How To Successfully Negotiate A Salary Offer Or Pay Raise

Because you have to ask for the pay you think you deserve.
These negotiation tactics will help you get the salary you want.
AntonioGuillem via Getty Images
These negotiation tactics will help you get the salary you want.

Some people are well versed in the art of the deal. They love to debate, argue and negotiate. For others, any kind of confrontation feels just plain icky.

When it comes to your salary, however, you can’t afford to simply accept what you get. Failing to negotiate your pay means leaving money on the table, plain and simple.

The High Cost Of Not Asking

According to a survey by Payscale, 57 percent of respondents said they’ve never asked for a raise. Twenty-eight of those people said it was because they’re uncomfortable negotiating salary, while an additional 19 percent didn’t want to be perceived as pushy. The survey also found that women are more likely than men to be uncomfortable with negotiating their salary (31 percent versus 23 percent), which is an unfortunate contributor to the gender wage gap.

A 2005 survey of Carnegie Mellon University MBA graduates found that, on average, starting salaries among the male students were 7.6 percent higher than for the women. However, only 7 percent of the women negotiated their starting salaries, versus 57 percent of the men. The group of mostly male grads who negotiated was able to increase their starting salaries by just over $4,000.

That might not seem like a lot of money until you consider the long-term loss. Say Employee A is offered a salary of $50,000 and Employee B gets $54,000. Both employees receive annual cost-of-living raises of 3 percent a year. After 20 years of work, Employee B has earned a whopping $114,706 more than Employee A.

“Find that sweet spot between being an agreeable, contented person that people love to work with and the squeaky wheel,” said Marielle Smith, vice president of people at GoodHire. She said that, although you don’t want to be “that person” in the office who’s always making demands and rubbing people the wrong way, you also don’t want to be the one who gets steamrolled.

“Wherever you are in this process, whether you’re negotiating your salary for the first time with the new employer or whether you’re doing your 30th salary negotiation with your existing employer, you want to find that right balance,” Smith said.

How To Determine Your Value

Before you enter into a salary negotiation, it’s important to arm yourself with data. That means doing research ahead of time to find out how much your skills and experience are worth.

“There are a variety of online resources that you can use to find out what the going rate is for a particular position in a particular ZIP code,” said Diane Farrell, the career services director at the University of North Georgia. Those resources include Glassdoor, and Payscale, which are a good place to start, though Smith noted that sometimes job titles on their own don’t always tell you what the job entails, so you should only use these data to determine a range.

The other important piece to determining your worth as an employee is figuring out your business value.

For example, say there are two software engineers at a company. “One of those software engineers innovated some great new feature on their own that ended up bringing in millions of dollars to the business,” explained Smith. “The other is doing great work, but didn’t achieve anything like that …. Those two people are going to have different compensation levels.”

Smith said that you’ll be in a much better bargaining position if you can cite specific ways you’ve driven business value over the last 12 months.

And if you want an insider’s perspective, consider talking to your co-workers about their salaries, too, said Farrell. Of course, many people won’t feel comfortable discussing their pay with you. “People are squeamish about talking about their salaries,” she noted. But if you have a trusted friend at work you can confide in, it could be a good way to find out how your salary compares with others in the same company.

How Important Is Your First Salary?

When it comes to negotiating the salary for your first job, there are two schools of thought: Some experts believe that this is extremely important because it sets the benchmark for future raises and job offers. “[Employers] often base your salary on what you’ve been paid in the past,” said Farrell. “It can build more slowly for you if you start out low.”

Others, like Smith, don’t think it’s all that important anymore. “Of course, it’s great to get as much money as you can,” Smith said. However, what’s more important than what you’ll be paid is what you’ll learn. She said that if you have a choice between a boring position that pays a lot and an exciting, challenging job that might pay a little less, go with the challenge.

“That’s going to give you so much more value in the future,” she said. “Your first job is just your first job. Your second job is when you’re going to leverage everything you learned.”

And, fortunately, your previous salaries might have less bearing on future offers soon. A handful of cities and states have made it illegal for employers to ask prospective employees about salary history.

6 Steps For Negotiating Future Offers And Raises

Once you’ve established your career and are ready to move up the ladder, there are a few tips to keep in mind whether you’re considering a new job offer or negotiating a raise at your current company.

1. Start early.

One of the most important steps in salary negotiation is starting the conversation early. Smith recommended sitting down with your manager to define what success looks like. That includes any milestones, deliverables or revenue goals you need to meet to grow in your position. “Then the conversation about your compensation gets way easier because you’ve already talked about it,” said Smith.

2. Share your research.

After digging up all the data on salaries for your field and coming up with a handful of personal accomplishments, it’s time to make your case. “It should be based on observable accomplishments and performance that has taken place,’” Farrell said, rather than simply tenure.

And the more time you spend collecting information beforehand, the better. “Understanding how you fit into the big picture of the business and how the work you do contributes, and then being able to clearly and concisely articulate that to your manager, shows that you’ve come prepared,” Smith added.

3. Remain professional.

It’s important to maintain a professional demeanor throughout the negotiation process, even if you feel nervous or frustrated. “Hopefully, the negotiation ends up being successful and you’re going to going continue having a relationship with the person you’re negotiating with,” said Smith. “You want that to be a good relationship.”

And if you’re negotiating a raise with your current employer versus a new job offer, keep in mind, “It’s easier to screw that one up,” according to Smith. There’s already a sense of familiarity, and your boss probably already has a good idea of what your personality is like. You might want to remain a little more buttoned up than if you were having a casual conversation, according to Smith.

4. Consider other benefits, too.

It’s also important to look beyond just your base salary and consider other valuable benefits that might be negotiable. “You really have to evaluate the entire package and not just the salary alone,” Farrell said. For instance, “Vacation time is worth something… [and] so are retirement contributions,” she noted.

Other benefits to consider include tuition reimbursement, flexible schedules and free meals. You can even consider accepting more equity in the company instead of salary. “There are some people who’ve done really well because they joined companies that have been acquired, and the equity they had was immediately turned into cash,” Smith said.

5. Be reasonable.

In order for your request to be taken seriously, you need to shoot for a number that’s within the realm of possibility. Aim too high, and you could appear irrational or greedy. Aim too low, and you might end up selling yourself short.

“Ask for more than what your bottom would be,” said Farrell, who recommended aiming for 10 percent more than what you would settle for, because you should expect a counteroffer.

6. Know when to walk.

When it comes to that bottom line, you need to determine whether you’re prepared to move on if it can’t be met. That might mean turning down a job offer.

And, in the case of a raise, “You have to decide whether you’re going to consider staying there if the answer ends up being no,” Farrell said. “I would never approach it as an ultimatum to a current employer… but do you really want to stay at a place where they seem not to value your contributions in the right way?”

Salary negotiation isn’t about demanding more. It’s about advocating for yourself and ensuring you’re being paid what you’re worth. So don’t be afraid to start the conversation. It might not happen otherwise.

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