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Salary NegotiationSalary Negotiation

Dr. Monika RenardDr. Monika Renard

Florida Gulf Coast UniversityFlorida Gulf Coast University

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NegotiationNegotiation

Negotiation is a back-and-forth communication designed to reach an Negotiation is a back-and-forth communication designed to reach an agreement when you and the other side have some interests that are agreement when you and the other side have some interests that are shared and others that are opposed.shared and others that are opposed.

Negotiation is the highest form of communication used by the lowest Negotiation is the highest form of communication used by the lowest number of peoplenumber of people

-President John F. Kennedy-President John F. Kennedy

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Salary Negotiation ProcessSalary Negotiation Process When NOT to NegotiateWhen NOT to Negotiate Prepare to Negotiate SalaryPrepare to Negotiate Salary Recognize Buying SignalsRecognize Buying Signals Build and Use Powerful ArgumentsBuild and Use Powerful Arguments Use Negotiation StylesUse Negotiation Styles Evaluate the OfferEvaluate the Offer Multiple OffersMultiple Offers

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When Not to NegotiateWhen Not to Negotiate

On the application blankOn the application blank– ““open” “negotiable” “competitive”open” “negotiable” “competitive”

During routine discussions During routine discussions of the jobof the job– ““What is your salary history?”What is your salary history?”

– ““How much are you looking for?”How much are you looking for?”

Do not negotiate without an offerDo not negotiate without an offer– Rarely on first interviewRarely on first interview– ““Sidestepping”Sidestepping”– Is this an offer?Is this an offer?

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Prepare to Negotiate SalaryPrepare to Negotiate Salary

– Salary range for level Salary range for level above and below you at above and below you at the companythe company

– BLS dataBLS data– State labor officeState labor office

– Ask headhuntersAsk headhunters– Salary surveysSalary surveys– National Business National Business

Employment Weekly by Employment Weekly by Wall Street Journal Wall Street Journal every week.every week.

Know your minimums (BATNA)Know your minimums (BATNA)– Salary, benefits, other items, which?Salary, benefits, other items, which?

Know what your skills are worthKnow what your skills are worthin the current marketin the current market

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1998 Salary Offers to Bachelor’s Degree 1998 Salary Offers to Bachelor’s Degree Candidates by DegreeCandidates by Degree

AccountingAccounting 32,82532,825 Business Admin Business Admin 31,45431,454 Construction ManagementConstruction Management 32,49832,498 Distribution Management Distribution Management 35,50335,503 Economics & Finance Economics & Finance 33,69133,691 Hotel/RestaurantHotel/Restaurant 25,53425,534 Human Resources (& LR)Human Resources (& LR) 27,15127,151 MISMIS 39,21839,218 MarketingMarketing 29,23129,231 Merchandising Management Merchandising Management 26,58426,584

Source: National Association of Colleges and Employers

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1996 Salary Offers to Masters’ 1996 Salary Offers to Masters’ Degree Candidates by DegreeDegree Candidates by Degree

MBA -Non-tech undergrad < 1 yr exp 40,731 1-2 yrs exp 46,394 2-4 yrs exp 54,999 > 4 yrs exp 67,209

MBA -Tech undergrad < 1 yr exp 39,146 1-2 yrs exp 43,000 2-4 yrs exp 51,600 > 4 yrs exp 70,339

Accounting32,537

Econ/Finance (Banking)42,650

HR (inc LR)39,870

MIS 38,400 Marketing

41,547 MS - Business

37,237

Source: National Association of Colleges and Employers

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Recognize Buying SignalsRecognize Buying Signals He/She says:He/She says: ““How do you think How do you think

you would like you would like working here?”working here?”

““People with your People with your background always fit background always fit in well with us.”in well with us.”

““You could make a You could make a real contribution here.”real contribution here.”

““Well, you certainly Well, you certainly seem to have what it seem to have what it takes.”takes.”

Or, You say:Or, You say: ““How do you think I would fit in How do you think I would fit in

with the group?”with the group?” ““I feel my background and I feel my background and

experience would definitely experience would definitely complement the workgroup, complement the workgroup, don’t you?”don’t you?”

““I think I could make a real I think I could make a real contribution here. What do you contribution here. What do you think?”think?”

““I know I have what it takes to I know I have what it takes to do this job. What questions are do this job. What questions are lingering in your mind?”lingering in your mind?”

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Build and Use Powerful ArgumentsBuild and Use Powerful Arguments Know your worth to the employerKnow your worth to the employer Know your fit with the jobKnow your fit with the job What do you offer the organization, What do you offer the organization,

can you do for their benefit?can you do for their benefit? Use to determine your BATNA and Use to determine your BATNA and

as negotiation ammunition.as negotiation ammunition.– Skills: common, specialized skills, and organizationalSkills: common, specialized skills, and organizational– Knowledge: common, specialized, and organizationalKnowledge: common, specialized, and organizational– Experience: length of time, previous triumphsExperience: length of time, previous triumphs– Contacts: internal and external, long term and short term.Contacts: internal and external, long term and short term.– Replaceability: how are you more valuable than someone else?Replaceability: how are you more valuable than someone else?

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What Do Employers Want?What Do Employers Want?Personal/ProfessionalPersonal/Professional Drive, motivationDrive, motivation Communication skillsCommunication skills Problem solving skillsProblem solving skills Team playerTeam player ConfidenceConfidence Energy, determinationEnergy, determination ReliabilityReliability Honesty/integrityHonesty/integrity Pride, dedicationPride, dedication Analytical skillsAnalytical skills

Business ProfileBusiness Profile ProfitProfit EfficiencyEfficiency EffectivenessEffectiveness Money earned/savedMoney earned/saved Necessary skills for jobNecessary skills for job

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Homework: Salary Negotiation Homework: Salary Negotiation PreparationPreparation

Identify a job you would be interested in Identify a job you would be interested in having in an actual company. having in an actual company. – E.g., E.g., www.monster.comwww.monster.com

Find out the market rate for that job. Find out the market rate for that job. – E.g., E.g., online.onetcenter.orgonline.onetcenter.org//

Write out at least five good arguments for Write out at least five good arguments for why you would be worth a higher salary why you would be worth a higher salary than they might offer. than they might offer.

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Researching a Prospective Researching a Prospective EmployerEmployer

Organization name, address, phone, contactOrganization name, address, phone, contact Main operations, main locationsMain operations, main locations 2-3 significant aspects of history, development2-3 significant aspects of history, development How it compares to others in How it compares to others in

same businesssame business Policies re: training, salary, Policies re: training, salary,

advancementadvancement Future prospects of organizationFuture prospects of organization Other info re: company or industryOther info re: company or industry

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Salary Negotiation TacticsSalary Negotiation Tactics

Win-Win Win-Win

Win-Lose Win-Lose

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Salary Negotiation Styles: Salary Negotiation Styles: More EffectiveMore Effective

Active negotiationActive negotiation– Negotiate to get the highest salary possibleNegotiate to get the highest salary possible– Ask for more than you expect employer Ask for more than you expect employer

to offerto offer– Ask for more than the company offersAsk for more than the company offers

Preparation and self-promotionPreparation and self-promotion– Emphasize relevance of educationEmphasize relevance of education– Stress motivation to workStress motivation to work– Explain willingness to do different thingsExplain willingness to do different things

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Sharing InformationSharing Information

Sharing infoSharing info

Requests for infoRequests for info Build common groundBuild common ground

Objective criteriaObjective criteria

I would rather have a higher I would rather have a higher salary than an increase in salary than an increase in moving expensesmoving expenses

Is salary negotiable?Is salary negotiable? We both want to benefit the We both want to benefit the

company.company. I’ve checked 3 moving I’ve checked 3 moving

companies, and moving companies, and moving expenses run about $3,000expenses run about $3,000

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Problem-SolvingProblem-Solving

Request reactions to Request reactions to offersoffers

Focus on interestsFocus on interests

Separate people from Separate people from problemproblem

Would that be all right with Would that be all right with you?you?

Why is that important to you?Why is that important to you?

I am pleased with your I am pleased with your cooperation, buy I am still cooperation, buy I am still concerned about salary.concerned about salary.

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Inventing Options for Mutual GainInventing Options for Mutual Gain

AlternativesAlternatives

LogrollingLogrolling

Expand the pieExpand the pie

Suppose I started next week to meet Suppose I started next week to meet your deadline, and then took off two your deadline, and then took off two weeks next month to arrange my weeks next month to arrange my move?move?

Starting next week is important to Starting next week is important to you, salary to me. How about if I you, salary to me. How about if I start next week for a $1000 bonus?start next week for a $1000 bonus?

If I work for part commission, we If I work for part commission, we could both get more.could both get more.

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Salary Negotiation Styles:Salary Negotiation Styles:Less EffectiveLess Effective

AggressiveAggressive– Say you have other job offersSay you have other job offers– Say you have another offer with higher salarySay you have another offer with higher salary

AcceptanceAcceptance– Ask for salary you hope to getAsk for salary you hope to get– Accept any salary over minimumAccept any salary over minimum

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Competitive TacticsCompetitive Tactics ThreatThreat

Positional Positional CommitmentCommitment

PutdownPutdown

ChallengeChallenge

Give me $50,000 salary or I will Give me $50,000 salary or I will have to interview elsewhere.have to interview elsewhere.

$50,000 is as low as I will go.$50,000 is as low as I will go.

That offer is like leaving a dime That offer is like leaving a dime tip for your waiter, more tip for your waiter, more insulting than anything else.insulting than anything else.

What’s the problem with your What’s the problem with your company that you offer so little?company that you offer so little?

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Accommodating, CompromisingAccommodating, Compromising

YieldingYielding

AcceptanceAcceptance Trade Trade

concessionconcession

Split differenceSplit difference

OK, I guess promotion-review is not OK, I guess promotion-review is not that importantthat important

I wanted $38,000 but I will accept I wanted $38,000 but I will accept $30,000 if I can start in 2 weeks $30,000 if I can start in 2 weeks instead of 1.instead of 1.

$34,000 is fine.$34,000 is fine. I would accept $3000 less salary if I would accept $3000 less salary if

you will increase the moving expense you will increase the moving expense by $3000.by $3000.

Your offer is $40,000, I want 50,000. Your offer is $40,000, I want 50,000. Lets say $45,000. Lets say $45,000.

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Other Competitive TacticsOther Competitive Tactics

High Initial DemandsHigh Initial Demands

DelayDelay

Limited authorityLimited authority

Good guy/bad guyGood guy/bad guy

Temper TantrumTemper Tantrum

I must have $70,000I must have $70,000

I need to think about this I need to think about this overnightovernight

My spouse would have to My spouse would have to approveapprove

I’d be happy to do that, buy I’d be happy to do that, buy my current boss won’t allow it.my current boss won’t allow it.

How dare you say that?How dare you say that?

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Evaluate the OfferEvaluate the Offer It sounds fair and equitable - You may It sounds fair and equitable - You may

still want to negotiatestill want to negotiate ALWAYS say how excited you are ALWAYS say how excited you are

about the opportunity and how much about the opportunity and how much you want to work there. you want to work there.

If it meets your needs, your If it meets your needs, your BATNA, your career interests, BATNA, your career interests, etc. money may not be so etc. money may not be so important.important.

Think it over, don’t decide on the spot.Think it over, don’t decide on the spot. Get a Written Offer/Contract.Get a Written Offer/Contract. KEEP LOOKING UNTIL YOU DO!KEEP LOOKING UNTIL YOU DO!

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Evaluate the Job, TooEvaluate the Job, Too Weigh salary, future earnings and career prospects, benefits, Weigh salary, future earnings and career prospects, benefits,

commute lifestyle, stability of company, commute lifestyle, stability of company, gut gut feelings. feelings. Answer:Answer:

Do you like the work?Do you like the work? Do you have a realistic chance of success on the job?Do you have a realistic chance of success on the job? Do title and responsibilities provide challenge?Do title and responsibilities provide challenge? Is opportunity for growth compatible with your needs?Is opportunity for growth compatible with your needs? Are location, stability, reputation in line with your needs?Are location, stability, reputation in line with your needs? Is atmosphere/culture conducive to you enjoying it?Is atmosphere/culture conducive to you enjoying it? Will you get along with manager and workgroup?Will you get along with manager and workgroup? Are money and total compensation the best you can get?Are money and total compensation the best you can get?

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It Isn’t What You ExpectedIt Isn’t What You Expected ALWAYS say how excited you are ALWAYS say how excited you are

about the opportunity and how much about the opportunity and how much you want to work there, with them.you want to work there, with them.

Run money topic as far as you can Run money topic as far as you can in a calm and businesslike way.in a calm and businesslike way.

Examine other potential benefits of the jobExamine other potential benefits of the job– Future salaryFuture salary - Title & promotion after - Title & promotion after

monthsmonths– Signing bonusSigning bonus - Bonus, commission - Bonus, commission– Performance reviewPerformance review - Car, gas, maintenance, - Car, gas, maintenance,

parkingparking Try money again.Try money again.

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Multiple OffersMultiple Offers Generate as many interviews as possible in a 2- Generate as many interviews as possible in a 2-

to 3-week periodto 3-week period– ““Mr. Johnson, I’m calling because while still under Mr. Johnson, I’m calling because while still under

consideration with your company I have received a consideration with your company I have received a job offer from one of your competitors. I would job offer from one of your competitors. I would hate to make a decision without the chance of hate to make a decision without the chance of speaking with you again. I was very impressed by speaking with you again. I was very impressed by my meeting with you. Can we get together in the my meeting with you. Can we get together in the next couple of days?”next couple of days?”

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Accepting New JobAccepting New Job Accept verbally, ask for a written offer, give Accept verbally, ask for a written offer, give

notice.notice.– ““Mr. Smith, I’d like to accept the position of general Mr. Smith, I’d like to accept the position of general

manager at a starting salary of $42,000. I will be able manager at a starting salary of $42,000. I will be able to start work on January 7. And I understand my to start work on January 7. And I understand my package will include life, health, dental, a 401K plan package will include life, health, dental, a 401K plan and a company car. I will be glad to start on the above and a company car. I will be glad to start on the above date pending a written offer received in time to give date pending a written offer received in time to give my present employer adequate notice of my departure. my present employer adequate notice of my departure. I’m sure that’s acceptable to you.” I’m sure that’s acceptable to you.”