Friday, September 28, 2007

Negotiating Salary, Start to Finish

*A repeat performance post from another of my blogs, Firm Advice.

Ever wonder if you're making what you're worth? Well, if you're wondering, you probably aren't making what your worth. One of the most important things I learned as a recruiter was that salaries vary greatly for practically identical positions based not only on skill but also on knowledge of the market and ability to negotiate.

Knowledge is power. It can make a huge difference. I once interviewed two gentlemen employed in nearly identical positions at equivalent organizations. Much to my surprise, one was making approximately $50,000 a year less!

He must have been less qualified, you might think. Perhaps his educational background wasn't as impressive or his work experience was less extensive. Sadly, no. The only significant difference between these two candidates I was interviewing for the same position was that one knew his worth and knew how to negotiate and the other did not.

The man making less wasn't aware he was being underpaid and didn't know how to ask for what he was worth. In order to ask for what you are worth, you must first know your worth.

The advent of the Internet has made salary information much more accessible. Where companies formerly shielded salaries as a closely guarded secret, smart companies today are more open in salary negotiations, faced with better informed prospective employees. Negotiating is another part of the interview process. Someone who is well-informed and negotiates to a win-win solution adds value to her worth before even beginning the new position.

Researching the salary range for your position is much like familiarizing yourself with an area by looking at a map. You can begin by using salary sites like, and These will give you a bird's eye view, but not the detailed information you will need to skillfully negotiate your way to your destination. Using these sites alone for your salary research would be like trying to find your way around Los Angeles using a map of the United States of America. For a better view, using more than one source and more than one type of source, will help ensure your research is balanced and accurate.

Very detailed information, including salaries for certain titles at named companies in certain cities, is available from, a leader in the area of targeted salary research. Although you have to pay to see these reports, the information is worth the small fee, if you are considering working for a large firm or corporation. If you are considering a position with a small firm in a small town, the information is not as relevant. To balance your view, turn to industry organizations and sites such as,, and FindLaw's

Once you have done your initial research online, reality check what you have found by talking with a professional counterpart you trust in your geographic market. If you don't yet know anyone you feel you can ask, you can use a message board such as the one found on

While salary information is more readily available for large firms, you can get a reliable look at compensation at medium to small firms in your area by relying more heavily on the last part of the process described above. Regardless of the size of your market, staying connected with colleagues is great way to not only enjoy the camaraderie of people with similar interests, but also continue to learn about your market. Having a friend with whom you can discuss important professional decisions can put you far ahead in evaluating whether a position offers the right opportunity for you.

When considering the information you find, keep in mind the many factors that impact salary, including but not limited to: 1) your salary in your current and previous positions; 2) geographic location; 3) cost of living; 4) size of firm; 5) areas of law in which the firm practices; 6) locations of the firm's other offices, if any; 7) prestige/name recognition of the firm; 8) hiring history; and 9) salary in relation to billable and non-billable hour requirements.

Be sure to continue your research until you reach a firm conclusion on the minimum and maximum compensation amounts you consider fair. Consider this your "comfort zone." Once you have identified your comfort zone, stick to it.

If you receive an offer significantly outside of your comfort zone, in either direction, be very cautious about going to work with the extending firm. While reaching a compensation agreement most often includes some amount of negotiation, an offer either unreasonably low or high can be an early indicator of serious problems right from the beginning.

Negotiation can be challenging, but if you keep a few basics in mind, the process can be a much more enjoyable and informative experience. With that in mind, the following tips can serve as a guide as you travel the sometimes treacherous, yet often rewarding, path of salary negotiation:


Collaborative Approach
When negotiating salary, a collaborative approach is most often the appropriate tack to take. While you may be tempted to adopt a more adversarial approach, it is important to remember that this negotiation is the beginning of what will hopefully be a long and productive union.

A collaborative approach is characterized by working together toward a win-win solution, one in which both parties walk away feeling they have gotten a fair deal. It's not just the end agreement that results in both sides feeling they have won, it's also the tactics you use to get there.

Be wary of overblown advice. "Don't tell them your current salary. It's not about your past. It's about how much the work in this position is worth." Statements like this are just plain wrong. It's not only wrong. It's so far off base it can turn an interview that was going well into one that totally destroys your chances of getting hired.

It is standard for an employer or recruiter to ask what you are making in your current position and you should be prepared to discuss it openly when they ask. Failing to answer directly only makes you appear evasive.

If you feel you are currently being underpaid, explain why and back your belief with facts. Be prepared to discuss whether or not you have asked for a raise, why or why not, and any response you received to such a request.

Open Exchange

One of the keys to win-win negotiating is the open exchange of information. This may include discussing your salary research in detail, especially if you find there seems to be a major discrepancy between your expectations and theirs.

For example, if you find that relocation expenses are not included and are not negotiable, don't just assume they are cheap. Discuss with them the fact that your research indicates that other similar companies (preferably their competitors) cover relocation for employees at this level. If they want more information, be specific, include the name of the company, title of the equivalent position and type and amount of relocation expenses covered. It may simply be they were not aware, or there may be another explanation.

Be open to listening to their explanation. They may make up for not covering relocation by offering bigger signing bonuses, for example. It's fairly common for smaller companies to not invest the personnel and expense necessary to calculate moving expenses, negotiate with moving companies and deal with real estate or corporate housing rentals. In such a situation, you can calculate your estimated expenses and negotiate the appropriate signing bonus to ensure your expenses are covered.

Your Comfort Zone

Establish a comfort zone for yourself. Know the bottom number you are willing to accept and the top number. These numbers should be based on the market value for the position you are being offered, your past pay and performance and the future for advancement in the position offered. Any offer you accept should be within your comfort zone.

If you are presented with an initial offer far below your comfort zone, think seriously about whether or not to invest your time negotiating with this company. An inappropriately low offer can indicate some serious problems that may be difficult to correct.

For example, the company may be out of touch with the market. If this is the case, it is likely that it would not only be difficult to negotiate a fair salary initially, but also difficult to negotiate raises in the future.

An inappropriately low offer can also indicate you are overqualified for the position, a situation which, if you accepted, could result not only in you being underpaid, but also low job satisfaction and an overall slowing of your career progression.

Unfortunately, an inappropriately low offer can also mean that an inexperienced hiring manager is simply trying to get the best deal he can, no holds barred. While this may seem excusable at first glance, it should make you think twice about his management style.

If you are presented with an initial offer far above your comfort zone, be cautious about accepting. While it may seem like a dream come true, it may be an important red flag.

Step back and consider other motivating factors.

If the company extending the offer trying to hinder a competing company by hiring you away? They may be paying more for the opportunity to hurt their competitor than for your skills, a fact that won't be helpful when it's time for a raise.

Are they engaged in a bidding war for your services? This most often comes into play with counter offers from an employer you are leaving. You should almost never accept an offer that comes in response to your decision to leave. If salary is the main motivator for leaving, you should have addressed it and ask for a raise before deciding to leave. If they were unwilling to give you the raise before you had a competing offer, what has changed? Did your skills suddenly improve overnight? Unlikely. The difference is that now they are forced to either give you the raise or have you walk out the door while they have no replacement. The sad fact is that even if you accept their offer, they can simply keep you on board until they hire someone to replace you (for less money) and then fire you.

Know when to walk away

In order to have leverage in salary negotiations, you must be willing to walk away. If you can't reach an agreement that is within your comfort zone despite your proposed solutions and theirs, you should walk away from the negotiating table and feel good about it. Know that it was not a personal slight against you or them, simply a business negotiation in which you could not reach an agreement. In the end your interests just did not match closely enough.


Evaluating the Total Package

Compensation is more than just salary. The more your career advances the more complicated compensation negotiation becomes, as it includes more and more negotiable parts, such as profit sharing, stock options, and executive perks. At some point, it may be wise for you to enlist the help of a professional in negotiating compensation. If you are not yet at that point, you should act as your own compensation analyst.

Even jobs that appear to have relatively few components in the pay package can have a suboptimal component that results in pay not adding up as well as you initially thought. Health insurance is a prime example. A difference in health insurance can easily make a $5,000 to $10,000 difference in your effective compensation. When evaluating insurance, remember it is not only the premium you pay, but also the deductible and expenses covered that should be considered.

To be sure you are considering the big picture, you can use a spreadsheet like the one shown here on, the Wall Street Journal's Executive Career Site. You can use this or a similar spreadsheet as a dynamic tool to compare your current position, an offered position and your comfort zone.

(For more information on finding your comfort zone, see last week's article Researching Salary: How and Where to Look.)


Brokering the Deal

Take your time in evaluating any offer extended, remember you are brokering a deal that will impact every step in your career from here forward, so asking for a couple of days to evaluate at least the initial offer is standard.

Once you have used your spreadsheet to compare your current position, the offered position and your comfort zone, you should have some idea of adjustments you would like to make to the offer. Make some notes to use during your conversation and schedule a time to talk with the person extending the offer. Be sure to have your notes and spreadsheet available each time you talk. If the person calls you unexpectedly and you do not have your notes available, let him or her know you are not able to talk at the moment and ask if you can call them back.

Asking for More

When you do talk with them remember that good negotiation is good conversation. Statements and inquiries should be constructed to invite a favorable response and keep both parties involved. Begin your conversations by repeating your interest in the opportunity, and make use of questions and open-ended statements to keep discussions going.

For example, let's say they offer $140,000 base and you won't be happy with less than $150,000. (This assumes your research backs you up and you haven't already told them that you would accept something in the $140,000 range during the interview process.)

Instead of responding with, "I can't take 140." and ending the conversation there, try, "Considering the market, I was really hoping for 155." Then wait for a response. The most likely response is, "Let me see what I can do, and I'll get back to you."

Another possible response is "That's the best we can do on salary, but we may be able to make some adjustments elsewhere." Still you keep the conversation going and have opened the door to compromise.

A flat "That's the best we can do." is unlikely but possible. If you've responded as suggested above, you haven't turned down the $140,000 on the table and you can move on to negotiating other pieces of the deal such as annual bonus, deferred compensation, and signing bonus where you have the opportunity to make up for the $10,000 additional you had hoped to see in base salary.

Solving for the Solution

Be open to solutions. As well as presenting your own alternatives, be open to hearing theirs. If the negotiation is going well, proposed solutions should be flowing back and forth.

Remember that a potential employer hopes you will join the team as an asset. Show your worth up front by suggesting solutions. For example, offer to forgo the signing bonus for more base pay (Although you may not be able to get a one for one trade for this because base salary is a recurring expense, where a signing bonus is a one-time expense.)

View the situation form the hiring manager's shoes. If the manager has a budget for her division, your compensation likely comes out of that budget. Although there may not be money there for relocation, there may be money available for travel, allowing you to negotiate use of a hotel or corporate housing for a few months. Suggest some alternatives, repeat your interest in the position and continue to work together.


Before finalizing the deal and giving notice at your old job, get the deal in writing and make sure the agreement is clear. Make sure all the details are included and unambiguous. Be especially cognizant of items such as bonus eligibility, amounts, and pay out dates and when you are first eligible for a performance review and raise. These can make a significant difference in your pay.

Whether or not you accept the position, maintain positive communication throughout and even after the negotiation. Consistently reinforce what you like about the company and your interest in it even if you do not accept their offer. There may be another opportunity in the future that may be a better match, or someone you have met during the process may recommend you for another position with a different company.

1 comment:

the individual voice said...

Great advice I could have used earlier in my career when I was totally clueless...and way underpaid as a psychologist. Now I'm ok.