Get more money: How to negotiate your salary
Hi there, it’s Laura!
In this post I want to discuss 6 things every job applicant should keep in mind when negotiating their salary. The negotiation is a crucial step and if you fumble it, ultimately you’re hurting your financial prospects not only in the short term, but also in the long term. This is why I wanted to sit down and write a guide on how to prepare for the discussion in order to not be caught by surprise.
Stay tuned to the end of the post in order to find out the single biggest advantage that you have when negotiating the salary!
Know yourself
Before trying to find out anything about the company, before looking things up online, you should sit down and review your current living expenses and budgets. You should have a clear view of:
Your non-negotiable expenses (rent, mortgage, utilities, internet)
Your financial goals: how much are you looking to invest per year or how much you’re trying to save by when for a down payment on a house for example.
Your current family situation is and how it’s likely to change over the course of the next 2-3 years. For example, if you don’t have children now but you’re planning to start a family that will significantly increase your expenses so you should take that into consideration.
Make a spreadsheet with all these expenses as well as any estimates for upcoming expenses in order to get a final number. This number is the minimum that you’ll try to get out of the negotiation and it’s also an easy way to understand if the offer you’re getting is simply not viable.
Here’s another tip: if the job you’re considering implies moving to a new country, make sure you compare the cost of living to your current location. The best way to do this is by using one of the comparison websites such as LivingCost or Numbeo. However, I would encourage you to also check out apartment rental websites, local and international school fees and so on.
I can’t stress just how important it is to actually do this research and having a good overview of your expenses,
2. Gather Salary Information
This is a classic Glassdoor moment for sure! The very first things you should do is look up the salary ranges for the company you’re applying to, as well as what other candidates mention that they got in their offers.
That being said, you should understand that if the company is quite large - we’re talking multinationals - there is actually a salary band in place, so usually most candidates will get an offer somewhere middle of the band. This is of course unless they didn’t do very well in the interview. Your goal here is to understand just how wide that band is, so that when you do get an offer you can asses if it’s top of the band or not.
Another piece of information you should be looking for is average annual salary increases. For example, if people are complaining that the average annual increase is in the lower single digit percent you might want to negotiate your salary like you’re never getting an increase ever again. Ultimately, a lower single digit increase doesn’t even beat inflation in most countries so you’ll end up underpaid a lot faster.
You should also look at the value of the stocks - if the company offers this as part of the compensation package - and try to understand if the company has a specific model of compensation: do they give longer vesting schedule on the stocks but cash bonus up front? Do they give pro-rated vesting schedule? What should you expect?
And here’s another tip, when you’re trying to assess your total compensation definitely look up how your tax is applied to different components of the total compensation. I can give you an example from my time at Amazon in Luxembourg: my stocks were taxed at a much higher rate than my salary because they were considered a bonus under that country’s law. And let me tell you it was a steep tax that was applied.! It wouldn’t have prevented me from taking the job but it’s definitely something you want to know beforehand.
For startups you should be ready to drill down on what the valuation is and what it’s based on as well as what round of funding the company is,. You need to understand if they’re giving you stocks or options on stocks and have a rough idea when that IPO is going hit. This is a lot more difficult than assessing an already established company.
3. Do Not State Your Number
A lot of recruiters will ask you what your salary expectation is and honestly it’s a trap. If you give a number that is too low, getting beyond that will prove very difficult. Instead, ask them what the budget or the salary band is for that role and go from there.
4. Negotiate Your Total Compensation
Trying to negotiate each component at a time will probably get you a lower total number than trying to negotiate your total compensation. So go into the interviews with a target total compensation, discuss only on that basis and only after you have alignment then you should tweak your rations.
I will say that you should try to understand how much of your TC is in stocks and what your cash flow looks like. A lot of companies have RSU packages that vest over a number of years so make sure you have a clear PER YEAR view of the offer. At the same time you should consider how much of your personal wealth is actually tied to that company’s stock as probably if you’re over reliant on that it’s not a good look.
Also, you should understand how your TC composition matches your personal plans: to give you an example, a lot of banks don’t take into consideration stocks that you haven’t sold when calculating how much you can borrow.
5. Use New Information to Renegotiate
This is especially true for big companies where compensation is often very formulaic and recruiters don’t really have that much power to change the offer but you can use it in startup’s as well. While this might seem obvious here’s some examples of what I mean when I say new information:
Other competing offers - if you have a competing offer from a different company, you can definitely use that as leverage to get more money. Here’s a tip: if they ask you to show that offer in writing - that’s a BS - you DO NOT have to show proof of these offers to use them in negotiations.
Offer to stay from your current company - this can also be a good source of data to use to raise your TC. However, I will say that if during the interviews you mentioned that you’re trying to leave cause you company is absolutely sucking the soul out of you, it might seem a bit dodgy to now use the offer to stay.
Information you found out during the interview - if you uncovered during the interview that they actually didn’t list some of the responsibilities - especially if these will be very time consuming or perhaps what the next level up should be doing, bring this up in your negotiation.
Feedback you’ve gotten from the interview - ask the recruiter to share with you what the interviewers thought of you. If you see that they have some concerns then maybe you can find a way to dispel these so that they can feel more comfortable with making you a better offer.
6. Your Biggest Advantage
Assuming your interviews went well, everyone liked you, you liked everyone and what they have to say, it’s time to close the negotiation. Let me be totally transparent with you and say that this is where you still have your best asset in hand. This is the one asset, the one quality that will get you a higher salary which is
your willingness to walk away from the job.
It might sound simple, it might sound counter intuitive but I can promise you the one thing you can do to increase the company’s offer is to be willing to walk away from the offer before you. It’s scary and I don’t recommend you do it lightly!
This is the nuclear option so you should revise a few things that would indicate you SHOULD take the job. Things to consider include:
If the offer it top of the band
Why you’re applying for the job - for example, if you’re looking for a job to improve your work life balance, that might come with lower stress but also with a lower pay so you need to be mindful of that,
If you’re really trying to get FAANG experience and that’s what is most important to you
Are you in desperate need of a job?
Those exceptions being said, if the offer does not meet your expectations here are the steps to apply:
Thank the recruiter and reinforce your enthusiasm: You can say something like “Thank you so much for taking the time to work with me. I loved meeting everyone, the job really does sound incredibly good and exactly what I’m looking for. The team was seems great as well and I do think that I would be a good fit here”.
Refuse the offer “That being said, I simply cannot accept the current offer, it’s too low.”
At this point in time if you do have a number or a different compensation composition in mind, you can indicate what they can give you to sweeten the deal. Here it might happened that they come back with something higher than what you asked for but they might also come back with that exact number so keep that in mind when you choose this number.
I want to stress here, don’t be aggressive when you say this and don’t say it unless you mean it. Work with your recruiter - especially on the phone rather than email - be cooperative but also be ready to walk away if that’s not a number you are willing to accept.
Negotiation and compensation are not exact sciences so outcomes are not guaranteed but that doesn’t mean you shouldn’t advocate for your compensation. I know it’s hard - and let me come clean that it’s also difficult for me to do - but if you’re not going to advocate for yourself, no one will.
What are some tips you have for people negotiating compensation?
That’s it for today, folks.
Until next time, this is Laura signing off.
