A client of mine e-mailed me last night to tell me that his negotiation strategy that we worked on last week resulted in an extra $15 per hour, equaling over $31,000 a year. How did he do it, you ask? How do you get more than what an employer initially offers?

Many people don’t realize that negotiation starts very early in the hiring process when HR first contacts you to ask what your salary requirements are. Your power in negotiation increases as you move through each stage of the hiring process — its lowest point is when you first approach the employer and it’s at the highest when the employer makes you a formal offer.

Before you learn how to negotiate successfully you must understand the three key ingredients in negotiation: Outcome, Mindset and Strategy.

Outcome: Before you start negotiating, decide on what you want the outcome to be. What are your minimums and what are nice-to-haves? Are you interested in more pay, extra vacation time, a sign-on bonus, a specific job title, responsibilities, benefits, education reimbursement, additional severance pay (should you get laid off) or a combination of the above?

It’s helpful to consult with people working in and outside the organization to find out which things can be negotiated with the employer. Awareness is the first step to visualizing a successful outcome.

Mindset: If you believe that you don’t deserve more than what the employer has offered, or even worse, you think what they’re offering is already too generous, you won’t be in the right mindset for successful negotiation. Your self-esteem, confidence and beliefs are challenged when you try to ask for what you want. I suggest you examine your weaknesses, fears and limiting beliefs about your self-worth before you attempt any negotiation.

Strategy: So, once you know what you want and have the confidence to ask for it, the way you approach the negotiation will determine whether or not you’ll attain your desired outcome.

When creating employee compensation, employers set a salary range for different job titles based on the maturity of the organization (start-up, high-growth, stable, declining), the marketplace and budgets. Depending on how well you interview for the job, employers will generally make an offer on the low- to mid-end of the salary range, meaning in most cases that salary can be negotiated. Other items such as job title, benefits, additional severance — known as soft dollars — are easier to negotiate than hard dollars.

As a hiring manager at companies such as Expedia and Microsoft, I remember having the fear that we would lose our ideal candidate if we didn’t make a strong competitive offer. In most cases, we would pull strings to make sure we did whatever possible to get the candidate to accept the offer.

When coaching my client, I asked him to make a couple of phone calls to people in his industry to find out the going hourly rate for someone with his expertise. We realized that the employer’s offer was in the low range of the market for his experience level and that we had plenty of room for negotiating a better rate. Here are the steps we took to secure an additional $15 per hour for him:

  • He told the employer that he would like a day to think about the offer
  • He called the employer the next day and told them that he appreciated the opportunity and was excited to move forward, however there was one item he would like to discuss with them first
  • He told them, “based on my research and talks with other employers locally, the range for someone with my experience is $XX-$YY (in this case, $20-$40 per hour higher than the original offer).
  • He remained silent after he stated the range (I counseled him that there is always silence through this period, and whoever talks first, loses)
  • The employer added $10 per hour to the original rate
  • My client said the minimum he would be willing to take to move with this project was $15 per hour extra
  • The employer accepted

While the steps seem short and simple, my client’s strong beliefs about his self-worth, and knowing precisely what he wanted, helped him successfully negotiate this offer.

What’s important to learn from this is that while the economy has impacted us, employers are still willing to pay to attract the right talent to the organization.

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3 Responses to How to negotiate an extra $31,200 in less than 10 minutes

  1. Joe Claeys says:

    Paul,
    Thank you for the insight. Once the salary is determined, is it appropriate to talk vacation and other benefits (ie. the soft dollars)?

    Joe

  2. As long as you don’t negotiate too many items, the answer is “yes”, it’s very appropriate to talk about the soft dollars.

  3. Kathy says:

    Impressive! Not just on the successful outcome, but your insightfulness.