This is the first of a three part blog series on negotiating a pay rise, written in conjunction with a talk given to the General Assembly by TalentRocket’s founder Chris Platts, entitled “Negotiate Your Way to a Better Salary”. Please enjoy responsibly.
Getting a great pay rise for yourself whilst at the same time giving your company that warm, fuzzy “we got a great deal too” feeling is a skill most of us are still to master. But it is possible.
The salary you manage to negotiate has the benefit of a ripple effect, it’s often what your bonus is calculated on and is the basis for future pay rises, so it’s important that you get to a number you feel good about.
Of course, salary negotiations would be a lot easier if companies just realised how awesome we really are – but they rarely do. As a former recruiter I’ve coached a number of candidates, friends, and family members through the process of securing a pay rise and this is what I’ve learned.
According to data by Salary.com only 37% of us typically negotiate our salary and 18% of people have never brought it up.
On top of this, women are statistically far less likely to negotiate, especially when in comes to the initial contract. In fact, only 7% of women negotiate their first salary, whereas 57% of men do. That’s one ugly statistic if I’ve ever seen one.
Before I go on, I just want to get one thing straight – employers expect you to negotiate. So don’t feel greedy, icky or ungrateful, just have a realistic plan and stick to it.
Timing of Pay Rise Negotiation is Everything
Here are some pretty good times to negotiate a pay rise:
-Joining a new company
-Your annual performance review
-When you intend to leave
-When you’ve demonstrated unique, indispensable value (UIV)
Ok, let me clarify that last point. Your goal isn’t to become irreplaceable. Being irreplaceable (i.e. being damn good at doing one thing) means you’ll probably never get promoted because your boss will be scared to death of replacing you. Being indispensable is what you want to aim for. This means being adaptable and thriving in any situation. These are the skills that every company really needs.
Your goal is to make your company feel good about giving you a pay rise and the only way you do that is by creating and communicating your unique, indispensable value, or for the purposes of this post your UIV.
Oh and a little side note, only use an external job offer as leverage for a pay rise if you intend to accept it. Sure it might be tempting to rush out and get a huge offer from some tin pot company you know pays well. But using this as a good negotiation point is risky. I’ve seen companies not only refuse to budge, but also from that moment forward your loyalty is questioned which can result in resentment and, in some cases, being passed over for promotion. It’s fine to accept a counteroffer to stay where you are, but getting job offers just for leverage is just pretty darn selfish.
Know Your Worth
Before you enter into a salary negotiation it’s important you gather as many data points as possible that strengthen your argument. Benchmarking your salary vs the industry standard is a pretty good place to start. I’d recommend using tools like Glassdoor, Adzuna, Payscale and Salary.com to get some quantifiable data on how much other people in your position are getting paid. Be careful to choose similar roles in similar sized companies in a similar geographical region to your current company as the data will vary wildly.
Next, to get more data it may be worth asking recruiters, colleagues or industry peers what reward they think your job level should be getting. And finally posting a question online on community sites such as LinkedIn and Quora may get you the data you require.
Know The Cost of Replacing You
Hiring someone else to do your job costs your company far more than offering you a (reasonable) pay increase. The average cost per hire in the UK is over £5,000 and over £7,500 if using a recruiter, but if you include the cost of lost output e.g. time to hire plus getting the new hire up to speed, the costs can quickly escalate.
When you consider all of the costs associated with employee turnover – including interviewing, hiring, training, reduced productivity, lost opportunity costs, etc – here’s what it really costs a company:
- For entry-level employees, it costs between 30% and 50% of their annual salary to replace them.
- For mid-level employees, it costs upwards of 150% of their annual salary to replace them.
- For high-level or highly specialized employees, you’re looking at 400% of their annual salary.
So when you enter the negotiation remember that it costs less to retain you than it does to replace you.
The Value Of ‘Brand You’
When carving out your UIV, have a think about what it is that makes you so valuable.
What is the value of brand you? Do you speak at conferences? Are you recognized in your field as being a thought leader? Do you hold influence with some key people that meant if you left the business would be significantly hurt?
This isn’t something you necessarily want to threaten your employer with, but it’s worth noting and internalising for extra confidence when it comes to sitting down at the negotiation table.
That’s it for this post folks. Let us know what you think in the comments, and tune in
tomorrow NOW for the controversially named sequels: “How To Negotiate Your Way To A Pay Rise: Part 2“, and “How To Negotiate Your Way To A Pay Rise: Part 3”