’s start with an example: James is a software developer, SomeNiceCollege graduate, with 1.5 years of engineering experience from CoolSocialNetwork company. James currently makes $50k yearly.

James has successfully passed all interviews for ViralNewApp company and when asked, he said his salary expectations are $80k.

Wow, James, are you sure? Maybe you are asking for too much?

But wait, what if I told you James currently makes $75k, then his expectations are reasonable, right?

The answer is simple — how much you currently earn it not a variable in this equation! James (and you) should try and understand how much he’s worth not based on what he makes. If you are making less than your market value, it doesn’t mean you should compromise your next salary!

Search online for salary averages and ask your friends. Ask the ones you trust will give you an honest answer — not the ones bragging about some astronomic number they got at TrendyPlace company. Find a number you are comfortable asking for and able to explain — don’t sell yourself cheap and don’t exaggerate and scare companies off. Companies wouldn’t like to start a process with a candidate who is far off the scale or who they think is over exaggerating.

Minimize The Margin of Error

The number you have in mind might not be set in stone, it might be flexible, but it shouldn’t be a range.

Let’s say James tells the recruiter that his expectations are $75k-$85k — what would you understand as the future employer? I think it would be fair to assume that he would be ok with settling on the lower end of the range, so we can maybe start the negotiation from $70k and some other perks and benefits — reasonable, right? In reality, James felt he deserves around $82k but wasn’t feeling fully confident to state it.

Yes, we all have a range and some lower end to it, for which we might settle if the position is great, or other benefits are included. But when asked — give a specific number you are comfortable with, and keep the range for yourself, like a poker hand.

Intel Collection

Nowadays, you can get a proper ballpark number of how much company X pays someone with your level of experience — make sure this is roughly consistent with the numbers you have from the previous section. If this number is higher, you can adjust — but if it is lower or even much lower, this might be a bit problematic. In this case, I would advise to still ask for a number you feel you deserve, and hopefully they will do their best to meet it, maybe using other components of the compensation pack. In any case, it is not a deal-breaker, and you should take it with a pinch of salt, as anonymous online people tend to be somehow flexible with the truth.

By now you should have a solid number — now let’s see how we play it.

Game Time

Understand The Setting

Back to you. If a company decided to give you a contract offer — this means they want you. All or most of the interviewers thought you are good enough to join their team, want to work with you, and think you can even make them a better team.

Don’t get me wrong, it doesn’t mean you can blindly assume you have the upper hand and ask for ridiculous things or give even the slightest of attitude.

What you do have, is a good hand, and it’s time to try and maximize it, gracefully. Usually, there is some space to play around. Getting a compensation pack you feel good about when signing the contract is very important, as it will shadow you until you leave this company.

Negotiation Skills

The full name of this section is “You Don’t Have ANY Negotiation Skills”, but once you understand this, your negotiation skills can improve greatly.

At some point in time, you are given a contract, usually, the recruiter over the phone or in person will explain the highlights of the proposed contract draft (yes, draft, it’s not final) and although she is going to talk about a nice pack of benefits, the only thing you hear is the bottom line: annual salary.

Step 1: Now there is only one thing you should do — say “Thank you very much, I would love to go over the contract in detail; will it be ok if we chat tomorrow?”

No “Hell Yeah!” nor “Hell No!” — remember, you don’t have any negotiation skills, you need to take some time, read it, and figure out your next step.

Step 2: Go over the contract thoroughly. Even if it the compensation pack seems great, go over all the details, there are usually a few notes worth discussing. This part shouldn’t be taken lightly, but this is a whole different topic, and we are not going to drill into in this story.

Sometimes, the salary will be a bit lower than what you expected or think you can get, even when taking into account the other benefits. Go back to the number you originally had in mind and your range — now when you have the full job definition and compensation pack in front of you, decide what salary you should negotiate on. In addition, prepare a solid explanation of why you deserve a higher salary.

Step 3: Now, chatting with the recruiter again, and having done your homework, you can say their suggestion is very generous but… gracefully explain what you want to change.

Hopefully they would say the same — “I will get back to you”. And let the ping-pong begin.

Next — you can continue ping-ponging once or twice more, staying humble, like Kendrick Lamar. But remember, you need to strive to close it, don’t overdo it !!

The key here is that each conversation can end either with a decision or with someone who needs to get back with an answer. So if you don’t like the number, your goal in the upcoming conversation is having the other side say “I’ll check it and get back to you” (they will not change the number while on the call) — if they got homework, they might change — try maneuvering them to accept the homework :)

If you are unable to send them with homework — you have homework, as it seems the flexibility on their side has reached its limit — your homework is to decide if you would: agree, be rude and insist, or withdraw.

One thing to keep in the back of your mind — there are many factors to a compensation pack, some of them are open for debate if salary has reached exhaustion, even at the tip-off — you can still talk about vacation days, options, RSUs, bonuses, or other benefits the company might have

Other Important Notes

• When asked about your salary expectations, you might also be asked how much you currently earn, here is a nice guide on how to talk about it.
• Each company has their surveys and their pay grades per title and experience level — they will do their best to make you happy in the one they pigeonholed you — as it is problematic to have underpaid employee who will soon need a big raise or an overpaid one who can agitate the others.

Summing It All Up

Preparation steps include:

1. Understanding your value and defining a wish number you can justify
2. Having a range you are comfortable with, taking into consideration other components of an offer
3. Tailor your final ask number to the specific company

Negotiation keys:

1. Don’t answer directly — thank them, take it offline, think about it, return with a thought-through answer
2. No homework — No change, try to send them with homework
3. Don’t overdo it, always stay humble, and show honest willingness and desire to sign when the gap is bridged

Conclusion

You received a contract draft, meaning this company thinks you are good, they want you, and would love to have you join. They hope you would accept a salary in their pay range for the experience they estimate you bring — don’t be afraid to challenge it a little, gracefully, just like Kendrick Lamar said: “Sit down, Be humble”.

And don’t forget, every decision you make is just another step in your career — think about your path, keep your eyes on the bigger goal — will this job help you get closer to it? If so, money isn’t the only variable in the equation.