If you deserve a payrise, then you should go for it. If you don’t deserve it – consider making it your business to deserve it – then when you reach that point – grasp the bull by the horns.
Early on in his executive recruitment career, Paul Zauch was dealing with a job seeker applying for a national sales manager role.
The applicant was given a job offer including a healthy salary in line with what he’d asked for. But he told Zauch to go back and ask the employer for an extra $8000, saying a salesman needed to be able to drive a hard bargain on his own behalf if he was to do the same thing for the company.
“The client said ‘I like his style, don’t give him $8000 give him $12,000’,” recalls Zauch, who is now general manager of Randstad Sourceright (Australia & NZ).
“It exposed me to the fact that salary negotiations are commercial, psychological and political,” he says.
Despite the obvious importance of negotiating well for pay rises, particularly in a tough economic environment, many people either avoid negotiating entirely or are left questioning whether they could have done better.
The Australian Financial Review asked three experts in the field – Zauch, Harmers Workplace Lawyers general counsel Margaret Diamond, and Australian Business School associate professor Julie Cogin – for their top tips for a better salary, whether in getting a new job or simply negotiating a pay rise.
1. Talk to the decision-maker, not HR, if you can. “Often people throw themselves into negotiations with people who don’t have any power over pay. It’s a waste of time,” says Diamond, who acts for senior executives and employers. She says that while the person companies usually appoint to have the pay discussion, typically a human resources manager, might then pass pay rise requests up the line, often key messages are lost or distorted.
2. Get the data. All three experts emphasise the importance of knowing what others in similar positions are being paid by competitors and the employer in question via salary surveys from recruiters, word of mouth or published wage data. “The days of saying it’s salary review time, the CPI increase is 3 per cent so I want 3 per cent are gone,” says Zauch.
3. Timing. The three experts all suggest people pick the right time and a quiet, private place for having a salary discussion, and book a meeting rather than casually stopping by to ensure they get the decision-maker’s attention. “You don’t want to be going in when the person you are dealing with has had bad news or there’s a crisis in the organisation,” says Cogin. She says the right time will also depend on the work cycle in the organisation.
4. Pitch to the decision-maker’s values. All too often, employees will talk only about what they have been working hard on or their strengths, Diamond says. “Work out what the person places value on and craft a message to those values,” she says.
5. Have a business case. Zauch remembers a personal assistant asking him for a $35,000 pay rise. Asked how she came up with that figure, she told him she’d been offered a role as a dancer for hip-hop group The Black Eyed Peas and considered $35,000 the minimum rise she would need to refuse such a great job. The pitch didn’t work. “You need to see it from the business perspective, not your personal perspective,” he says.
Cogin says people need to make the business case for a pay rise using “rational, logical evidence” to support their claims about what they have already achieved and are planning to do. “Don’t just describe the tasks you do, but show how your abilities contribute to business success,” she says.
The business case involves some personal marketing, she says.
6. Who goes first? Experts are divided on whether people should wait to get a salary indication from their employer before discussing their own expectations. Cogin warns against falling into the trap of going first. Academic research shows that when it comes to performance appraisals, people usually rank themselves lower than their supervisor would have ranked their performance. The same often applies to people’s salary expectations, she says.
But Zauch takes a different view, arguing setting salary expectations early can save time in the negotiation process. A recent study from the University of Idaho even suggests that employees who make a ridiculously overinflated salary request jokingly in an interview end up with substantially higher salaries than those who play a straight bat.
7. Don’t threaten to leave without another job. Threatening to leave without actually having an alternative job that you genuinely want to take up will hurt your credibility should your employer refuse to agree to your demands. Cogin advises against outright threats, but says comments like “I need to consider my other options” are more diplomatic.
8. Be professional. Whether you are going to a new employer or staying with an existing one, pay negotiations set a tone for a person’s future standing at work, Zauch says.
9. Don’t just accept the first offer. Whether you should take a first offer from an employer depends on what was offered and your circumstances.
Cogin warns people to read the person they are dealing with and be open to accepting a good salary offer, particularly in the current economic climate. “Not all organisations are entering into a haggling exercise,” she says.
But in senior executive positions, sales roles, and other jobs where people are expected to be good at bargaining, taking a first offer can be a big mistake, Zauch says, adding that employers tend to anticipate bargaining in such roles and build this into their first offer.
10. Get it in writing straight away. “The thing which amazes me is how people can have completely different recollections of some meetings,” says Diamond of her years of litigation experience.
If a bonus is dependent on personal or company hurdles, establish in writing how they will be assessed, she says.