Updated: Mar 3
The Do's and Don't's of Salary Negotiation, How to Calculate, and What to Say
Note: This salary negotiation resource speaks about how to think about your salary and general principles for negotiation. This article does not apply to all companies. This is aimed at roles within the first 5 years of your career but can be applied to more mature careers. Stay tuned for more in-depth articles that cover RDUs, bonuses, sign-on/off, etc.
A lot of you are probably applying to new jobs and are about to embark on the dreaded negotiation conversation. Salary negotiations are often easier than they seem to be. So, why do we have such trouble getting started?
Money and salary have often been taboo topics, so it’s no wonder that when it comes to salary negotiation, most of us don’t have a clue what to do. Too often we go into our interviews clueless and unprepared for when salary is inevitably brought up. And when it finally is, numbers are tossed around without any true forethought.
We get it; it’s difficult. It's intimidating. Making money moves is a lot harder than Cardi B said it would be. You don't want to leave money on the table and your salary reference points aren't specific enough. Look no further – we at The 2.0 Collective are providing you with the tips, tricks, and tools you’ll need to walk into any salary negotiation.
Why Even Bother with The Dreaded Negotiation?
Before we get into the nitty-gritty of the actual negotiations, first let’s talk about the need for negotiations in the first place.
You probably already know the basic why of negotiating salary: You don't want to leave money on the table. You don't want to be valued less or be overworked and underpaid. Ultimately, negotiations are about value and self-worth. When a company writes down a number in the initial stages, they don’t yet know your value to them and the company. They’re just going through the motions. That is why it is up to you to let them know just how valuable you are through a language they understand all too well... numbers, of course.
Now really, the number doesn’t matter in the way you think it does in this conversation. Yes, you want a higher salary. And yes, the company’s bottom line would probably prefer to pay you on the lower end of the salary scale, especially as a new hire. But this doesn’t mean that they are not willing and able to pay you the salary you deserve and are worth.
No matter the number put on the table, you should remember the basics. You are worth more than you think you are. You may not know exactly how that translates into number form, but you know the quality of work you produce. You know what you need and generally what you deserve. So, when an amount is offered, make sure you negotiate it regardless.
Before we continue, make sure you read this closely: The numbers are arbitrary. No matter which role you go into. The difference between 72,000 and 73,500 is pretty much nothing for some companies.
We speak from experience.
The Initial Offer Negotiation – Prepping for the Big Bucks
Alright, so you're in the home stretch! Let us be the first to say "Congratulations!" You freaking deserve this role, and we're so excited for you. Now, let's get to it – negotiate for more. Always.
Ideally, your employers will agree to the numbers you put forward, and the best way to have them do so is to prepare accordingly to back up your ask. So, whether they are your first interview, your fifth, or 30th round of interviews with a company, you should have some information at-the-ready for any negotiation.
Now for getting into the actual numbers!
1. Living Budget – Calculate what you need
A great way to consider salary options is to create a Best, Worst, Okay Case scenario in order to help you better understand where you should be aiming at on the salary scale. Essentially, you can think of these categories in the same way you would think about applying to colleges way back when.
The "Worst" Salary: What is your "safety" school?
The "Okay" Salary: What is your "target" school?
The "Best" Salary: What is your "reach" school?
Worst Case: Living Costs
When you start the calculations, take into consideration what you need to survive. This includes things like rent, travel expenses, and other living expenses. It also takes into consideration your lifestyle and cost-of-living. You should be thinking of what you need to take care of those living with you (such as if you have dependents under your care), and you should also be considering what major events are going on in your life. This amount will then become your minimum salary, and ideally, you should never ask for the minimum – living paycheck to paycheck is not in your best interest. Instead, make your worst-case-scenario your minimum plus a cushion, so a hand-to-mouth situation is not in your future.
Best Case: Living Costs + Money to Thrive
Your best-case-scenario should consider a few more cost potentials. Think of where you are in life. How much do you want to put away each month or year? What’s the next milestone you’re saving for? How much were you paid in your previous job and how much more do you believe that you are worth in comparison? Once you have those additional numbers, combine them appropriately with your baseline to create your best case scenario salary. Your okay scenario would be somewhere in the middle.
Factor in Research
Use this scenario scale to help you manage your expectations when negotiating. When you eventually do your industry salary research and find the range for standard salaries, you have your best-worst-okay case scenarios to help you recognize how much you should be negotiating in comparison. Ideally, you will be able to negotiate your best salary, but if the standard is $65,000 and your ideal is $90,000, you may want to compromise with a salary closer to your “okay” case scenario instead.
2. Industry Reference – Recognize the current times and industry trends
This should be the first thing you research about a company when applying. It is imperative that you are aware of not only the typical industry standards and baselines for salary but also the current industry standings. For example, currently, we are in the middle of a pandemic, so for certain industries, their salary baseline may be lower than usual. You may need to take things like this into consideration when calculating your desired salary, but this is something that should only affect smaller businesses.
Consider the following for industry reference points for salary:
Location – City, State
Growth – Is the industry growing rapidly in this area? Look for articles.
Salary.com – this can give you the lowdown for your area
For the larger companies (Fortune 500, Series C+ startups), however, remember to NOT lower your standards. Ultimately this information is just meant to help you be more prepared for potential tones and setbacks in the negotiation conversation. If they are a big enough company, they should already have a budget set aside for new hires, and if they are looking to hire someone, then they should have enough money to do so properly. With these companies, asking for a lower salary is just devaluing yourself. You are worth the salary standard and so much more, so don’t settle in those negotiations.
Remember: If the company is hiring in the pandemic, they have the funds to pay you, so do not devalue yourself.
3. Company Information – Look into the company background
Check Glassdoor to see how much they are paying similar roles to you. Look into the news for any current information on the business’s budgets or goals for the upcoming year. You can also research how successful the company was in previous years through past earnings and reports if it's publicly traded (#stonks). What this allows you to do is better understand if the company will have the ability to hit your salary goals at that current time.
Research the company’s past interview process. On forum sites like Glassdoor, Quora, and Reddit, people often crowdsource helpful information like interview questions and interview processes. This information can help you discover what others did to succeed and then apply it to your own interview and negotiation process.
4. Compare and Contrast – Research comparative roles
Usually, when we compare salaries, we look at the title of the position and research from there.
But, instead, we should look at the duties and roles listed under the job you're applying for and find positions with similar duties and roles. Use that position, no matter the title, compare and estimate an appropriate salary. Even if the titles are the same, there is never a guarantee that the duties align, so titles are not a fantastic comparative reference. (i.e. Customer Experience Ninja vs. Customer Experience Lead)
You can do this research on sites like Quora, Reddit, LinkedIn, Glassdoor, and other application and salary-listing websites and forums, but we highly recommend not starting this research until after you have calculated your salary needs.
5. Your Value – Understand what has changed
Finally, you should also be constantly taking inventory of your life and your work with each passing quarter. Now that you know about what's out there, take a look at that number and see if that makes you happy.
Taking inventory is essential in recognizing if it is time or if it is appropriate for renegotiation whether in the same role or a new role.
What to take into consideration:
What have you accomplished in that time frame at your last role?
Has your situation changed in life?
Do you deserve a raise?
Are you unhappy with your current standing?
Have your roles and duties changed or increased?
By keeping a running tab of the work-related duties and outside factors in your career and life, you can then review that list at the end of the quarter to reasonably and efficiently determine if a raise is in your future. If you feel that it is time and that you deserve it, you probably do. Just make sure to have the information with you to back it up and secure that bag.
Hi ______ [Insert Hiring Manager's Name],
Thank you for the offer! I am very excited to get start with [Company] and look forward to joining the team. After careful consideration, I feel that I would be happy with XX,XXX base salary and [insert other asks]. In my due diligence for this role, I found that [industry] is on the rise and my role is valued at a target salary of [salary range] in [city, state]. With my expertise and unique skillset, I feel that this base salary would be a fair offer. I am ready to give my all to this company and would be delighted to begin as soon as I can.
Please let me know your thoughts! I am happy to hop on a call to discuss if it's more convenient.