For a new employee, salary negotiation can be intimidating, but it’s one of the most important difficult conversations to have at the beginning of your career. For a new employee, successfully negotiating a salary offer up by $5,000 could make a huge difference over the course of her career. A 25-year-old employee who enters the job market at $55,000 will earn about $634,000 more over the course of a 40-year career (assuming annual 5% raises) than an employee who starts out at $50,000. But not everyone negotiates for a higher pay when offered a job, and some who do are dissatisfied with the final outcome.
In a 2009 negotiation research study, researchers Michelle Marks of George Mason University and Crystal Harold of Temple University surveyed 149 professional employees who had been hired in the previous three years – specifically, tenure-track faculty at a university and part-time MBA students – about their wage negotiations for their current position.
The participants were questioned about their attitudes toward negotiation and risk, their negotiation strategies and outcomes, and their level of satisfaction with the wage negotiation process. In addition, their degree of of power in negotiation was measured based on their work experience, other job offers, and knowledge of the organization’s past salary offers.
Salary Negotiation Skills: Five Negotiation Strategies for Employees Negotiating Wages
The researchers identified five types of negotiating strategies:
Salary Negotiation Tip #1. Collaborating (engaging in problem solving to reach the best possible outcome for both sides);
Salary Negotiation Tip #2. Competing (trying to maximize one’s own outcomes with little concern for others);
Salary Negotiation Tip #3. Accommodating (putting the other party’s concerns first);
Salary Negotiation Tip #4. Compromising (trying to reach middle ground); and
Salary Negotiation Tip #5. Avoiding (dodging negotiation altogether).
Independent of the power the applicants had at the table, choice of negotiation strategy turned out to be a critical factor in determining the size of the salary increase that the participants negotiated.
Different Negotiation Styles: Collaboration versus Competition
In the study, those who chose to negotiate salary, rather than avoiding negotiation and accepting the offer on the table, increased their starting pay by an average of $5,000 primarily by using competing and collaborating bargaining strategies. Those who behaved competitively at the negotiation table did better than those who focused on collaboration, but collaborators were more satisfied than competitive bargainers with the negotiation process.
Different Negotiation Strategies: Risk-Averse and Risk-Taking Strategies at the Bargaining Table
By contrast, compromising and accommodating strategies were not linked to salary gains. Participants who were risk averse were less likely to negotiate a salary, and when they did, they had an accommodating style that left them feeling dissatisfied with their results.
Female participants in Marks’ and Harold’s study were no less likely than male participants to negotiate their salaries; however, the men negotiated higher salaries than the women did. Interestingly, among participants who faced a competitive opponent, women responded more competitively than did men, suggesting that women may be more likely to adapt to their counterparts’ negotiating style when putting their salary negotiation skills to practice.
Based on their results, the negotiation researchers conclude that it pays to negotiate assertively for a salary increase upon being offered a job. They also encourage employers to recognize that giving employees wiggle room to bargain up their starting pay could help create a more satisfied, productive workforce. We add the caveat that if you don’t have a competing job offer, you should negotiate with caution, since there’s always a chance bargaining may cause the employer to revoke the offer that’s on the table.
Great Negotiators Earn More Money
The context of salary negotiations is one area where negotiators tend to assume that any gains made come at the expense of the other party, and vice versa. Yet when we start looking at “salary negotiations” as “job negotiations,” we realize this doesn’t have to be the case.
Think of the myriad issues available to add to the discussion when you are engaging in a job negotiation. When negotiating salary, what tradeoffs could you make to get a higher offer? Maybe you could offer to take on added responsibilities, make tradeoffs on benefits, or look for other ways to add value to the employer. The employer should be happy to accept a tradeoff that leads to no net financial loss to the organization.
In salary negotiations, the best negotiators share information and ask questions. The more information you can provide about what you value (without revealing your bottom line), the better equipped you and the other party will be to identify new issues to discuss. And the more questions you ask, the more you will learn about what the other party values. This type of information exchange will put you in a good position to claim as much money and other value as possible for yourself.
Have any of these tips helped you with salary negotiation? Let us know in the comments.
Adapted from “For a Higher Salary, Choose the Right Strategy,” first published in the Negotiation newsletter, December 2010.
Originally posted in 2012.
I have previously taken a lower salary in exchange for a higher bonus – the problem though was that due to the economy the business was not able to pay out any sort of executive bonus (and the traditional ones had been very impressive) – thus it turned out to have been a good deal in a good economy and a poor deal in a bad one. I have also had deals pulled off the table as it turns out they were stretching to get me the highest salary they could (which were still below industry standards) and failed to mention the efforts they took in getting to the offer level (so at that point were were coming to the table with two distinctly different perspective and what should have been a traditional negotiation turned into a slap in the face).
When I started my career, I had no idea how to negotiate salary. Instead, I cared more about whether I got the job or not. However, I thoroughly agree with the fact that one stands to lose a lot of money in future if he/she does not develop the skill-set of salary negotiation. The insight about the ‘Mark’ and ‘Harold’s’ study was very interesting.
I am currently writing my Master Thesis about salary negotiations. I am looking for practical literature on this subject. Would you have any recommendations for authors or books?
I would be very grateful.
Thank you in advance.
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