Negotiating When You Have Leverage

Let's face it. One of the reasons why many of us dislike salary negotiations is the feeling that we are rarely in a powerful position. It often seems as if we have little leverage as we deal with our employers who have more information and the final say in whether we get what we want.

However, one of the benefits of advancing in a career is that the balance of power can change. Your leverage in salary negotiations can increase as you gain knowledge, expertise and experience. All of a sudden, you realize that you are now quite valuable to the company, and irreplaceable should you decide to leave for one of those great offers you keep receiving.

When you are sitting in that position, your negotiation will likely feel much different than it has before. You may feel great temptation to use your leverage to exact revenge for the numerous slights (real or imagined) that were inflicted upon you in the past. Still, most people do not want to gain a reputation for being greedy, tyrannical or exploitative. Therefore, instead of flaunting your power and doing unto them as they have done unto you, why not focus on your long-term goals and negotiate in a way that enables you to get what you deserve and enhance your status as a leader and loyal team player. Consider the following advice:

Focus on getting the best deal for yourself that is still good for them, too.

Begin with the realization that this is your opportunity to maximise your compensation. Now is not the time to sell yourself short or leave items on the table. Instead, focus on what you feel you need and ought to have, and then negotiate for it. Many employers will provide their most valuable executives generous packages of stock options, profit-sharing bonuses, generous severance packages, along with non-financial compensation like paid sabbaticals.

At the same time, unless your proposal helps the company satisfy its interests (e.g. retaining your services, maintaining internal equity among executives and establishing good precedents for the future) your negotiations will go nowhere. For that reason, you must make sure that your agreement benefits the company and helps it achieve its objectives. Try connecting some of your compensation to the achievement of key strategic objectives. Or, make part of your bonus contingent on receiving good feedback on your ability to personally lead your team. If your compensation richly rewards you for acting in the company's best interest, you have struck a good deal for them and for you.

Make sure you have a fair deal.

Just because you have more leverage does not mean you have to be greedy. Asking for an unreasonable package or item may jeopardise the process and will likely upset the other negotiator, causing her or him to fight much harder on other issues. It will also cause resentment among your co-workers and staff (remember them - they help you look good). If you do your research on what other star performers receive (both in your company and at its competitors) you will be able to stake out terms that are quite beneficial to you and justifiable as appropriate given the value you provide.

Refer to your 'BATNA' - Your Best Alternative to a Negotiated Agreement when you have to, but use it as a warning, not as a threat.

There may come a time in your negotiation when you have to consider walking away. Perhaps the company is not appreciating the value you bring or does not realize that you have a great offer somewhere else. If you want to continue the negotiations, you may find it advantageous to let the company know that you have other opportunities and that they will suffer negative consequences if you leave. That dose of reality may bring them to their senses, and alert them to the fact that you do have leverage here. However, how you raise these opportunities is critical. Use it as a warning, for example, saying "I would prefer to work something out, but I just want to be clear about what I think will happen if I leave ..." or "As you may know, I have an outstanding offer from another leading firm ...". Making threats like "If you do not give me this point, I will work for ..." only tends to inflame the situation. In many ways, negotiating your compensation package is a form of leadership. When you have the power to lead, you will want to act honourably and effectively. You should not act differently when you negotiate and you hold most of the cards.

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Deal or No Deal: Negotiating Salary

Talking about money during the hiring process should feel nothing like being a contestant on a nerve-wracking game show. Job candidates who prepare before the interview and adhere to some specific principles during the negotiation will eliminate much of the guesswork in the equation.

Before the Interview

Know what you want and prioritize what's most important to you in your next role --money, more responsibility, work/life balance, a shorter commute, corporate culture --before you begin interviewing.

Locate an industry association contact that can provide you with relevant compensation information. This will also help you know that jobs you apply for pay well enough for you. Remember, however, that variables such as company size, economic conditions, and availability of qualified candidates in the market need to be factored into your information-gathering process.

When and How to Talk About Money

Keep in mind that companies typically have salary ranges budgeted for specific roles within the organization. Exceptions aren't all that common. The only flexible items in a job offer may come down to things other than salary -- a signing bonus, moving up your review date, additional vacation time -- and could be an alternative to a higher salary.

Be prepared. You should be ready to convince the recruiter that you are worth the dollar amount at the higher end of the salary range. The easiest way to do this is to provide very specific examples of how you can add value to this organization -- just like you've done throughout your entire career.

Be upfront. When asked about your compensation requirements during the initial telephone interview, let the recruiter know where you stand. "I'm looking at opportunities in the $60-70,000 range, but can be flexible for the right opportunity." It's acceptable to ask if you're in the correct range for the position, and important to know so that both parties can make an informed decision about moving forward without wasting time. Remember, the role of the recruiter differs at each organization, so don't underestimate the influence this person has on the decision-making process.

Be respectful. If an offer is presented that is lower than what you hoped, thank the presenter. Ask if there is any flexibility in one or two of the areas that you've identified as being a priority for you. Regardless of the answer, always say you need time to consider the offer. Don't start negotiating new terms immediately.

Be firm. If there is no flexibility in the offer, you can accept it as is, or politely refuse and walk away. If the company is flexible on your terms, agree on all the new details in one conversation so that you can move forward with the next step in the process -- signing and returning the written offer letter.

Above all, be professional. Your actions during the negotiation process will be remembered by everyone involved long after you're hired, and may be helpful when it comes time to ask for a raise. As before, early preparation is the key to success in getting the salary you want and in taking away the feeling that you could be playing "Deal or No Deal."

5 Steps to Negotiating a Raise

Many employers are looking at their budgets and payrolls. So now may be a good time to hit up your boss for a raise. But summoning the courage to ask for more money can be tough -- especially if this will be the first time you've ever done it.

We're not talking about a token cost-of-living increase to keep your buying power up with inflation -- in 2008, inflation is expected to be 2.5%. That's not a raise. Rather, we're talking about a reward for your performance and contribution to the company that goes beyond expectations.

If you want a real raise -- a raise you deserve -- you need to ask for it. It probably won't fall in your lap. But with the right timing and preparation, you'll feel less fear and more confidence in making your request, and you'll have nothing to lose by asking. Just remember: Nothing ventured, nothing gained. Here's how to plan your pitch and get the pay you deserve.

Prepare and Make Your Pitch

1. Make a list of your specific accomplishments. Think you deserve more money? Be prepared to prove it. You need to show your boss the value you add to the team and point out specific instances you went above and beyond the call of duty.

Ideally, you should keep a personal log of significant contributions you made to your job from day one. If you haven't, start now. For example, note how you saved the company money or boosted sales, how you decreased hassle or stress on a project, and how you showed leadership under pressure. Use as many details as possible, such as numbers and facts. You'll want to take five to seven of your most recent or biggest-impact contributions and present them in a bulleted list.

If your job description has changed over the past year, or you've taken on added responsibilities, include those with your list of accomplishments. If you've recently completed training, received credentials or obtained an advanced degree that will benefit your employer, make sure to point that out as well. To drive home your case, you might want to make copies of any e-mails, memos or notes you've received from higher-ups, clients or colleagues that praise your performance, advises Teena Rose, president of Resume to Referral, a resume writing service provider.

Remember: your pay raise is based on your contribution to the company. Do not bring your personal financial situation into the discussion at all -- your boss doesn't care that your rent has gone up, you've got a wedding to pay for or you're expecting a new baby. When handing out raises, he or she only cares about the bottom line of the company. You should only ask for a raise if you feel you truly deserve it -- not because you need it.

2. Find out how your salary compares. You'll need to tell your boss exactly how much you'd like to get paid. When you know what others in your field are paid and what your position is worth, you can use that figure as a starting point for negotiations. Use our salary comparison calculator to find median salary information for jobs in your particular metro area.

3. Consider negotiating benefits and perks. A raise doesn't have to come in dollar signs. So before entering negotiations, think of other areas you are willing to negotiate such as vacation time, flexible work hours, stock options or tuition reimbursement. You might also consider bargaining for the right to telecommute, a more prestigious title or a week at a professional conference in Hawaii, suggests career coach Marty Nemko.

If the benefits and perks are as important or more important to you than money, you can include them in the forefront of your pitch. But if you prefer the dough, keep a couple of possible perks in your back pocket just in case your boss says "no" to a monetary raise (see below). They'll give you something else to bargain with if negotiations stall.

4. Time your pitch right. If your annual performance review isn't any time soon, approach your boss after you've done well on a project or taken on extra responsibilities. This will make your case much easier to present because your boss already will have a positive taste in his or her mouth. You don't want to allow him or her time to forget what an asset you are.

5. Broach the topic professionally. Set up a meeting with your boss and approach the subject like two parties trying to reach a compromise. Come with your list of accomplishments neatly typed for your boss to reference and your salary request printed at the top.

When making your case, don't compare yourself to co-workers -- stick to the field in general. And don't be cocky or greedy. If you've only been at your entry-level job for a year or two, expecting a hefty bonus, substantial raise or prestigious promotion is probably unrealistic unless you really, truly outdid yourself. Going into the negotiations with a sense of entitlement may actually hurt your chances.

Oh, and don't threaten to quit unless you really mean it. If you give your boss an ultimatum -- "Give me a raise or else" -- you just may find that "or else" is your only option.

If Your Boss Says "No"

There are a number of reasons your boss may turn down your request, but if it's because there simply isn't enough money available, shift gears. "Suggest an upgrade in your position," says Nemko. "It's easier for your employer to rationalize a higher salary if your job description is changed to include higher-level work." You could also ask to reopen negotiations in a few months.

Ask your boss candidly what it'll take for you to get a raise by that time -- and then do it. This shows your boss you truly are interested in increasing your value to the company and will give you a specific accomplishment to quantify when you reopen negotiations.

Boss still turning you down flat? Simply say, "I understand your position," and leave the room. "An ambiguous response is often more effective than an aggressive one because it leaves your boss wondering what you'll do next," says Nemko.

Indeed, you have some thinking to do. "If they consistently say no, and you are consistently performing well, it may be time for you to start looking for a company that is willing to pay you what you deserve," says Ross MacPherson, founder of Career Quest, a job coaching firm. See "Moving on Up" to learn more about making the decision to stay or go -- and how to look for a new job while on the job.

Negotiating a salary

Once you’ve established your personal market value, how do you actually make sure you get it? It can be easier holding out for more money when you’re in the process of being offered a job than trying to get a raise when you actually have one, but the negotiating process is essentially the same.

Negotiating a salary for a new job
If you’re being offered a new job, don’t rush things. If specific salary numbers are discussed directly at an interview, ask for time to consider any offer made to you. If your interviewers ask what you think the role is worth, be ready to turn the question round and ask what range they had in mind. If you expect your new employer to beat your existing salary package, be sure to include all your various benefits in your calculation and then add on a bit extra for bargaining space.

If you’re not absolutely crazy about the job anyway, you could consider turning it down to see whether they come back with an improved offer that might tip the balance. Be aware that this can be a risky strategy if you’re desperate for work.

Negotiating a pay rise in your current job
If you are already in a job and trying to secure a pay rise, you need to go in well prepared. Your boss is certain to question why you think you’re worth the extra money, so be ready to argue your case clearly and persuasively using specific examples to prove your worth. Make sure you have a good idea of what other people with your experience and responsibilities are earning, presenting evidence of your research if appropriate.

Whatever your situation, here are some of the key things to consider:

• Positions of power
Who’s holding the cards? Each side has something the other wants – you want their job and salary, they want your skills and experience. The eventual winner of the negotiation will be to one who holds more positions of power so make sure they know just how much impact you can have on their business.

• Bargaining tools
Is there anything extra either side can add or remove from an offer that is of value to the other side? Would you be prepared to forgo a company car allowance if they were able to get a salary closer to what you desire? These tools may not have a specific monetary worth, such as having the option to work from home, but can be of great value to the negotiation process.

Added extras to enhance your overall package that could be extracted from the employer include extra holiday, an increased pension contribution, health care, flexi-time working or even your own office. Think about things you could offer such as essential business contacts or insider knowledge on a competitor.

You could also suggest a guaranteed increase in salary after a certain time period once you have proven your worth. This makes the employer aware you will put in extra effort to achieve goals during that time to get the reward.

• Consequence of non-agreement
What happens if neither side is happy? If you’re negotiating for a new job there may be another candidate who is just as good that they could offer the job to instead at a lower rate. Or you may be the only suitable interviewee and they are desperate for you to join the company. If you’re asking for a pay rise, if they don’t give you what you want would you leave, meaning they have to go through the cost and effort involved with finding a replacement? Whoever stands to gain the most from completing the deal will generally lose out in the negotiation.

Unlike more straightforward transactions, such as buying a car where all the cards are on the table, many of the factors to salary negotiation are hidden or implied. This makes it very difficult to judge who is on top in the negotiation so you may need to be more flexible than you would usually be.

If you approach the negotiation in the right way, your employer or potential employer will be impressed, regardless of whether you eventually win or lose, and see it as another skill which you can bring to their business.

Closing the deal
Make sure you have a record of the agreement down on paper which is signed by both parties. There’s no point winning a negotiation if you allow the other side to go back on their responsibilities at a later date.

Particularly when negotiating a salary for a new job, be sure not to overlook anything that needs to be factored in. Will you need to relocate? Will the company make a contribution to your costs?

If the job is really your dream role, you might find you’re willing to be more flexible. But if they ask you to accept a lower salary than you currently enjoy, always check to see how regularly you can expect a pay review.