How to avoid leaving money on the table with salary negotiation

Although any sort of negotiation can be stressful, negotiating compensation for a new job—especially when you have the opportunity to get paid to work on open source software—can be especially intimidating. Because of this, many people, particularly women and minorities, choose not to negotiate at all. Unfortunately, this choice may come with a $500,000 penalty. That’s how much money the average person loses throughout their lifetime by choosing not to negotiate their wages.

Talking about the importance of wage negotiation in America is impossible without talking about the wage gap for women and minorities. A few years ago, the big buzz was about “79 cents to the dollar” that women were paid in comparison to men. Data show that the U.S. pay gap has improved marginally, and women are now on average receiving 80 cents to the male dollar. This number varies by location, and ground is being lost in some places. The disparity is even worse for women of color and other marginalized groups. We don’t even have statistics for the difficulties experienced by transgender and gender-nonconforming people, who often face some of the most severe barriers in the workplace.

Makes you look at your paycheck a little differently, doesn’t it?

Don’t let it get you down, though. Although there is a lot that must be done at the corporate and social policy levels, you can help improve your own situation by choosing to negotiate. Making that choice isn’t always easy when you’re fresh out of school or new to the industry and only have open source contributions to showcase your skills. But, once you decide to negotiate—and learn how to do it well—a lot can change. For example, last year I made the choice to negotiate my salary and increased my monthly take-home pay by more than 50%. It wasn’t easy. There was a risk it could backfire, but with a little courage and elbow grease, the result was certainly worth the effort.

Remember: If you don’t ask, you don’t get.

Like the idea, but not sure where to start? Try negotiating on small things that don’t matter. Start frequenting yard sales and flea markets. Negotiate when you buy something, just to practice your skills. This will help boost your confidence and get you used to the process. Focus on what you can gain, not what you can lose. Recognize that the process is a bit of a game, and you can have fun in the interaction. Remember: If you don’t ask, you don’t get.

I like to think of negotiation as a two-phase process: Phase One happens before the offer, sometimes even before the interview, whereas Phase Two occurs when you sit down with HR, the hiring manager, or the recruiter and hash out the details.

Phase One

Start by looking at your own finances. Figure out your monthly and yearly budget. Decide what you need to earn to scrape by and what you need to be comfortable—whatever comfortable looks like for you. Don’t forget to include the cost of saving for emergencies and retirement. Once you have this information, start looking at pay-scale data for the position you are considering, both nationally and locally. Looking at both is important to get a baseline for what you can expect the company to offer, which may be different locally from the national average.

Now, put those numbers aside for a moment, and write a list of how wonderful you are. No, really—write a list of all your qualifications, professional accomplishments, and open source contributions. You don’t have to show it to anyone, but you should keep it close at hand. Now that you have all this in front of you, take a walk or whatever you do to relax, and decide, in your own mind, how much your knowledge and expertise are worth.

Think about what matters to you besides your direct monetary compensation.

Then think about what matters to you besides your direct monetary compensation. How much time off would you like? What would you like your work hours to be? Do you prefer to work in an office or remotely? What kind of sign-on bonus do you expect? Do you want to go back to school for an advanced degree? Would you like your employer to pay for it and allow flexibility in your schedule so you can attend classes?

There are a ton of fringe benefits to employment, and often we forget that many are negotiable. Once you know what you want, decide where you’re willing to bend; for example, you might be willing to accept a little less money to have extra holiday days or to work remotely. Once you know where you’re flexible, create a salary range. The low end is the rate that you absolutely will not go below, and the high end is what you prefer. Now make a table and in the first column write down regular intervals within that range. In the second column, do a little quick and dirty math to add 10% to each number. If you think they’ll offer between US$ 50,000 and 55,000, your table may look something like this:

Offer Offer +10%
$ 50,000 $ 55,000
$ 51,000 $ 56,100
$ 52,000 $ 57,200
$ 53,000 $ 53,800
$ 54,000 $ 59,400
$ 55,000 $ 60,500

Now that you’ve done your research and prep work, you’re ready to negotiate.

Phase Two

This is the day. The company you’ve been interviewing with for that job you’d love (or desperately need) has extended a job offer. Whether it comes by letter, phone call, email, or while sitting in a cold office across from a steely eyed negotiator, the result is the same: It’s time to step up to the plate and take your swing. Throughout the negotiations, make sure to stay polite, enthusiastic, and firm, use cooperative language, and if you’re offered an insulting number, don’t be afraid to walk away.

Don’t tell the recruiter your previous salary or salary expectations when they ask.

The hardest part comes first, but with practice it will become second nature. Don’t tell the recruiter your previous salary or salary expectations when they ask, and they will. Instead, give them a friendly smile and say something like, “I’m far more interested in designing widgets here at ACME Enterprises than I am in the compensation package.”

This gentle pushback does two things: First, it tells the other person that you know the game, and second, it keeps you from anchoring the negotiations against your previous pay. This should work most of the time. If the recruiter asks a second time, simply say, “I will consider any reasonable offer.” This is again putting the ball back in their court while not losing any ground. In rare cases, the company may push back and ask a third time. Don’t sweat it. Say something like, “You’re in a much better position to know how much I’m worth to your company than I am.” It’s hard to argue with that logic!

Try to negotiate in person or on the phone.

Once you get an offer, even if the company mails or emails it to you, try to negotiate in person or on the phone. I prefer to do it by phone, because I can be somewhere I feel comfortable and have notes in front of me, and I don’t have to police my facial expressions and body language. Even if the offer is more than you dreamed, repeat the number and stop talking. Jack Chapman, a career coach and author, calls this “the Flinch.” Because people are uncomfortable with silence, the person you are negotiating with is likely to try to fill the lull in the conversation, often with a better offer. Look at the table you made in Phase One, and counter their offer with one 10% higher.

Your last step is to ask for a compensation review in six months.

A little haggling between the numbers will probably follow. The person you’re negotiating with may need to speak to someone higher up and come back to you later in the day—this is all part of the process. Once you have a number that you both are happy with, cinch the deal and use that as a baseline to negotiate your fringe benefits. Maybe you’re willing to give up that 10% you negotiated to get extra holiday days, or a company car, or whatever is important to you. Your last step is to ask for a compensation review in six months. This gives you half a year to show them how great you are, then you can ask for more money in your glowing pay review.

Negotiating a job offer can feel a little overwhelming, but if you practice, do your research, and remain calm, enthusiastic, and firm, you’ll end up with both a more rewarding experience and a more satisfying pay stub.

What are your experiences with negotiation? Do you have a tip or trick that never fails? Tell me about it in the comments below.