Tips for negotiating a higher salary

Every employee wants a higher salary, either when he is offered a new job or when he has been working for a company for a certain duration. But should we negotiate for a higher salary? The answer is Yes for both cases:
  • 58% of hiring managers say they leave some negotiating room when extending initial job offers.
  • Many hiring managers agree to a candidate’s request for a higher salary.
  • People who routinely negotiate salary increases will earn over $1 million more by retirement than people who accept an initial offer every time without asking for more.
  • The fact that an employee is doing a good job does not mean he will automatically get a raise because his boss may believe the employee is satisfied with what he is getting.

Salary negotiation

So, research supports the idea that you should negotiate for a higher salary if you think that you deserve it, either with the new job or the existing one. Here are the tips suggested by Bauer and Erdogan (2009) that you can use when negotiating salary:
  • Overcome your fear: Don’t be afraid of angering the boss if you think you deserve a higher salary. The boss may not know your contribution or he believe you are satisfied with your current salary.
  • Get the facts: Do some background research before the negotiation. Check within your company or the market to see if your expected salary is appropriate or not.

Salary negotiation

  • Build your case: Make a list of your contributions to the company and be sure to focus on the contributions that your boss values most. If another company has shown interest in you, mention that as a fact but do not use this as a threat unless you are prepared to take the other offer.
  • Know what you want: Set your expected salary based on your research and figure out:
    • What will happen if you can not get the expected salary? Will you quit or take offer from the other company?
    • What are the alternatives (such as higher title, more vacation, training …) that you can accept besides salary raise?

Salary negotiation

  • Begin assertively: Start the negotiation with your boss friendly with the list of your contributions to the company.
  • Don’t make the first offer: Instead, let’s your boss name the figure first. If your boss offer a range then ask for the high end. In case you are insisted to provide the figure, ask for the most that you can reasonably expect to get. This will leave some room for negotiation.
  • Listen more than talk: The more you listen, the better the boss will feel about you. People tend to like and trust people who listen to them.

Salary negotiation

  • Look for the future: If you can’t get a raise now, get your boss to agree to one in a few months if you meet agreed-upon objectives.

Reference:
Bauer, T. and Erdogan, B., 2009. Organizational Behavior. 1st ed. Flat World Knowledge, Inc.

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Negotiation

1. Introduction
Negotiation is a process in which two or more parties work toward an agreement. Negotiation can occur everywhere: in business, in organizations, between nations as well as in personal situations such as marriage, divorce, shopping and everyday life. In addition, negotiation is also a common way to deal with conflict. The purpose of this post is to provide some basic knowledge about negotiation such as:
  • The five phases of negotiation
  • The two approach for negotiation
  • Some common mistakes in negotiation
  • Third-party negotiation techniques

Negotiation

2. The five phases of negotiation
A typical negotiation process usually includes five phases:

Five phases of negotiation

  • Investigation: In this phase, information related to the negotiation process should be gathered. Here are a few questions that the parties can ask themselves in this investigation phase: What are my goals? What do I want to achieve? What would I concede? What would I absolutely not concede? What is the other party likely to want? Which aspects could be changed and which could not?
  • Determine BATNA: BATNA is an acronym for the “Best Alternative To a Negotiated Agreement”. In this phase, we need to know what our alternatives are. It should be noted that the party with the best BATNA has the best negotiating position, so the more possible  alternatives we can explore, the better it is. Here are some good practices when determining your BATNA:
    • Brainstorm a list of alternatives
    • Identify the most beneficial alternative to be kept in reserve as a fall-back
    • Keep revising the BATNA since they may evolve over time
    • Don’t reveal the BATNA to the other party
  • Presentation: In this phase, the parties assemble the information they have gathered in a way that supports their position.
  • Bargaining: In this phase, each party discusses their goals and seeks to get an agreement. A natural part of this process is making concessions, which means giving up one thing to get something else in return.
  • Closure: In this phase, either the parties have come to an agreement on the terms, or one party has decided that the final offer is unacceptable walked away from the negotiation. This phase is also a chance to learn why a deal can not be reached in case the negotiation fails.
3. Negotiation strategies
There are two approaches when negotiating:
  • Distributive approach: In this approach, negotiators see the situation as a pie that they have to divide between them. Each party tries to get more of the pie and “win”. This is also called the “win-lose” approach.
  • Integrative approach: In this approach, both parties look for ways to expand the pie, so that each party gets more. This is also called a “win–win” approach. This approach require cooperation, listening and trust between the parties.

Negotiation

4. Common mistakes in negotiation
According to Bauer and Erdogan (2009), there are five common mistakes in negotiation:
  • Accepting the first offer: Some people are taught to feel that negotiation is a conflict situation, and these individuals may tend to avoid negotiations to avoid conflict. However, research shows that those who accept the first offer without negotiating usually receive less than those who are willing to negotiate. Research also reveals that more women usually make this mistake than men.
  • Letting your ego get in the way: If we are thinking only about our own needs, it is very likely that the deal can not be made. People usually don’t accept a deal that doesn’t offer any benefit to them so it is very important to help the other party to meet their own goals while achieving ours.
  • Having unrealistic expectations: Setting reasonable goals that address each party’s concerns will decrease the tension in negotiation and will improve the chances of reaching an agreement.
  • Getting overly emotional: Research shows that those who express anger negotiate worse deals than those who do not. However, research also shows that those with more power may be more effective when displaying anger.
  • Letting past negative outcomes affect the present ones: Research shows that negotiators who had previously experienced ineffective negotiations were more likely to have failed negotiations in the future. In other words, there is actually a tendency to let the past repeat itself and being aware of this tendency allows us to overcome it.
5. Third-party negotiations
Sometimes, it is more effective to have a specially trained, neutral third party involved in the negotiation process, especially for challenging problems. There are several approach for third-party negotiations:
  • Mediation: In mediation, an outside third party (the mediator) enters the situation with the goal of assisting the parties in reaching an agreement. The mediator can work with both parties to facilitate, suggest, and recommend but does not represent either side. The mediator’s role is to help the parties share feelings, air and verify facts, exchange perceptions, and work toward agreements. This approach should be used when:
    • The parties are unable to find a solution themselves.
    • Personal differences are standing in the way of a successful solution.
    • The parties have stopped talking with one another.
    • Obtaining a quick resolution is important.
  • Arbitration: In arbitration, the parties submit the dispute to the third-party arbitrator. It is the arbitrator who makes the final decision.
  • Mediation – Arbitration: This approach starts with mediation and then followed by arbitration. At the beginning, the third party will play the role as the mediator to facilitate the negotiation process. After that, the final decision will be made by the arbitrator.
  • Arbitration – Mediation: In this approach, both parties formally make their cases before the arbitrator. The arbitrator then makes a decision and places it in a sealed envelope. Following this, the two parties work through mediation. If they are unable to reach an agreement on their own, the arbitration decisions will be applied.

References:
Bauer, T. and Erdogan, B., 2009. Organizational Behavior. 1st ed. Flat World Knowledge, Inc.