Negotiating a salary is a crucial part of accepting a new position, but botching this step can cost a candidate the job. And even if the fallout isn't quite as severe, the outcome of salary negotiations can damage the employee’s ability to succeed at work.
The problem is, few of us have negotiating skills. According to Dennis Theodorou, a managing director at JMJ Phillip Executive Search, “people look for a job every three years on average and negotiate a salary once or twice every three years, which means they're not experts in salary negotiations.”
Below are some of the negotiation strategies that have the potential to backfire.
- Don't negotiate your salary until you have a firm offer.
- Don't try to get one company to match another company's offer.
- Don't rely on the estimates you see on a salary website.
- Don't fixate only on money. Other perks have value.
- Don't try to reopen negotiations after you've accepted a verbal offer.
Negotiating Too Early
The first mistake candidates make is trying to negotiate a salary before the company has even extended an offer of employment.
Steven Rothberg, president and founder of College Recruiter in Minneapolis, MN, tells Investopedia, “The best time to negotiate your starting salary and other components of your total compensation is after receiving but before accepting the offer of employment.”
Approaching this topic too soon could be a deal-breaker.
Trying to Leverage a Counter Offer
You may have interviewed with more than one company. However, don’t assume that a company is willing to match another employer’s offer, and don’t make the salary the determining factor.
Kristin Scarth, Vice President of Recruiting and Development at Spark Talent Acquisition in Michigan, warns that trying to leverage one job offer against another offer might be a short-sighted approach. “No two jobs are apple-to-apple, and if you're trying to get one company to come up another $5,000 just because you have a better offer, it doesn't mean that they’re going to comply—and it doesn’t mean that you should choose the highest-paying job."
Scarth advises candidates to weigh the pros and cons of each company and choose the organization that offers the best overall employment situation.
Relying on Published Estimates
It's important to do your homework on a company you're about to interview with, but don't rely on the estimates published on salary websites, or try to use them as a bargaining tool.
Theodorou says that many people request a certain amount because a salary website stated it as the going rate. “This never works out. If you're making $65,000, and the new job is offering $70,000, and your rebuttal is that Google says that you should be making $82,000, this situation will likely not end well,” warns Theodorou.
Salary websites can be useful research tools, but they don't claim to be providing precise figures for every opening.
Various factors determine starting salary offers, including experience, company size, industry, and location. According to Katie Weigel, a division director with Robert Half Finance & Accounting, “You should know if what you are asking for is at or above competitive compensation for your location.”
If your requirements seem unreasonable to the potential employer, Weigel says, it could cost you that job, especially if the hiring manager has interviewed other candidates that made favorable impressions.
Regarding a salary range, Theodorou warns that asking for more than a 5% to 10% raise when switching jobs usually doesn't produce the desired result. “We see roughly 3% to 5% when getting a new job that's local, and 5% to 10% when having to relocate," she said.
However, she notes that there are exceptions. For example, if you currently manage three people, and the new job involves managing 50 people, there is a reasonable expectation of a higher salary.
Negotiating Solely for Money
If more money is out of the question, Rothberg recommends negotiating other aspects of the job, particularly those that can help you achieve a healthy work-life balance.
“Rather than asking for Friday afternoons off, ask if you can work an extra hour the other four days of the week so that you're still working 40 hours a week," he suggests.
Pulling a Bait and Switch
One terrible salary strategy is to agree to a verbal offer and then ask for more after receiving the written offer.
According to Steven Lindner, executive partner of The WorkPlace Group in New York City, “Agreeing to a lower compensation just to get a foot in the door, hoping that once they meet you and see how terrific you really are that they will pay you what you really want is a waste of everyone's time.”
Lindner also says this is a surefire way to have the job offer rescinded.
Once you have the job, don't threaten to quit to get a pay raise. Your employer may take you up on the offer. Even if you get the raise, you'll be seen as someone with one foot out the door.
Missteps on the Job
Sometimes employees try to renegotiate their salaries by threatening to leave if they don’t get a raise. Lindner says this is a sure way to end up in the unemployment line. “Managers prefer to advocate for individuals who are engaged, passionate, and committed to them and the business,” he says.
If you show that money is your primary concern, your managers will know you will leave as soon as a better offer appears.
By failing to follow the company’s guidelines for promotions and raises, these workers may end up jeopardizing their careers. "Sure, you may get the raise from your current employer but according to most companies polled, they will make note of this occurrence, never forgetting it, and will likely be looking to replace you,” says Lindner.
The Bottom Line
While salary is an important part of accepting a new job, don’t let it become an obstacle that prevents you from seeing the big picture. While it’s normal to want a job that pays well, failing to understand when, how, and why to negotiate your salary may cause the company to look for other candidates.