How to Negotiate a Salary for Your New Job
Negotiating a starting salary for a new job can be a nervous time for inexperienced candidates. People often incorrectly assume the company has all the power. Fortunately, salary negotiations are not a guessing game - you don’t have to guess the right number to get the job. Instead, salary negotiations are an effective way for both you and your employer to create a win-win employment contract. Follow these simple steps and you’ll discover it’s easier than you think to negotiate a great starting salary for your new job.
Step 1 - Preparation
A little preparation gives you enormous confidence when the time comes to negotiate your starting salary. Prepare properly and you’ll breeze through salary negotiations, secure in the knowledge of an appropriate salary for your skills and position. Here’s how to prepare:
- Understand job requirements. Be absolutely certain you understand everything that will be required of you in this position. You don’t want to be under-compensated. You also want to avoid expecting too much money for a junior role with little responsibility.
- Research your market value. Get to know the average salary for your position in your particular industry. Read job websites, salary survey results and newspaper advertisements for similar positions. You can also gather information by discussing your expected salary with peers or career guidance counsellors. Knowing your market value helps you gauge the salary range you might be offered.
- Research the company’s recent performance. If you know the company has reported record profits and breakout growth, you can confidently ask for the higher end of your market value.
- Know your professional worth. Your individual skills, experience and qualifications may make you worth more money than a similar candidate. If you are already trained in the company’s preferred software, you will save them training and education costs. If you have significant experience and proven results, companies will usually pay a premium to hire you over another equally qualified candidate with little experience. Practice articulating your professional worth. In negotiation, you want to clearly explain why you’re worth extra money.
- Establish your bottom line. With the above in mind, set a minimum salary level you’d be willing to accept.
Once you have decided on the absolute bottom salary figure you would accept, add 10-20% to set your starting offer. Remember, the first salary amount you mention will usually be the highest amount discussed – you will only be negotiated down from there. Don’t be shy to set it slightly higher than you require.
Step 2 - Negotiation
You’ve made it to the end of the application process, so rest assured the company wants to employ you as much as you want to be employed. You want to feel well compensated for your skills. The employer needs to know they’re getting good value for their money. Getting a good deal is important to both of you. Here are some tips to swing the odds in your favour.
- Don’t be first to mention an amount. Where possible, wait for the employer to mention an amount first. If you’re asked to state your expected salary range early in discussions, deflect the question back to them. Try to find out what they’re offering. Alternatively, state you will consider any reasonable offer. Keep your options open. Once you mention a figure, you will feel anchored to that amount. Avoid locking yourself in too early.
- Start high. If you’re pressed to make the first offer, state an amount at the top of your expected range. It may help to indicate you’ll accept a certain amount of flexibility with how your salary is packaged.
- Communicate your value. Be prepared to restate key points from your interview. Don’t be afraid to sell yourself. Remind the employer of the benefits you bring to the company, your past results and what you expect to achieve in the new position. Having made it through the interview process, you should be well rehearsed in your ‘sales pitch’.
- Take time to consider every offer. If the employer makes the first offer, always ask for time to think it over. Candidates are often tempted to say yes or no too early. Even if the offer seems high (like a dream come true), you’ll still need time to examine the finer details. You don’t want to accept too early only to discover that 50% of the salary is performance-based. Likewise, if the offer is too low, don’t say no too soon. Further examination may reveal extra bonuses and perks that compensate for the low figure.
Step 3 - Review the Offer
Once you’ve received an offer, take time to review it properly. Don’t look at the dollar amount alone. There are many other factors that count towards your overall remuneration besides your base salary. Consider the dollar value of any benefits that may be included in your salary package, including:
- Opportunity for promotion
- Free training courses
- Paid relocation expenses
- Employee benefits (company car, gymnasium, childcare, wellness programs, etc.)
- Travel opportunities
- Performance bonuses
- Access to share purchase plans
- Access to salary sacrifice programs
As well as the items outlined above, reflect on the value of other less obvious job benefits. Such benefits might include close proximity to your home, short daily commute, low stress, easy responsibility and flexible hours.
Important Note - Pay special attention to whether your superannuation is included in the specified base salary, or whether it will be paid in addition to your salary. You should also investigate whether you’ll need to pay fringe benefit tax and how it will impact your net pay.
Step 4 - Counter Offer (Optional)
After a thorough review, decide whether you are happy with the offer. If you are, proceed to Step 5 below. If not, you’ll need to prepare your counter offer.
As discussed above, you can negotiate many factors besides the base salary. If you want more pay but suspect your employer won’t agree to an increase, try negotiating other items that indirectly translate to more dollars in your pocket.
All of the factors in Step 3 above can be negotiated. Be creative. Chase your career and lifestyle goals. Why not ask the company to agree to give you professional training or an extra holiday each year? It’s an excellent idea to negotiate a 3 month pay review, so you know you’ll have an opportunity for pay rise very soon.
Step 5 - Decline or Accept
If you can’t come to an agreement with the employer, you have every right to decline the offer. Be sure to decline graciously with thanks and appreciation - you never know when you might cross paths with the employer in the future. Politeness is key in maintaining good industry relationships.
If you’re happy with the negotiated salary, get it in writing. You must ensure every item you have negotiated is documented in your offer letter. If the letter looks good, go ahead and sign up for your new job. Congratulate yourself on your new position!
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