Salary Negotiations: The 10 Steps For Success

Negotiation is a fact of life. In the workplace, your salary and benefits are the return for the service you provide to your employer. For most people, this means they want fair and equitable pay, acknowledgement for experience, and benefits that reflect a healthy work/life balance. To achieve a compensation package that matches your contribution to the company, it is likely that you will need to negotiate your salary with your employer.
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Knowing What You’re Worth
Salary negotiation can be an intimidating process. There is a natural tendency to doubt your value and contribution to the company or to be worried that your employer does not see your value in the same light that you do. These are legitimate concerns, but the first step is to acknowledge it and then get it out of your head. Resources like the Salary Wizard and Personal Salary Report help you to determine what employers like yours pay employees like you in your city. By understanding your market value, you can set realistic expectations for your base salary and consider any trade-offs for benefits and work/life balance components of your compensation.

Once you determine that you deserve a raise, don't be the fool that rushes in. Take your time to build a compelling case and proper approach to your salary negotiation.

Finding The Right Time to Negotiate Your Salary -
You can ask for a raise at any time, but there are natural 'money moments' that are more logical for negotiating. Addressing your salary at the right time will leave a better impression with your employer than if you rush in without considering the 'big picture.' Understand the goals of your team and the company – being able to position yourself as an integral piece to helping them achieve their objectives will increase your leverage in negotiating a raise. Also important is your company's financial calendar and current situation. If your company is nearing its financial year or quarter end and the outlook is rosy, that might be a good time to broach the subject. However, if numbers are tight or down, it may be best to wait until after the end of the quarter.

The most obvious occasion to negotiate your salary is when you are interviewing for a new job. But even if you've been with the company for years, there is still ample opportunity to negotiate salary. For example, the completion of a successful project, an increase in responsibilities, the start of a major company initiative or your annual performance review are all times that you can address your pay.

Start early -
The conversation between you and your boss is only the first step in the negotiation process. Executive decision making and budgeting take time. Plan to initiate a conversation before you are invited to attend your review. This will eliminate the excuse, "I would love to give you a raise but the budget has already been set."

Be Prepared -
It isn't wise to charge into your boss' office and demand a raise. That isn't a negotiation. It becomes a stand-off and no one likes having their back against the wall. Good negotiation is creating a give and take, working together to find common goals and ensuring you both have ways to be successful. It isn't a winner take all mentality and many employees lose their negotiating power when they aren't willing to work together.

Do Your Research -
Do your research and conduct a realistic self-assessment of your contribution and performance. Realize that although you may feel you single-handedly run the department, management may not agree. Align your accomplishments with the direct success of the company to support your rationale using specific examples. Negotiations offer you the rare opportunity to open management's eyes to things that may have otherwise gone unseen. It's up to you to make yourself shine - so shed some light on you! Be confident in your direct role towards the success of the company. Be confident in you.

10 STEPS

Step 1: Find your job description.
The first step is to find or update your job description. If you're lucky, you have one handy that is current and up-to-date and can skip to step 2. However, many employees often have an outdated or inaccurate job description that represents what they were hired to do – not what they are actually doing.

Take the job description that you have on file. If one never existed, use the Salary Wizard® to search for one or two job descriptions that are close matches to your current job responsibilities. Next, update your job description to reflect your responsibilities and tasks.

Step 2. Know what you're worth
Now that you have defined your job description – visit the Salary Wizard and benchmark your job description to a benchmark job.

A common mistake that many people make is trying to compare their value based on a job title alone. The problem with trying to match pay to job titles is that titles and their associated responsibilities are not always consistent across companies. Matching only title, you may find yourself comparing your salary to people performing completely different jobs.

When trying to align your job description with a "benchmark" job, the compensation professionals at Salary.com recommend a minimum 70 percent match of your job responsibilities to the benchmark description you are trying to match.

Step 3. Adjust your salary for your industry, company size and location
Salaries vary across locations, industries, and company sizes. As a rule, larger companies pay their employees more than smaller companies because larger companies tend to have higher revenues per employee. Larger companies also tend to generate greater productivity and efficiency per worker. The trade-off is that small companies offer more direct access and exposure to senior level executives, and sometimes offer a better professional experience. These factors must be considered if you are to accurately assess your market value with your current employer.

The industry you work in may also have a significant impact on the final value of your job. More profitable industries can afford to pay more and be more demanding at the same time. It is a widely observed trend that biotechnology employees typically earn more than their counterparts in manufacturing, who, in turn, earn more than those at non-profit and government organizations.

There are a variety of resources that can help you determine what the fair market value is for your position, including the free Salary Wizard which provides HR reported salary data scoped to your geographic location. For a more accurate match of your specific job responsibilities, experience, industry and company size (all important factors in determining a job's value), the Personal Salary Report can help you to understand more precisely what you're worth to your employer.

Step 4. Assess all your pay factors (cash comp, benefits, work/life)
Your current or potential pay may still not align with what your salary report says. There are a number of factors to consider in addition to just base salary. Consider the benefits with a direct cash value that your current or prospective employer provides; benefits like health coverage, vacation time, reimbursements, discounts or subsidies. There are other benefits that may not have a direct cash value but are worth considering, such as work-life benefits like: flexible schedules, summer hours, telecommute or a fun office environment.

Realize that some benefits are negotiable. For example, if you would prefer to have an extra week vacation or receive tuition reimbursement, just ask. The worst thing your boss can do is say "no." With most benefits, whether they have a direct cash equivalent or not, do require a financial trade-off. For example, an extra week's vacation is the equivalent of a week's worth of salary – so don't expect to get as large of a base salary raise. However, negotiating benefits may be better received if your boss has limited flexible to negotiate base pay.

Step 5. Tie your job performance to where you should be in relation to market
Performance plays a large role in determining how much your work is worth. You must be realistic and practical when evaluating your own worth to an employer. All relevant skills, professional experience and past performance should be considered when trying to determine your final value.

Take notes on projects completed, positive feedback received and how you have made your company better. In addition to assessing your measurable contributions, consider how the less tangible elements of job performance—like attitude, teamwork, dependability, education and certifications—increase your value. If you have attributes that are important to the company's success and they are in high demand, then you can expect higher pay.

If you are confident that you have exceeded expectations and your boss agrees, you should expect to be paid more than the "average" employee. Performance is a key factor that can affect your pay over time and it is important to understand how you are doing.

Step 6. Set Your Negotiation Goals
At this point, you have measured the market value of your job description and performance – so you have a good sense of what your work is worth and how much of a raise you deserve. Now it is time to set your negotiation goals based on the cash sum you have identified as a target. If all you expect or want is an increase in your base salary, then note what you expect and what would be the minimum desired raise you would gladly accept.

If you are interested in negotiating a non-base salary raise, write down what you would like and what its financial trade-off would be. For example, if you want the benefit of working from home one or two days a week, how much of a financial trade-off are you willing to make for that benefit? Or, how much value would tuition reimbursement have for you?

Step 7. Be confident
Many employees fear asking for a raise. It is okay to feel anxious. Asking for money is uncomfortable to many people. Oftentimes, we aren't taught to negotiate or to present a case for more money. Many employees fear that their boss will disagree, debate them and even hold it against them. These are very common fears. Fortunately, you do have some reinforcement. Oftentimes, your employer needs you as much as you need them. It is very expensive for employers to go out and hire new employees.

If you have followed the previous steps, then you are well prepared. You have a list of reasons and concrete answers that support your case for a raise or promotion. As final preparation, rehearse your negotiation with a friend or in front of a mirror so you can better anticipate any questions or objections from your boss. Then, when the time comes, you are ready, comfortable and organized.

Step 8. Discuss your job description, performance and market value with your boss
When you speak to your manager, he or she may want to know more about your process for determining your raise request and may have his or her own input. This should be considered a positive development. By discussing your job responsibilities, performance and job level, both you and your boss will gain a better understanding of what needs to be done for you to succeed in your current position and earn your next promotion.

For example, you may think that you are performing your position at a senior level (called Level III by Salary.com, but perhaps "Senior" or "Experienced" by your employer); meanwhile, your manager is evaluating you at a middle level (Level II). By discussing this with your manager, you may have a "meeting of the minds" and you may become eligible not only a raise, but also a promotion. If your manager disagrees, you will now have a clear idea of what it will take to get the next promotion. Don't be discouraged – this is really an opportunity for you to shine.

Once you and your boss have agreed on a job description and your performance – you have a concrete salary range to discuss your raise. It may be slightly different from what you had previously assessed, but you know what to expect and can still use your reasons to justify the raise.

Oftentimes, your boss will need to get approval from management regarding the amount of your raise – so don't expect to be awarded the raise on the spot. If they do need to discuss with management, try to set up a follow-up meeting to discuss the findings to keep them accountable to your request.

Step 9. Identify key benchmarks for the next raise or promotion
Remember, performance reviews and salary negotiations are continual processes. The last step of one salary negotiation should be the first step of the next. With this in mind, talk about your future - the next three to six months.

The end of a negotiation is a perfect time to set the groundwork for what specific performance objectives you need to achieve in order to receive your next raise or promotion. One of the major reasons people are dissatisfied with their salary increases is that the raise is less than expected and the boss doesn't have room to increase it. Setting the expectations early doesn't guarantee anything, but it does cause your boss at least mentally to "reserve" that money for you from the next raise pool.

By talking about future performance and expectations, you are jointly committing to a positive working relationship going forward. This helps end your negotiation on a positive note for both sides.

Step 10. Track your progress and tie priorities to your goals
At this point, if you deserved a raise, you should have received one – if not, you should at least have a clearly defined list of goals laid out by your supervisor that will get you to the next level. Keep those goals in a place where you can check on them daily or weekly. Each day, track your progress to reaching those goals. By constantly self-evaluating yourself against your goals, you will stay focused on achieving them and should hit your next raise period more quickly. Also, by taking notes, you will have most of your research on-hand when it comes to your next salary negotiation.