Most of us grow up with the idea that negotiation is a slightly shady and mostly greedy practice that should only be applied in a limited set of socially acceptable situations, like haggling about a €1 discount for a used handbag on a french flea market.
This mindset couldn't be further removed from how the real business world works. The reality is that successful people negotiate all the time about almost everything.
You might feel awkward and uncomfortable about negotiating, but it's time to accept that neither of those feelings is an excuse to leave yourself at a disadvantage.
Why should you be negotiating salary at all?
Most people are perfectly happy hopping from the Jumbo to the Albert Heijn just to take advantage of the various products on discount at both stores. It makes sense - in exchange for a little bit of extra effort, you keep a few of your hard-earned euros in your pocket.
While most of us are smart about how we spend money, we routinely neglect that even a half-decent attempt at negotiating a better salary at the start of a new job could easily provide you with an additional €3000 a year for 10 minutes of extra effort.
None of us are reasonably going to find jobs that pay even €3000 per hour, yet you can casually pick up €3000 more in salary by simply following the right strategy.
Once you're inside a company your salary will likely receive a 1% - 10% annual raise depending on how well you've performed each year. Even at an average "you've done okay this year 4% raise”, that €3000 will compound to almost €40.000 in 10 years.
If that amount of money at stake doesn't appeal to you I'll happily provide you with a shopping list of fun things to spend it on to provide some inspiration.
“Think of it this way: your salary negotiation is just a paid assignment you're doing for your future self. The highest paying assignment you'll ever get.”
You have an unfair advantage
Hiring managers and HR reps will have the upper-hand in experience when it comes to negotiations. They'll have played this game many times before.
HR reps are great people and in no way will they be trying to bamboozle you, but it's important to understand that the first offer you receive will likely be lower than what you could potentially earn in that role at the company because:
- a lower salary offers more room to keep you motivated with future raises
- a good negotiator anticipates the negotiation and leaves room for it
- their objective is to get you signed for as little as possible
The good news is you have an unfair advantage: the risk/reward ratio on the outcome of this negotiation is massively in your favour.
While the other side's job is to get you signed as cheaply as possible, they aren't remotely as invested in the outcome as you are, because they aren't spending their own money to hire you; they are spending their available budget.
That additional €3000 — your potential reward — means you'll be able to take an extra vacation to Greece and stuff your face at an all-inclusive luxury resort. All your counterpart gets for convincing you to take €3000 less is a thumbs-up emoji on Slack from their boss after announcing you accepted the offer.
They stand far less to win and much more to lose in negotiating with you.
How do you figure out what you're worth?
What you are paid has nothing to do with your life situation or costs. Whether you're single, married, have children, student debt, have a low net-worth or don't really need the money, none of that should be part of the conversation about your compensation.
Your skills have a market value and you need to figure out what that is.
An important factor in market value is the push and pull of supply and demand. If you're applying for entry-level jobs you'll have a hard time negotiating for more than a 5% increase since you're competing against so many others with the exact same skillset (and no, your top-graded MSc thesis really isn't going to move the needle).
As you start specialising, obtain management experience or build up significant experience in in-demand professions, like software engineering or growth marketing, the range within which your skillset can be valued will increase and with it your potential to negotiate compensation.
It's imperative at this stage to acquire a good understanding of what value (read: compensation) others with a similar skillset can command in the market. As salaries are always in flux, this will require research on your part:
- consider reaching out to third-party recruiters and ask for their opinion on what would be a reasonable compensation for your skills; you can trade information with being added to their database for future job opportunities
- consider asking friends in your business network that work in similar or higher positions to share what kind of compensation is usual within their company
- take salary information you find on the internet with a grain of salt; salaries are highly dependent on company size, location and industry
If you're uncomfortable at the prospect of openly asking people about this information (which you shouldn't be), you can always reach out to the Techleap team for advice.
Understanding the building blocks of compensation
Your total compensation includes more than just your base salary, making it important to fully value all the tangible and intangible components of what you'll get offered.
Let me address some obvious and less obvious examples:
- evaluate base salary on an annual figure so you understand whether the offer includes a 13th month, a 14th month and vacation money
- if a pension plan is included, understand what amount the employer is contributing on your behalf (versus what you need to contribute). Just because it's not cash in hand, doesn't mean this component is any less valuable
- understand the impact of receiving company assets that lower your personal costs, such as a company phone, car, laptop and/or travel reimbursement
- consider the value you place on non-tangible perks like vacation days, freedom to work on side-hustles, remote work, flexible working hours, commute time and the potential impact working for this brand will have on future earning potential at other companies ie. will working at this company boost your CV
- particularly relevant at startups and scale-ups: being offered equity can stand to become a substantial component of your total compensation
The further along you are in your career it is also recommendable to carefully consider contractual separation agreements as negotiable elements:
- how long of a non-compete will you have after leaving and does that relate only to specific clients or to working in the entire industry
- how long of a notice period does your employer have before letting you go
As you start negotiating, focus on base salary first but keep sight of the additional components to use as secondary inputs for discussion in order to come to a complete package that you are happy with accepting.
When should a salary negotiation happen?
There are two critical things to keep in mind leading up to the ‘money conversation’; each of these have an outsized impact on how well you'll be able to negotiate.
#1 - You essentially started negotiating the moment you met
Every email, meeting or phone call, however insignificant you might think it is, subconsciously contributes to the employers perception of you.
As you interact, they will start painting a mental picture of how qualified they think you are, how valuable and in-demand they think your skills are, whether you are desperate for this job or whether they'll have to compete against your other job interview options.
As you navigate the entire process of interviewing, you should be mindful of subtly portraying an image that says:
“Hey, I really like this company and I think working together could potentially be really beneficial to both of us, but I want to carefully find out, together, whether this is the case. I have some other equally impressive job opportunities lined up and I want to make the best possible decision for my career”.
How skilled you are at designing this perception of you and your current situation will ultimately affect how well you are or aren't able to negotiate.
If you start giving off signals that indicate this is the only job you're interviewing for, that you're under pressure to sign a contract before you run out of money or that the position you're interviewing for is slightly above your skill set — well, then you've basically thrown in the towel before you've even entered the ring.
#2 - Always delay the money conversation
Always delay discussing salary until someone with hiring authority has agreed that, if an agreement on compensation can be made, you will be hired.
An experienced HR rep will try to ask for your salary expectations, but you should politely yet firmly respond that you're not comfortable sharing that at this stage. Every employer will ask about expected salary and every experienced professional knows to not to give an answer. Practice dodging this question with variations of this line:
You: It's a bit too early for me to share / I'm not comfortable sharing that just yet, but I'm sure we can work compensation out if we find that there's a great fit between us. I really want to learn more about the company and position first.
Why is this so important to delay?
By the time you arrive at the point that the hiring team has decided they want you to fill their position, they will have already spent a good amount of time and resources interviewing various different candidates. They're invested now and want to see this through.
Try doing some mental math on how much money the company would be wasting if the negotiation doesn't work out at this point. Multiple people have been kept from doing their regular day-job and the idea of having to go back to square one of the hiring process is something every hiring manager will rightfully dread.
So, what should you say during the ‘money conversation’?
At some point, HR will let you know everybody is enthusiastic and that they'd like to extend an offer. You've now successfully entered the ‘money conversation’.
Here are the most important tactics to keep in mind.
#1 - Respond excited, but refrain from reacting to the offer
Your first objective is to share your excitement about this new job without reacting in any way to the financials of the offer being made. Whether it's higher or lower than you expected, don't let any of that come across; you want to first buy time to find out more about the specifics of the offer.
HR rep: Hey Alicia, the team is very excited about you and would love for you to join the company as Product Manager. Here are the details of our offer:
- €39.000 annual base salary (incl. 8% holiday allowance)
- a flexible/open vacation policy
- a company laptop
- fixed travel reimbursement of €150 per month
- pension plan with a 3% employer contribution
You: Really excited to hear this and the feeling was mutual after my conversations with the team. I'm really thrilled about the prospect of joining.
Thank you for extending the offer. I'll need time to review this, can I come back to you in a few days? In the meantime, I have a few questions for you.
The goal of this approach is two-fold:
- to first collect more information and then calmly analyze and evaluate the offer
- holding off on responding to the offer adds to the notion you're not desperate
#2 - Embark on your fact-finding mission
Ask all the questions necessary to fully value the benefits you're being offered, and make sure to ask about any that have been omitted from the initial offer.
There is one question I recommend definitely including:
- What is the salary band for this level/position?
And one question you could consider including if the company is large enough and the type of role makes this question applicable:
- What seniority level is the job for, and can you share what the requirements are for this level vs the level above it?
Usually, this question starts becoming relevant when companies are over 35 employees, but even more so at companies with larger teams of 100+ employees. At that scale, the company will generally have a structured setup of seniority levels per job type.
#3 - Time to negotiate
Remind yourself that the company has spent a substantial amount of resources to get to this point, they probably needed the job filled last month and the hiring manager has had to take a lot of time out of her regular work schedule to find a replacement.
At this point, everyone wants the deal to happen.
It's challenging to provide a script that'll fit every possible situation, but we're going to provide two scenarios for how this next part could play out.
Scenario 1: you've found out that some of the requirements for the level above you (e.g. Senior Product Manager) overlap with your current/previous job.
You: Hey Tom — can we have another look at the offer level? In my current role, I'm the lead product manager for our mobile app division, oversee 8 Senior Engineers and participate in a weekly strategy team with the CEO. It seems like your Senior Product Manager level is much more in line with what I currently do at Company XYZ.
The HR rep will have to divert back to the hiring manager to discuss this remark.
If the direction you take with this line of conversation ends with the positive conclusion that they agree you should be positioned as a level higher, then repeat the earlier step of inquiring about the salary band for the Senior Product Manager level.
Even if — and this is likely to happen — the other side is unable to hire you at a higher level, this conversation will still help immensely in negotiating a higher starting salary, since you'll have established that you're close to overqualified for the proposed level.
Continue the negotiation as described in scenario 2.
Scenario 2: you're generally happy with the offer but ready to negotiate the full potential of the deal so that you can take that extra vacation to Greece this year.
Now that you know the full salary band of the position/level you're being hired for, pick a target in the upper half of the band that you'll negotiate for.
Your gameplay will be to stay firm and resolute about this figure being what you need to make it work, and only to back down on base salary if you can get an equivalent value alternative benefit to make up for it.
You: Hey Tom — thanks for answering all of my questions. Again, I'm really excited about this opportunity. I think we'd make a great team.
In terms of salary, I'm actually looking for something closer to €45.000, which is in line with the other opportunities I'm interviewing for. Given my experience, would you be able to agree on a €3.450 p/month base salary?
Tom: Hey Alicia, great to hear that. Unfortunately, this is the most we can do for this position, but there's plenty of room for growth in salary in the future.
You: I don’t think I can make it work at the current level — €45.000 is what I'd need to be able to sign. Is there anything you can do in terms of equity or EOY bonus?
<At this point, Justin realizes that he's not getting out of this negotiation that easily>
Tom: Let me talk to the team and see what I can do.
<A day later>
Tom: Hey Alicia, unfortunately, bonuses aren't part of our compensation structure at Company XYZ. I have spoken to the team and what we are willing to do is increase our offer to €3.250 a month. This is really the maximum we're able to do in this situation and I hope it shows we genuinely want you on our team.
You: Tom, thank you for your effort on this. I really appreciate it. We're still not at the number I'm looking for, but I understand your position and would be willing to compromise if the company could cover my mobile phone plan (€35 a month). I'll be using it a lot for this job. If we could make this work I would be ready to sign.
Tom: Hey Alicia, we can make that work. I'll send over the paperwork today!
Stay positive, show understanding and write/talk in the ‘we’ form as much as possible to indicate you're trying to overcome this obstacle together versus battling it out.Bonus tip: negotiating over email can be as nerve-wracking as it is in-person, but the benefit is that you can ask a good friend or your spouse to spar with you to see if you're making the right moves and saying the right things.
Some final words of wisdom
Early in your career, you won't have much choice but to apply for positions that interest you through job listings on the internet.
This is by far the hardest way to land a job.
By working on your personal brand and establishing yourself as a leader that delivers results in your respective domain, through for example public speaking, networking and guest-writing for media, you'll eventually make it much easier for your network to recommend you for applicable open positions at their companies.
Whether it's fair or not, personal recommendations always have a headstart in comparison to other applicants. If you can start off your hiring journey with an informal conversation with the hiring manager first, you'll find that you'll soon be playing the negotiation game on easy-mode.