Negotiating Your Salary

1. Postpone salary discussions until you receive a job offer

"Salary-Making Rule 1 is Postpone salary discussions until you have been offered the job."

Maintain leverage. By delaying salary discussions, you avoid being screened out prematurely and give the employer time to appreciate your full value. This strategy allows you to move the employer from a "budget" mentality to a more flexible "judgit" stage, where they are more likely to offer competitive compensation.

Postponing techniques:

• Redirect the conversation to job responsibilities
• Express confidence in reaching a fair agreement later
• Ask about the employer's salary range instead
• Emphasize your interest in the right fit over salary

If pressed, provide a wide salary range based on market research or state that you're open to a competitive offer for the right opportunity.

2. Research your market value before negotiations begin

"ISN Market Values = ORV$ + IV$ + Rf$ + Bennies/Perks."

Understand your worth. Before entering negotiations, thoroughly research your market value using the ISN formula: Ideal, Satisfactory, and No-go values. This research forms the foundation for confident and effective negotiations.

Components of market value:

• ORV$ (Objectively Researched Value): Current market rates for your position
• IV$ (Individual Value): Your unique skills and experience
• Rf$ (Risk-factor Dollars): Potential performance-based compensation
• Bennies/Perks: Additional benefits and perquisites

Utilize online resources, industry publications, and professional networks to gather comprehensive salary data. Prepare a range that reflects your research, with your ideal salary at the top and your no-go figure at the bottom.

3. Master the art of silence in salary negotiations

"When you hear the figure or top of the range, follow Salary-Making Rule #3: repeat the figure or top of the range, and then be quiet."

Strategic silence. After an offer is made, resist the urge to respond immediately. Instead, repeat the figure and remain silent for 30 seconds. This technique often leads to an improved offer or provides valuable information about the employer's flexibility.

During the silence:

• Calculate the annualized amount if given an hourly or weekly rate
• Compare the offer to your researched market value
• Consider potential counter-offers or negotiation strategies

Your thoughtful pause demonstrates that you're seriously considering the offer and can prompt the employer to reconsider their initial proposal.

4. Leverage your unique value and future contributions

"Rf$ can take the salary off the chart! Whenever you are willing to negotiate compensation contingent on performance, you add what I call Risk-factor Dollars (Rf$)."

Highlight your potential. Emphasize your unique skills, experience, and potential future contributions to justify higher compensation. Be prepared to discuss specific ways you can add value to the organization beyond the basic job description.

Strategies for demonstrating value:

• Provide examples of past achievements and their impact
• Propose performance-based bonuses or incentives
• Discuss your plans for innovation or improvement in the role
• Highlight any rare or in-demand skills you possess

By focusing on your potential to generate revenue or reduce costs, you make a compelling case for higher compensation.

5. Negotiate benefits and perks to enhance your compensation package

"Salary-Making Rule 5: Clinch the deal, then deal some more."

Think beyond base salary. After securing a satisfactory base salary, negotiate additional benefits and perks to enhance your overall compensation package. These non-salary items can significantly increase your total compensation and job satisfaction.

Common benefits and perks to negotiate:

• Additional vacation time
• Flexible work arrangements
• Professional development opportunities
• Stock options or equity
• Sign-on bonuses
• Performance-based bonuses
• Health and wellness benefits
• Relocation assistance

Prioritize the benefits that matter most to you and be prepared to explain how they would contribute to your productivity and job satisfaction.

6. Document and communicate your achievements for raises

"Employers don't give raises, employees earn them."

Prove your worth. Consistently document your achievements and contributions to the company. Use this information to build a compelling case for a raise during performance reviews or when requesting a salary adjustment.

Effective documentation strategies:

• Keep a detailed job journal of your accomplishments
• Quantify your contributions in terms of revenue generated or costs saved
• Gather positive feedback from colleagues and clients
• Track industry trends and your growing expertise

Prepare a concise "prereview memo" highlighting your key achievements and send it to your supervisor before your performance review. This proactive approach ensures your contributions are recognized and considered during raise discussions.

7. Understand and negotiate stock options effectively

"The ultimate financial benefit of a stock option to you is the difference between the price at which you purchase the stock and the price at which you eventually sell the stock, minus the appropriate taxes."

Maximize equity compensation. If offered stock options, take the time to understand the terms, potential value, and tax implications. Consider negotiating aspects of your stock option package to align with your financial goals and risk tolerance.

Key considerations for stock options:

• Vesting schedule and exercise period
• Type of options (NSOs vs. ISOs) and their tax implications
• Number of options and their potential value
• Company's growth prospects and stock price volatility
• Provisions for change of control or IPO scenarios

Seek professional advice if needed to fully understand and optimize your stock option package. Remember that options are a form of long-term compensation that can significantly impact your overall financial picture.

Last updated: August 20, 2024