One of the major reasons people come to me for help is how to best approach conversations around compensation or salary negotiation. It can be difficult or uncomfortable to talk about money, but it is something that you need to prepare for and practice in order to maximize your value when negotiating salary during a job interview.
Having the right mindset is an important part of the negotiation process.
Your mindset impacts your ability to negotiate, so it’s good to be aware of what thoughts and beliefs might get in the way of you earning more money. Shifting your mindset to focus on your strengths, value, and why you deserve a competitive salary, will help you during the negotiation process. You are always going to be your best advocate. Most employers are not going to offer to pay more than they need to so if you don’t speak up for yourself and know your value, no one else will. Keep this mindset as you go through the process.
The cost of not negotiating can cost you millions over a lifetime.
Here is a diagram of two people in the same exact job function and career trajectory. One person negotiated their salary while the other person did not. You can clearly see the difference in salary of $20,000 in just 5 years. That is money that was left on the table.
Teal offers a tool on the Teal Member Platform called the Compensation Projector which helps you predict and plan your future income needs. This tool will help you think about how much you need to make now and over time so that you are set up for your future.
Understanding total compensation will assure you don’t leave anything on the table.
When we talk about compensation, we are talking about everything the company is providing you in exchange for your work, so that means that compensation goes way beyond just base salary.
Here is a brief overview of the 5 forms of compensation to consider during negotiations:
- Cash compensation includes salary (full-time or part-time), sign on bonuses, or contract pay (full-time/part-time/project based)
- Variable compensation includes performance bonuses or commission
- Equity includes stocks (actual shares in a company) or stock options (an option to buy stock)
- Benefits include insurance, 40K, PTO, tuition reimbursement, childcare, meals, work from home equipment, and many other perks
- Terms include severance, start date, job title or scope, and many other things that can be negotiated
Here are the steps to prepare for a salary negotiation conversation:
The first step is to determine what you need by assessing your current financial situation. You want to look into your monthly expenses, savings, and current income (if any). You also want to calculate your runway or timeline and have a backup plan if things don’t go the way you expect or hope.
Teal has a tool called the Compensation Research Worksheet that helps you get calculate your budget and provides you with a space to record all of your market value research so that you can determine your target salary range.
The next step is to determine what you are worth by focusing on what you bring to the table in terms of your experience, skills, and credentials. You want to pair that up with your market value which is where you fit in the current market determined by your location, industry, company, stage, and function. Here is an example of how the salary may vary for a Product Manager depending on their market.
One of the best ways to gather market data on salary is from asking people. You can ask current or past employees of a company that you are targeting, professionals in similar roles, and recruiters. When asking for this type of information, it’s best to approach it by being honest about the fact that you are conducting salary research. You can offer to share your past or current salary and also ask for a typical range for the role rather than their direct salary.
Here are some places where you can gather some additional salary information online.
It’s important to look at several places and talk to different people to get a full picture of your market value. You want to land with three numbers for every negotiation:
- Your target salary
- Your “above target” number
- Your walk away point
If you do the research, you should be able to have an idea of these three numbers. It will give you confidence during the actual negotiation process, if you are clear about your salary range. Also, don’t forget to think about the other compensation needs you might have like equity, benefits, and terms.
Preparing your case and practicing your “scripts” is crucial.
After you’ve finished your research and determined your salary range and other compensation needs, start preparing your case. First, review your accomplishments and unique skills, then focus on what the employer needs, and finally practice talking about your value.
Here are some things that you might bring up to show your value to the employer, which is probably similar to what you brought up during your interview process. It’s good to highlight the high value parts you bring to justify your case.
- Your knowledge & expertise relevant to the role
- Your network or contacts such as leads to future business or hiring
- Your leadership, management, or team building skills
- How you plan to grow the business or increase revenue
- How you plan to help the business save money or become more efficient
Remember that the goal is for both sides of a negotiation to feel like they have reached a positive outcome. You and the employer want to feel like you both won and left the negotiation with something of value.
Negotiation can be uncomfortable, and the first step is to be aware of your discomfort and the causes for it so that you can come up with some strategies to become a better negotiator. Employers expect you to negotiate so they will not be surprised if you do. Evaluate the risk of not negotiating to help you feel more confident in these conversations.
Preparing and practicing scripts help you to respond to salary questions at any stage of the interview process.
Here are three examples of scripts you can choose from and customize to respond to the question, “what are your salary expectations or requirements?”:
Here are three examples of scripts on how to respond if the employer provides you with a salary below your expectations:
These scripts are just one way to approach these types of conversations. It’s good to practice responding to these types of questions out loud so that you feel comfortable and prepared for actual compensation conversations. If you shift your mindset, do your research, prepare your case, and practice your scripts, you will be able to handle any type of salary negotiation conversation with ease and confidence!
If you want to learn more, Teal offers classes and tools to help you learn more about how to understand compensation and negotiate effectively.