How to Negotiate Salary: Ultimate Guide (2023)

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To help you learn how to negotiate salary we first need to cover the fundamentals. In this section you’ll learn what is salary negotiation, when a salary negotiation can take place, employer salary negotiation personas, the salary negotiation process, what different types of employers are thinking and concerned about during a salary negotiation, and employer salary negotiation tactics. To have a successful salary negotiation outcome it’s critical to understand these fundamental elements of a salary negotiation.

What is salary negotiation?

• Interviewing for a new job  
• An internal promotion is earned 
• A salary adjustment is required due to being underpaid 
• A salary adjustment is required due to formally or informally receiving new job duties and responsibilities 
• A mid year review is performed 
• An annual performance review is performed
• Goals are consistently being surpassed 

• Recruiter 
• Team Lead
• Department Head
• Human Resources Representative
• Business Owner or Founder 

• In-person
• Over email 
• Over the phone 
• Over video conference
• Over text

What are salary expectations?

Salary expectations are the amount of money you are hoping to earn in a new position.

When interviewing for a new job or promotion your salary expectations should be set based on what companies at a similar stage are paying someone with your skills, education, experience, and track record of success to complete the job’s duties and responsibilities in your market or the market the company uses to benchmark salary.

When determining your salary expectations you should exclude incentive pay such as bonuses and commissions as they are not guaranteed. A salary expectation should be the minimum base pay you expect to earn.

Salary expectations can be asked:

• On a job application
• During a phone screen interview
• During an interview for a new job
• During an interview for an internal promotion
• During a salary negotiation
• In a conversation with a recruiter
• When an employer is preparing to make a job offer

While it is critical to establish your salary expectations to determine if an offer is equitable for your experience it is important to avoid sharing your salary expectations to prevent setting a salary negotiation anchor that can result in a low offer.

Later in this guide we’ll dive into how to avoid sharing salary expectations and what to say to prevent hurting a positive salary negotiation outcome.

What is a salary adjustment?

A salary adjustment is a periodic increase in an employee’s pay. Salary adjustments are generally increases in pay that can be the result of the:

• Company’s annual performance review processes
• Company’s mid-year performance review processes
• Company performing well
• Employee being underpaid and advocating for equitable pay
• Employee performing well
• Employee and the company performing well

It is important to note that not all companies offer salary adjustments, not all employees are eligible for them, and not all salary adjustments will be the same.

The most commonly used language for a salary adjustment is “pay raise.” All of the examples above are pay raises however the phrase “pay raise” is not always the most appropriate language to use. Very few companies train employer roles on salary negotiation terminology. This can result in an employer misunderstanding terminology and negative interactions that are harmful to your pay.

If you find yourself negotiating salary because you are underpaid, replace the phrase “pay raise” with “salary adjustment” or “salary adjustment to close an ‘oversight’ in equitable pay.” This terminology positions the salary adjustment conversation to be about closing a wage gap rather than a perceived performance pay raise.

What is total rewards?

Total rewards refers to the cumulative monetary, non-monetary, and incentive compensation received by an employee for the work performed.

Depending on the company, what it offers, the seniority of a position, and a job’s function a complete salary negotiation that negotiates all total rewards variables may include a negotiation of:

• Career advancement opportunities (i.e. learning and development)
• Commission
• Equity/profit-share/stock options
• Benefits
• Job perks
• Job title
• Merit bonuses/bonus schedule
• Signing bonus
• Opportunities for meaningful recognition and advancement (i.e. clearly defined metrics that demonstrate success and a defined process to trigger promotions)
• Other income impacting variables
• Other variables that increase happiness at work and ability to be successful
• Wages

To ensure money or career opportunity is not left on the table it is important to be aware of, and mindful that, a salary negotiation is not just a negotiation of base pay but all available variables that impact your household economics, your career advancement, and your day-to-day work-life happiness. In other words a salary negotiation is a negotiation of your total rewards.

What is a counteroffer?

A counteroffer is a response to an offer that is made by the other party. In a salary negotiation a counteroffer can be made by a potential hire or employee and the employer they are negotiating with. A counteroffer can encompass base pay, benefits, job perks, and/or other variables that make up total rewards.

As the potential hire or employee the goal of a counteroffer is to get the best possible deal for yourself while negotiating within or around company parameters such as standardized compensation processes (if they exist) and budget.

Salary negotiation research reports that on average one counteroffer increases an offer by 7.4% and that most employers expect a counteroffer and salary negotiation.

Unfortunately, despite the expectation of a salary negotiation 58% of people accept job offers without making a counteroffer or negotiating total rewards. This results in leaving upwards of a million dollars on the table over the course of a career.

One of the most important things to remember when learning how to negotiate salary is that you are not obligated to accept the first offer – no matter how competitive it is unless it’s presented as “best and final” or “non-negotiable.”

What can you negotiate in a job offer?

Many people think that the only thing you can negotiate in a job offer is your base pay, but there are actually many aspects of a job offer that can be negotiated.

In addition to your pay, some of the other things you can negotiate in a job offer include:

• Access to projects that will grow specific skills you seek to develop
• Adoption assistance
• Career development plan
• Childcare
• Clothing stipend (e.g. The position requires you to participate in meetings where you have to wear a suit and you don’t have one)
• Commission
• Commuting costs
• Co-working office space stipend
• Eldercare
• Equity
• Equity vesting schedule and cliff
• Flexible work hours
• Four-day work week
• Health and wellness benefits (e.g. Gym membership stipend and ergonomic work equipment)
• Health insurance (e.g. You don’t need health insurance because you are covered under a partner, parent, or have a private plan, you can negotiate the employer’s cost for you to be added to the company’s health insurance plan to be added to your monthly pay)
• Job title
• Job perks (e.g. Office lunches and massages)
• Long-term incentives (e.g. Stock refreshers units and/or profit share plan)
• Long lunch breaks
• Luggage stipend (e.g. The position requires a lot of travel and will wear out your personal luggage)
• Menstrual leave
• Merit bonuses
• No meetings on certain days
• Office with a window
• Paid time off (e.g. Extra paid vacation days to do volunteer work)
• Personal time off (Other than paid time off)
• Professional development stipend (For things like conferences)
• Relocation expenses
• Remote work
• Retirement benefits
• Severance pay
• Signing bonus
• Skills development stipend (e.g. Public speaking training or a course to learn a new coding language)
• Time off to give back to your community
• Tuition reimbursement
• Work from home stipend
• Your start date
• More!

What you can negotiate in a job offer depends on the stage of the company, the type of company, the resources available to the company, and who you negotiate with.

To ensure you are not leaving money on the table or variables that will contribute to your happiness with a company make sure to ask what job perks, benefits, and incentives the company offers.

Negotiation Leverage

• You will not accept their job offer and accept the competing offer resulting in them having to make an offer to a lesser qualified person
• That they will have to start the hiring process all over again
• You will accept a job offer from another employer resulting in them having to hire and train someone to replace you resulting in lost productivity and operational expenses (it can cost up to 6 – 9 months of an employee’s salary to hire and train a replacement)

• They will have to spend time and money training someone new
• Your leaving could cause other valuable employees to leave as well (talented people want to work with other talented people it’s not uncommon to come across groups of people that job hop together)

Types of Salary Negotiation Data

Every successful salary negotiation is rooted in two types of data: market data and personal performance data. When you use market data and personal performance data in a salary negotiation you empower yourself to negotiate with objective details. This in turn boosts your confidence and credibility.

What is salary negotiation market data?

Salary negotiation market data is information about what similar positions in the same industry are being paid. This information is used to support your case for a higher salary.

Salary negotiation market data is data used by both the employee and employer to establish a fair market value for the work performed.

Market data points seek to conclude what companies at a similar stage are paying someone performing comparable job duties and responsibilities with comparable skills, experience, education, and track record of success.

There are two types of salary negotiation market data: primary and secondary.

Primary salary negotiation market data is information that you collect yourself. This could be through talking to people you know who work in similar positions or by doing your own online research.

Secondary salary negotiation market data is information that has already been collected by someone else, such as a survey or aggregated data from a HR-reported salary data bank or HR-salary benchmarking software tool (these two tools are typically only used by HR professionals as the subscriptions to use the tools are costly).

Having salary negotiation market data is helpful because it shows the employer that you have done your research and what you are asking for is objectively rooted in data.

Below are examples of how to use different types of salary negotiation market data in a salary negotiation.

What is salary negotiation personal performance data?

In a salary negotiation personal performance data is data that quantifies the historical achievements and contributions of an employee. It is information about your personal performance throughout your work history. This information is used to communicate to an employer:

• Your successes as they relate to a position’s responsibilities
• Your proven track record of success to build credibility
• How your successes impact business objectives
• Why you are worth the specific value you are negotiating for

Personal performance data is generated by you (the potential hire or employee) to clearly communicate your successes to an employer:

• On resumes via the creation of resume bullet points
• During a job interview for a new job
• During a salary negotiation
• During weekly one-on-one meetings with a team lead or boss to measure progress
• During mid-year performance review
• During promotion interviews
• During an annual performance review

Personal performance data typically describes success by providing metrics on actions that impact a company’s bottom line, short-term goals, and/or long-term goals such as, but not limited to:

• Task completion
• Saved time
• Saved money
• Revenue generated
• Increased customer satisfaction

Below are a couple of examples of personal performance data statements for a salary negotiation.

The personal performance data statements above use metrics and a few supplementary details to directly communicate:

• How the data relates to the position
• The impact and value of work done
• Details regarding how success was achieved
• Value to the company

The Type of Company You Negotiate with Influences Your Outcome

In addition to the job function of the person you negotiate with, the type of company and its operational structure will influence what you can negotiate and how much flexibility you have to negotiate.

Examples of types of companies include, but are not limited to:

• Non-profit Organization
• Small and Medium-sized Business (SMBs)
• Privately Held Enterprise Business
• Pre-seed Tech Startup
• Seed Stage Tech Startup
• Series A Tech Startup
• Series B Tech Startup
• Series C Tech Startup
• Series D Tech Startup
• Publicly Traded Enterprise Business
• Publicly Traded Startup

Company types that generally have more flexibility to negotiate or that generally pay more for a position include:

• Series A Tech Startup
• Series B Tech Startup
• Series C Tech Startup
• Series D Tech Startup

For example, a survey of 2,839 remote developers found that developers at Series C and Series D startups earn an average of $145,000.00 which is 11.5% more than developers in the same role at publicly traded companies who earn an average of $130,000.00.

Company types that generally have less flexibility to negotiate or that generally pay less for a position include:

• Non-profit Organizations
• Small and Medium-sized Business (SMBs)
• Pre-seed Tech Startup
• Seed Stage Tech Startup
• Publicly Traded Enterprise Business
• Publicly Traded Startup

An emerging startup company competing for talent at the Series A to Series D funding rounds are much more likely to be flexible in their negotiations compared to a publicly traded tech company with thousands of employees.

A publicly traded tech company or late stage tech company preparing to go public will have standardized compensation practices. These practices result in less flexibility to negotiate.

Unlike fast scaling startup companies where operating in a deficit is often encouraged by investors, public companies and late stage companies preparing to go public have operations that look at profitability and the value of their stock. This results in the standardization of compensation practices and viewing employee costs as predictable costs.

These predictable costs are used to generate profit and loss reports for shareholders. Job offers from late stage tech companies and public companies will have some flexibility to negotiate but the flexibility is predictable and standardized.

Employer Salary Negotiation Tactics

Employers regardless of their level of training on how to negotiate salary with an employee will use one or more of the following salary negotiation tactics in their negotiations:

• Anchoring
• Framing
• Selective Focus
• Best Alternative to Negotiated Agreement (BATNA)

Anchoring

Setting an anchor or anchoring in a salary negotiation typically refers to establishing a base pay value that will serve as the referential point throughout a salary negotiation.

Salary negotiation anchors can be set when:

• A job applicant puts salary expectations in a resume
• A job applicant enters desired salary on an application
• An employer ask for salary history or salary expectations and a specific value is provided by a potential hire or employee
• An employer makes a job offer
• An employer uses internal company compensation information to establish salary history

Anchoring can be done directly or indirectly by the employer. An employer directly sets an anchor for base pay when they provide any type of salary range or make a specific offer. An employer indirectly sets the anchor for a salary negotiation when they influence a potential employee or employee to communicate salary history or salary expectations.

When an anchor is set using salary history or salary expectations the employer will strategically use the base pay value provided as their referential point. This will typically result in an offer lower than what the market is paying.

Below is an example of an employer setting a salary negotiation anchor using salary history.

What to say to negotiate past an anchor set by sharing salary history or salary expectations:

If you set the salary negotiation anchor by sharing your salary history or salary expectations you can negotiate past the anchor by confirming that the offer is negotiable and saying something like:

Framing

1. Comparing the salary they are offering to other jobs that pay less
2. Comparing the salary they are offering to what your salary history/what you were previously paid
3. Comparing the salary they are offering to a salary expectation you expressed
4. Comparing the salary they are offering to an anchor such as salary history or the initial offer made not what you have countered or what the market is paying
5. Trying to get you to think about the total rewards package and not just the base pay
6. Trying to get you to think only about the base pay and not negotiate other total rewards variables

• Comparing the salary they are offering to other jobs that pay less:

  “After researching the market I have found that the current rate for this position by other companies at a similar stage is $X.”

• Comparing the salary they are offering to what your previous job paid:

  “The job duties I performed previously are different from the job duties and responsibilities of this position. The comparison doesn’t reflect the duties and responsibilities of this job and what the market is paying. After researching the market I have found that the current rate for this position by other companies at a similar stage is $X.”

• Comparing the salary they are offering to a salary expectation you expressed:

  “After thoroughly learning about the position’s job duties and responsibilities and using the information to research I found that companies at a similar stage as this one are paying $X for someone with my skills, experience, education, and track record of success.”

• Comparing the salary they are offering to an anchor such as salary history or the initial offer made, not what you have countered or what the market is paying:

  “I’m excited by the prospect of getting started. The offer is X more than $Y however I used the information provided to me such as ABC to research what companies at a similar stage are paying. They are paying $Z for someone with my skills, experience, education, and track record of success. I’d like to work with you to agree on a number that reflects the fair market value. If you can come up to $Z, what the market is paying, I can commit to starting on [Insert date].”

• Trying to get you to think about the total rewards package and not just the base pay:

  “Thank you for highlighting all of the benefits, job perks, and incentives in the offer. Using the information provided to me I’ve researched the base pay for companies at a similar stage as this one. A base pay of $X accurately reflects what the market is paying for someone with my skills, experience, education, and track record of success.”

• Trying to get you to think only about the base pay and not negotiate other total rewards variables:

  “After researching the market I have found that the current rate for this position by other companies at a similar stage is $X and that their total rewards package includes Z benefits, Y job perks, and X incentives. Can you please share with me the value of the total rewards package and what is included in addition to the base pay?”

The framing highlights the difference between what they were making and the (low) offer made. The framing intentionally makes no mention of the difference between the offer and what the market is paying in Los Angeles, CA for someone with their experience, $88,625.00.

In this example, this framing can easily appeal to someone that did not research what the market is paying and knows the value of their experience in the Los Angeles, CA market.

To negotiate salary past this framing and make a counteroffer the potential hire could say something like…

Selective Focus

• Drawing your attention to the perks and benefits of the job
• Focusing on the positive aspects of the job and downplaying the negative aspects
• Focusing on their needs and not yours

• Drawing your attention to the perks and benefits of the job:

  “I’m glad to hear about the perks and benefits. Can you tell me more about the base pay and how it’s determined?”

• Focusing on the positive aspects of the job and downplaying the negative aspects:

  “I’ve heard that this company is great to work for. I’m curious, what are some of the challenges people in this role have faced?”

• Focusing on their needs and not yours:

  “I understand that you need someone in this role who can start right away. I could start next week. What is the salary range for this position?”

Best Alternative to Negotiated Agreement (BATNA)

Best Alternative to Negotiated Agreement (BATNA) in a salary negotiation for an employer is when the employer compares your counteroffers to their best alternative if you are unable to come to a mutual agreement. BATNA’s are not shared with a potential hire or employee but are something the employer considers internally throughout the negotiation process.

Common employer BATNA considerations for new job offer salary negotiations include but are not limited to:

• Is there another qualified person in the recruitment pool they would be willing to extend the job offer to? And, what is that person’s likelihood of accepting the job?
• If there is no one in the recruitment pool to extend the job to how much time and money would it cost to start and run the hiring process again?

Common employer BATNA considerations for a negotiation between an employee and an employer for a salary adjustment include, but are not limited to:

• What would the impact be on the company if you did not receive a salary adjustment and quit?
• How much would it cost the company to hire and train to replace you versus adjusting your salary?

To increase your salary negotiation leverage when negotiating as an employee you can:

• Highlight your experience in relation to the job description and how little training you would need in order to begin making an impact thus saving the company money on training and unproductive “new hire” time
• Highlight quantified work history achievements that clearly communicate why you are worth what you are negotiating for

Understanding common employer salary negotiation tactics such as anchoring, framing, selective focus, and BATNA helps you to view a salary negotiation through their eyes. When you’re in a salary negotiation, consider the employer’s choice of words and see how they match up with these tactics so that you can strategically negotiate past them.

1. Learn and master the job description
2. Make a list of your quantified achievements
3. Ask questions
4. Know what the market is paying
5. Schedule time for a focused discussion/negotiation
6. Never share salary history
7. Know the company’s culture
8. Know what you want
9. Know your WATNA
10. Know your audience
11. Be aware of potential bias
12. Know what you’re going to say
13. Know when you’ll walk away

1. Learn and master the job description: A successful salary negotiation includes clearly communicating your experience performing the duties and responsibilities of a job description as well as skills that highlight your potential to excel in performing the duties and responsibilities of a job description (even if you’ve never done them). In order to be able to communicate your abilities, and value, in relation to the job description you must take time to learn and master the job description.

To master your job description take time to read the overview, duties, responsibilities, qualifications, and requirements. Break the job description into individual requirements so that you can relate your quantified achievements to them. Doing this will help you build talking points for your salary negotiation and boost your confidence to negotiate for competitive market rates.

3. Ask questions: To efficiently and successfully negotiate salary you must first act like a detective and ask questions to find out how the company determines compensation, what is negotiable, and if there are duties and responsibilities you should be aware of that need to be included in your negotiation.

Examples of questions to ask prior to a salary negotiation include:

• What is the company’s formula to determine compensation for this role?
• What city does the company use to baseline/determine salary?
• What is negotiable?
• What does the company have budgeted?

Once you have mastered the job description and asked questions to ensure you know what is negotiable and that no job duties were left out of the job description you are ready to perform market research to know what the market is paying.

5. Schedule time for a focused discussion/negotiation: Once you’ve mastered the job description, quantified your achievements, asked questions, know what the market is paying for your skills, have received an offer, and have reviewed the offer you’re ready to schedule time for a focused discussion/salary negotiation.

To schedule time for a focused salary negotiation you must first ensure the offer is negotiable. If the offer is negotiable, request to schedule time to discuss the compensation and to ask “Does anyone else need to be included in the conversation?”

Typically for entry-level roles and mid-level roles where the job function isn’t viewed with high importance you’ll only negotiate with one person. Mid-level roles where the job function is viewed with high importance, senior-level roles, and C-suite roles may require a salary negotiation with multiple people, but not always.

Rather than accidentally have a decision-maker left out of the salary negotiation or have to rely on the person you’re negotiating with to correctly communicate what you say to another person, confirm who needs to be in the salary negotiation and schedule the salary negotiation at a time that works for everyone.

If you choose to send the request by email, clearly communicate what you want to discuss in the subject line and body of the email.

Communicating what you want to discuss and scheduling time for the discussion ensures the employer isn’t taken off guard. Taking an employer by surprise with a salary negotiation can result in placing them on the defensive, causing them to be annoyed, and/or having them rush through your negotiation all of which reduce the likelihood of a favorable outcome.

9. Know your WATNA: Your salary negotiation WATNA is your “Worst Alternative to a Negotiated Agreement.” In other words, what’s the worst possible outcome if you don’t reach the agreement you want in your negotiation?

Knowing the worst possible scenario, and being okay with it, helps to alleviate salary negotiation anxiety and build your confidence.

Your salary negotiation WATNA is dependent on your circumstance and what you’re willing to accept. Every person will have their own WATNA.

Prior to engaging in a salary negotiation, establish your WATNA. It will help you:

• Determine how much you’re willing to compromise
• Have courage and confidence to negotiate for what you want without fear of what happens if you don’t reach an agreement

• In 2020 Asian American and Pacific Islander women were paid $0.87 for every dollar paid to a White male colleague doing the same job.
• In 2021 Asian American and Pacific Islander women were paid $0.75 for every dollar paid to a White male colleague doing the same job.
• In 2020 Black women were paid $0.63 for every dollar paid to a White male colleague doing the same job.
• In 2021 Black women were paid $0.58 for every dollar paid to a White male colleague doing the same job.
• In 2020 Native women were paid $0.63 for every dollar paid to a White male colleague doing the same job.
• In 2021 Native women were paid $0.50 for every dollar paid to a White male colleague doing the same job.
• In 2020 Latinas were paid $0.55 for every dollar paid to a White male colleague doing the same job.
• In 2021 Latinas were paid $0.49 for every dollar paid to a White male colleague doing the same job.

• Janitorial: On average White men earn, $16.83/hour, Latinas earn $10.19/hour
• Child care: On average White men earn, $12.92/hour, Latinas earn $10.58/hour
• Personal Care Aides, Home Health Aides, and Nursing Assistants: On average White men earn, $14.42/hour, Latinas earn $12.02/hour
• Cashiers (Grocery): On average White men earn, $13.99/hour, Latinas earn $10.58/hour
• Servers: On average White men earn, $13.46/hour, Latinas earn $10.10/hour
• Cooks: On average White men earn, $11.06/hour, Latinas earn $9.62/hour
• Retail Sales and Retail Cashiers: On average White men earn, $12.36/hour, Latinas earn $11.54/hour
• Licensed Practical and Licensed Vocational Nurses: On average White men earn, $21.63/hour, Latinas earn $17.36/hour
• Pre-K, K-12, and Special Education Teachers: On average White men earn, $27.40/hour, Latinas earn $21.63/hour
• Retail Supervisor: On average White men earn, $24.04/hour, Latinas earn $15.48/hour

13. Know when you’ll walk away: There will be times when the negotiation doesn’t go the way you wanted it to. Rather than put yourself in a place to make an emotional decision, intentionally think about when it is appropriate (if ever depending on your WATNA) for you to walk away from a deal/offer. Use your market research, information from the company, your must-haves, nice-to-haves, and WATNA to set parameters on when it’s appropriate, and in your best interest, to walk away entirely from the salary negotiation.

Now that you have a grasp on how to prepare for a salary negotiation, let’s dive into how to negotiate salary offer, specifically strategies to successfully negotiate a salary offer.

How to negotiate a salary offer (Strategies)

1. Confirm that an offer is negotiable
2. Negotiate for precise and specific dollar amounts
3. Use data to your advantage
4. Use data-driven word economy to clearly communicate your value in counteroffers
5. Use tactics to overcome bias
6. Confirm that the “final” offer is equitable
7. Get all details of your offer in writing

2. Negotiate for precise and specific dollar amounts: Use the qualitative and quantitative market data and personal performance data you’ve collected to set:

• A specific “moonshot” dollar value goal to negotiate for
• Your must-have base pay minimum
• Counteroffer dollar amounts

Research conducted by Columbia Business School professors found that salary negotiations are more successful when a person is very precise with the amount that they want and does not round the number.

For example, when a person asks for an annual salary of $77,814.00 they are more likely to be successful than a person who negotiates for $78,000.00. This is because there is an illusion that the person has done their homework.

A person who negotiates for a precise amount is perceived “as better informed, the person on the opposite end believes there is less room to negotiate.”

To increase your chances of a successful negotiation do not round dollar amounts but ask for very specific values based on what the market is paying for someone with your skills, experience, education, and track record of success.

4. Use data-driven word economy to clearly communicate your value in counteroffers: When negotiating your salary, it’s important to use data-driven word economy. This means using as few words as possible while incorporating data into what you say to clearly communicate your value.

When a person uses less words to communicate they are perceived as knowledgeable, as having clear thought processes, and to have leadership traits.

In a salary negotiation data-driven word economy helps to overcome direct and implicit biases held by the person or persons you may be negotiating with. When you’re able to overcome biases you increase the likelihood of a successful salary negotiation.

Let’s contrast examples of negotiating compensation with and without data-driven word economy.

In our examples a potential new hire is negotiating the base pay for a project management position. In Example A the new hire uses no data-driven word economy to negotiate their pay. In Example B the new hire uses data-driven word economy to negotiate their pay and communicate a persuasive argument.

In Example A the person negotiating does not clearly communicate how their skills impacted the company. Their choice of words are “fluffy” and leave room for doubt.

In Example B the person skips fluffy details and focuses on correlating the job’s duties and responsibilities with quantified work achievements that reflect their abilities and monetary value.

When negotiating salary the use of data-driven word economy makes a significant difference. Using data-driven word economy puts you in a position to “speak business.” Meaning you empower yourself to clearly communicate your ability to contribute to the bottom line of the business. This is important when negotiating salary because the person you are negotiating with wants to know that there will be a fair exchange of value. The exchange of value being the business paying you $X and you using your skills and potential to excel in the job’s duties and responsibilities to help the business achieve its short and long-term goals.

The use of data-driven word economy in the workplace can also position you to be viewed as a leader and position you for promotions and pay raises.

6. Confirm that the “final” offer is equitable: In order to not leave money on the table it is important to confirm that a “final” offer is equitable. To confirm if an offer is equitable you want to ask three questions:

• How was this base pay calculated?
  • Was the same calculation used for every employee in this position?
• Where does a base pay of $X fall on the compa ratio for this position?

The answers you receive to these three questions will tell you if the offer is rooted in what the market is paying for someone with your skills, education, and level of experience, if the offer is rooted in a perception of your value based on who you are, or a blend of both.

How was this offer calculated?

Where does this offer fit on the compa ratio?

The third question you want to ask is “Where does this offer fit on the compa ratio?” This question lets you know if your offer is less than the median pay for the position at the company, equal to the median pay for the position, or higher than the median pay for the position.

What is a compa ratio?

A compa ratio is a tool used by HR to compare an employee’s salary to the median salary of others in the same position at the company or within the market. A compa ratio may be communicated in decimals or percentiles.

In decimals the compa ratio scale is from .80 to 1.2. In decimals the number one is median pay.

To create some level of pay standardization many companies will organize role-specific decimal compa ratios as follows:

• 0.8 – 0.9 is for new or entry-level hires and/or poor performers
• 0.91 – 1.10 is for mid-level employees with some experience and/or good performance
• 1.11 – 1.20 is for senior-level employees with significant experience and excellent performance

In percentiles the compa ratio is from 80% to 120%. In percentiles one hundred percent is the median pay. A company’s compa ratio scale in percentiles may look like the following:

• 80% – 90% is for new or entry-level hires and/or poor performers
• 91% – 110% is for mid-level employees with some experience and/or good performance
• 111% – 120% is for senior-level employees with significant experience and excellent performance

Compa Ratio in Decimals

An individual’s compa ratio is calculated by dividing their annual pay/salary by the median annual pay/salary for their position.

The formula to calculate in decimals where your offer fits on a compa ratio scale is:

• Base salary offer/Median salary for the position

Let’s walk through a couple of examples…

A compa ratio of 1.0 details that your offer is equal to the median pay for the position. A compa ratio higher or lower than 1.0 details how your offer compares to the median salary for the position.

The closer to 1.2, the top of the compa ratio scale, the better your offer. If your offer is above 1.2 the offer is hyper-competitive.

Inversely, the closer your offer to 0.8, the worse the offer is in comparison to the average salary for the position.

Compa Ratio in Percentiles

The formula to calculate compa ratio in percentiles to compare an your offer to the pay of others in the same role is:

• (Base salary offer/Median salary for the position)*100

Let’s use our examples above and calculate the percentile compa ratios.

• Below 0.79 or 0.79% is underpaid
• 0.8 – 0.9 or 80% – 90% is at the low end of the pay scale
• 0.91 – 1.10 or 91% – 110% is median pay
• 1.11 – 1.20 or 111% – 120% is at the high end of the pay scale
• Above 1.20 or 120% is hyper-competitive pay

• (Base salary offer/Market salary for the position)
• (Base salary offer/Market salary for the position)*100

How to Negotiate Salary Offer (Tips):

• Be careful not to disclose salary history
• Be confident, yet humble
• Be honest
• Be open to compromise
• Be positive and energetic
• Be prepared and practiced
• Be prepared to walk away if your must-haves are not met
• Don’t accept the first offer (unless it’s presented as best and final and meets your expectations)
• Don’t be entitled
• Don’t bring up personal finances and bills
• Don’t give an ultimatum
• Don’t make threats
• Express gratitude throughout the process
• Have leverage via competing offers
• Know your must-haves
• Know your nice-to-haves and what you can be flexible on
• Negotiate the whole job (i.e. make sure you truly understand the job’s duties and responsibilities)
• Negotiate beyond base pay, negotiate the total rewards package
• Think about the long-term win-win
• Use personal data and market data to communicate clear persuasive (non-emotional) negotiation points
• Use silence to your advantage
• Use word economy to communicate precisely
• View a salary negotiation as a collaboration

If you’re getting ready to negotiate your compensation as part of an interview process then this how to negotiate salary in an interview section is for you!

What Are Your Salary Expectations Best Answer

The process to negotiate salary in an interview starts when the first request for your salary expectation is made. A salary expectation request can be made even before you interview for a job. Most employers now include a field in their job application that requires you to submit your desired salary in the application.

If you enter a specific dollar value in the salary expectations field it will set an anchor for your salary negotiation making it harder (though not impossible) to negotiate a higher salary. If possible, it’s best to enter “Negotiable” into the field. Entering “negotiable” allows you to run your salary negotiation process without the additional hurdle of overcoming a salary anchor that you’ve set.

If during the interview process you’re asked for your salary expectations it’s best to say something like…

How to Negotiate Salary in an Interview (Suggested Strategy)

As a job interview progresses and the employer expresses interest in hiring you they may make a verbal offer. If you receive a verbal offer, express your gratitude and enthusiasm, ask for the offer in writing, and ask for time to review the offer.

Fuse together the details in the job offer with the information you collected to compare your offer to what the market is paying for your skills. Use the information to set your must-haves and nice-to-haves and then follow up with the employer to see if the offer is negotiable.

If the offer is negotiable make specific counteroffers ensuring not to forget to negotiate for things like job perks, stock options, income impacting variables, and variables that will contribute to your overall happiness and total rewards.

Once you reach a mutual agreement make sure all the details of your salary negotiation are included in your Employee Offer Letter.

How to negotiate salary in an interview:

• Express your gratitude and enthusiasm
• Ask for the offer in writing
• Request time to review the offer
• Compare the offer to what similar companies in the market are paying for someone with your skills, education, experience, and track record of success
• Set your must-haves
• Set your nice-to-haves
• Ask if the offer is negotiable
• Make specific counteroffers to negotiate your total rewards
• Ensure all final negotiation details are written into your Employee Offer Letter

Asking if an offer is negotiable is critical to setting a positive tone for a salary negotiation. It is also one of the most overlooked parts of a salary negotiation.

Not asking if an offer is negotiable and beginning to negotiate salary can have detrimental consequences. These consequences can range from the employer having a defensive attitude (which doesn’t help you in your salary negotiation) to having a job offer rescinded (a rare extreme response).

To avoid these consequences it’s important to learn how to ask to negotiate salary. The process of asking to negotiate salary is simple. Here is an example:

The three sentence “How to Ask to Negotiate Salary” example above:

• Expresses gratitude
• Shares excitement
• Clearly asks if salary is negotiable in a direct yet soft manner

The employer will either respond with a “Yes” and ask you what you had in mind or they will let you know that the offer is not negotiable. If the offer is not negotiable you can either accept it, decline the offer, or ask when they need an answer and continue the interview process and use the offer as leverage to negotiate starting salary.

• Quantified work data that relates achievements to the duties and responsibilities of the position
• Quantified work data that communicates your achievements and abilities to relation to the bottom line of the company (i.e. Why you are worth more and the better option to a “cheaper” hire)
• Areas of expertise in which you require no training and thus save the company money
• Information on how quickly you can begin to make an impact, especially compared to new hires that require substantial training (which make less experienced applicants a larger financial investment to hire)

• Quantified work data that relates your on-the-job achievements to the duties and responsibilities of the position
• Awards and recognition you’ve earned for the company
• What the market is paying for your skills and contributions
• How long it would take to hire and train someone to replace you
• How long it would take someone to get up to your level of productivity

Practicing what you’ll say when you’re in a salary negotiation will help you effectively and confidently communicate what you want without coming across unsure of yourself, emotional, or entitled.

A salary negotiation is part art and part science. There are many variables that should be taken into account. It’s important to note a salary negotiation script is not one size fits all.

Below is a salary negotiation script for a new job offer negotiation. If you’re getting ready to negotiate a new job, you can use the salary negotiation script below to practice an example of what you could say (if the situation is right).

Simply fill-in-the-blank spaces with your relevant information and practice saying the script out loud.

The process to negotiate a higher salary is part art and part science. The art resides in building rapport with the person with whom you are negotiating. The science resides in understanding what needs to be communicated and in what format to make a persuasive case for a higher salary.

Before we get into the art and science of how to negotiate a higher salary, let’s cover variables that can cap your salary, make it harder to negotiate a higher salary, or make it easier to negotiate a higher salary.

Variables that influence how flexible a company will be with a salary negotiation include:

• What the market is paying for similar positions
• What the market is paying someone with your skill level and experience performing the duties and responsibilities of the position
• The budgeted salary range for the position
• The company’s processes to set salary (are processes standardized or not)
• The type of company and its stage (e.g. Public company, Series C stage, Seed Stage, Non-profit, SMB, etc.)
• What city the company uses to calculate base pay for your position (and is it the same city for every person in the role regardless of location or does the city where the work is performed impact base pay)
• The position’s level (e.g. Entry level, Mid level, Senior Level, or C-Suite)
• If the position is a leadership role responsible for leading the success of a department, team, and/or others
• If the position is an individual contributor with no leadership responsibility
• If the position directly contributes to revenue generation or not (e.g. a Chief Product Officer, a User Experience Designer, Marketer, or Sales Engineer versus Payroll, Accounting, Human Resources Representatives, Administration)
• How important the position is to the company (e.g. An international snack food chips company hiring software developers will likely pay less for a software developer than a funded Series B or Series C technology startup. This is because a global snack food company’s view of a software developer is to support the manufacturing and distribution of its snack chips whereas a technology software startup views the function of a software developer as critical and very important to the company’s success.)
• How much the company wants to hire you
• If you have salary negotiation leverage such as competing offers

These variables can contribute to your ability to negotiate a higher salary. Keeping these variables in mind will help you set salary negotiation goals that are well-informed (and realistic).

How to Negotiate a Higher Salary (The Science)

The science of a salary negotiation is understanding the process, what needs to be communicated, and how best to communicate it. In order to negotiate a higher salary you must:

• Ensure you understand salary negotiation terminology such as: total compensation, total rewards, and “desired compensation type” versus “desired salary range” (if you are unsure that you and the person(s) you are negotiation with are using a term in the same way or if you are unsure what a specific term means it is critical that you ask to avoid a costly salary negotiation miscommunication or mistake)
• Research the market
• Account for variables that will increase or decrease the company’s negotiation flexibility
• Get salary negotiation leverage such as multiple competing offers
• Never share salary history
• Ask questions regarding the company’s budget for the position
• Ask questions about the job’s duties and responsibilities to ensure you negotiate compensation for all duties and responsibilities
• Set personal must-have goals based on market data and personal achievement data
• Confirm that an offer is negotiable
• Negotiate for your base pay goals plus benefits, job perks, other monetary incentives such as stock options, as well as variables that make up your total rewards
• Counteroffer using data-driven word economy to clearly communicate your value
• Ensure every detail of your salary negotiation is included in the Employee Offer Letter, if a detail is omitted the company does not have to uphold the detail

It’s not often that we negotiate salary. Most people only negotiate salary a handful of times in their life. Not knowing what to expect in a salary negotiation can make the idea of negotiating scary, especially if you’ve never done it before.

One of the best ways to learn how to negotiate salary is to see a salary negotiation conversation example. By seeing how a real-life salary negotiation could play out, you can get a better sense of what to say (and what not to say) when it’s your turn to negotiate.

Below is an example of a salary negotiation conversation example. In it you will see:

• How to graciously open a salary negotiation
• How to make a counteroffer
• How to use market data to support your salary negotiation
• How to use personal performance data to support your salary negotiation
• How to be flexible and compromise

Every salary negotiation is nuanced but in general they follow the same salary negotiation flow:

• Offer
• Seeing if the offer is negotiable
• Back and forth counteroffers
• Compromise
• Mutual agreement

Salary Negotiation Conversation Example (Dialogue Part 2 of 3)

When not to negotiate salary:

• At the beginning of an interview. If you enter a job interview and begin negotiating salary, it sends a red flag to the employer. If a potential employer has not signaled they are interested in hiring you and you start negotiating salary they may think you’re not interested in the details of the job or that you’re only interested in money.
• When you are underperforming at work. If you are not performing well at work, it’s not the time to negotiate salary. Your employer may find the conversation off putting and use the situation to highlight your lack of performance. This can result in being placed on probation or even fired.
• When you are emotional. Emotions can run high if you discover you’re underpaid or that you’re being lowballed. Your emotions may prompt you to want to jump into a salary negotiation. Entering a salary negotiation when you are emotional can have negative consequences. If you are emotional, it’s difficult to think rationally and make logical arguments. You might even make unintentional threats or give an ultimatum that loses you a job opportunity or gets you fired. When you’re emotional, it’s best to wait until you’ve calmed down before negotiating salary.
• When you are unprepared. Successful salary negotiations are rooted in preparation. If you’re not prepared, it will be difficult to make a strong case for why you deserve a higher salary. Do your research, prepare what you’ll say, and practice what you’ll say in different scenarios. This preparation will help you negotiate in a friendly and confident manner and boost your chances of success.

Given that resources to learn how to negotiate salary have been limited (until the creation of PayDestiny 😄💵) many people have sought salary negotiation advice in online forums like Reddit.

Unfortunately, this is very dangerous since most people are unfamiliar with the salary negotiation process from the perspective of the potential employee or employee and all employer roles that could participate in a salary negotiation.

In addition, a person offering advice may have “credentials” but offer advice from a limited and/or biased perspective. This can result in bad advice that harms the success of a salary negotiation and long-term earnings.

When seeking salary negotiation advice online people often search “‘How to Negotiate Salary Reddit.’ The top search engine result links to a forum thread where most of the advice is bad.

The thread starts with someone asking the question “How to negotiate a (better) salary?”

How to Negotiate Salary Reddit (Beware of Bad Advice)

Let’s dive into the key points of the top response to the question “How to negotiate a (better) salary?”

🚫 (Bad) The top comment is from an executive recruiter whose lens on the salary negotiation process is very different than a team lead or owner who are the best employer personas to negotiate with. This makes the advice limited in scope and biased based on the individual’s job function as a recruiter, their limitations, and job goals.

✅ (Good) The top comment says “…decide for yourself what you want. Decide in your head as early as you can…” This is good advice if you have done market research to support the development of your base pay minimum, base pay “moonshot” goal, must-haves, and nice-to-haves.

🚫 (Bad) The top comment does not recommend the use of market research or personal performance data to determine your base pay minimum, base pay “moonshot” goal, must-haves, and nice-to-haves.

🚫 (Bad) The top comment gives the following instructions: “When asked what you want (it is inevitable), tell them “I would really like $T (target) but I could be flexible for the right opportunity.”

This advice helps recruiters gain salary expectation information that helps to set an anchor that can result in lowball offers. While the recruiter may seek to understand where you fall within their hiring budget the question still results in setting a salary negotiation anchor.

They could simply not ask for your salary expectations and share the salary range for the position instead. This would allow you to determine if the budget for the position is inline with what you’re looking for.

This advice benefits the job function of a recruiter more than the outcome of a potential employee or employee’s salary negotiation.

Rather than provide a dollar value that results in setting a salary negotiation anchor you could say something like…

In this statement you are presenting yourself as professional by wanting to maintain employer confidentiality. Additionally, you flip the question to gain information on how the company “calculates base pay” signaling you’re looking for a company that has equitable compensation practices.

As outlined above when searching for things like “How to negotiate salary Reddit” it’s important to use the information you’ve learned in this guide to filter out outdated, biased, and generally bad advice.