You may believe applying for jobs, landing interviews and producing outstanding references are the toughest of job search challenges. However, it's what happens after you land a job that presents the real test.
A survey by Salary.com found that most people don't negotiate salary offers due to fear and lacking the skills to properly negotiate. Apart from the obvious drawbacks, individuals who fail to negotiate their first full-time salary stand to miss out on more than $500,000 by age 60. This is particularly troubling, especially in fields like investment banking, trading or private equity. Since many arenas in finance are beginning to make a comeback, but still have the stigma of being slow to grow, many up-and-comers may miss out on a larger paycheck. Ultimately, they may see the bar as quite low when starting salaries are actually on the upswing.
However, it all may come down to how you navigate through the negotiation process. After all, there's a certain art that goes along with discussing pay. Let's look at some steps you can take to acquire the salary you deserve, particularly for those in the finance industry:
Understand the state of the financial market.
The finance industry has changed over the past few years. There are more regulations, as well as hoops to jump through. This will clearly play into what sort of salary you are offered -- but it goes deeper than that.
Having a thorough understanding of the financial market, including future salary projections of popular industries, can help you to understand what you should be making. In addition, knowing what people are making in your role, at your level, and in your city will provide you with a rough estimate. Check out resources like Glassdoor.com, PayScale, as well as industry publications to put you on the right path.
Wait for the employer.
Never, under any circumstances, bring up compensation in the first or second interview -- employers should always start the conversation. If sharing your salary is required for the job, put it in your application. However, it's still important to make an employer understand why you could be an asset and why they should hire you before talking dollars.
Once an employer comes to you, use your previous research to suggest a reasonable salary range. Never lie about your previous compensation. Employers can, and will, ask for your W-2 or proof of past employment. Plus, while you may feel like you have the upper hand, the company actually has a major bargaining chip -- hundreds of other candidates. If you don't fit the money mold, they'll just find someone else.
Gauge the audience
Once you get an offer, you have to understand there is no blanket formula for negotiation -- much depends on the circumstance and your audience. Every good negotiation, whether it's in-person or over the phone, hinges on tactfully testing boundaries.
- Discover whether the employer is willing and able to amend their initial proposal. Some companies will be able to offer more money to top talent, while others might be locked into a specific budget, no matter how much they might like to offer you more.
- Know who the salary decision-maker is and negotiate with this person. There are plenty of times when the person doing the hiring isn't actually the person capable of setting or changing the budget. This can be a sensitive area though, so be tactful in your approach.
- Have a few other offers in your pocket when you are negotiating. While this for some is easier said than done, it's important to entertain offers from more than one company. This provides leverage in demonstrating that you're an in-demand candidate, and puts some urgency on the employer's end to reach an agreement sooner. However, when other open and fitting positions aren't available to you, simply be prepared with the comparable compensation someone with your experience makes in a similar position at another company.
Suggest alternatives to salary increases.
In an ideal world, every employer would readily accept your counteroffer. However, since many may not budge, think about alternatives to salary increases. This does not pertain to health insurance or flexible spending accounts, elements which are typically given to all employees. Instead think about professional development opportunities or pay-for-performance.
If the employer is unwilling to budge on the base salary, it may be smart to negotiate a commission structure in which you are paid for bringing in clients, growing accounts by a certain amount, or improving the image of the organization. In this situation, it's important to map out the deal, such as through a legally binding agreement; no matter what is finally decided, be sure it is put down in writing. This way, the employer will only have to pay you once certain levels are met, spacing out pay "increases" through performance. In this scenario, everyone wins.
Never rush into a decision or agree to a salary on the spot. Instead, be extremely respectful, ask to think about the offer, and do more research. Even if you like the offer, there should be a "wait" time where you do your due diligence.
During the limbo period, look at the pros and cons of your salary offer and write them down on paper. This allows them to become "real" and helps to match up the level of work with the amount you'll be receiving. Plus, putting things in perspective allows you to check out other opportunities, understand your financial obligations, and helps to see what you can and can't live without.
For example, if you got an offer from a smaller firm, it's a roll of the dice. It may be harder to assess your risk for advanced opportunity or career growth. In these cases, taking the time to think over the offer can provide you with the insight you need to accept or decline the job.
While negotiating your salary may seem intimidating, you lose a lot more by taking a backseat and accepting the first offer that comes your way. Do your research and show employers why you should earn more in order to receive the salary you really deserve.