How to ace a salary negotiation – on both sides

I was looking for ideas about this month’s article and typed ‘negotiation’ into the search bar – the overwhelming result was ‘how to ace your salary negotiation’. Agency leaders reading this are probably screaming, “Don’t tell my workforce that, you’ll kill me.” However, before you run for the hills, think about this:

A pay negotiation shares all the same traits as negotiating a deal with a client

• If you know that someone is disgruntled with their package, then you have to get a plan to deal with it proactively – and it’s always about more than money.

• If you aren’t prepared and they come to you, you’re on the back foot – in negotiation, the prepared mind wins the day.

• It’s often an uncomfortable thing to talk about – which is why you need to have a step-by-step guide.

In this article I’ll talk about:

• People’s typical reasons for demanding a pay rise

• Our step-by-step guide to remove the anxiety and get better outcomes for both parties

What’s going on when someone says they deserve more money?

Before we start, there’s an overriding principle of equal pay for the same job, irrespective of gender, ethnicity or religion. The challenge is, what does the ‘same job’ mean, particularly as the roles get more senior? But that’s not a debate for this article.

The main reasons for people wanting and demanding more money are usually a mixture of emotions, facts and perceptions. Here are just some of the common underlying reasons:

• They’ve done some research on job-boards and talked to recruitment agencies – they see other firms paying higher base salaries with better compensation plans.

• They’ve saved the company money and believe they should see a percentage of the savings.

• They’ve sold more deals than their peers, so they believe they should have a higher base salary.

• They’ve recently passed some exams/qualifications and therefore bring more skills to the table.

• They are looking for a career pathway and promotions.

• They’re doing a job that they perceive as being on a higher grade.

• They’ve found out that their peers in your company are on more money.

• Their friends are earning more for similar types of jobs in other companies.

• They’ve been loyal to the company through difficult times.

• They’ve not had a salary rise for years.

The question now is how do you respond to these ‘demands’? My view is:

• Firstly, consult with your HR team to ensure there are no deeper issues and that what you’re thinking of doing won’t set a precedent for other members of your workforce.

• Then think through and write down what’s motivating the individual and decide if you’re going to engage in a negotiation – do they have a reasonable justification? Sometimes it just needs a conversation to take the emotion out of the situation, and a discussion about their value and future opportunities.

• Then, if you are going to negotiate, create a plan and engage in discussions.

My seven-step guide to a successful salary negotiation (from both perspectives)

Once you’ve decided you are going to negotiate, you need a repeatable step-by-step process to get the best outcome for all parties:

1. What are the goals at the end of this negotiation? Write them down from both sides of the table (as you perceive them). Describe in detail ‘what does great look like by when’? Do not limit your thinking to the singular dimension of salary and bonus.

2. Write down two or three ‘objective criteria’ by which you can both judge if the negotiated agreement is fair and reasonable. This is really important – it’s one of the most common reasons that we fail to reach agreement.

3. Work out your best alternative to the negotiated agreement (BATNA), i.e. what will you both do if you fail to reach agreement.

4. Work out the steps and milestones in the negotiation (it’s never just one meeting). What will need to happen to move from one step in the negotiation process to the next?

5. Write down all the variables that you can negotiate around e.g. working hours, work locations, salary, performance bonuses, share options, career planning or personal brand development. Then, for each variable, decide on your most and least desirable outcomes, i.e. the end-stops for your negotiation. You’ll need to do some external desk-based research to see what the market is offering to make your proposals credible. When you’re negotiating, think about all these variables as a live ‘mixing desk’ – as one dial is turned up, another is dialed down.

6. Think through their objections and issues – and yours – in advance and how you’ll resolve them.

7. Then, and only then, sit at the negotiating table and engage with confidence, making sure you separate personalities from the problems and opportunities.

If you’re looking for a high-quality set of tried-and-tested templates, with a step-by-step guide for this, and any other negotiation, we’ve just published our ‘Higgle workbook’. You can purchase it here.

Conclusions

A pay negotiation shares all the same traits as negotiating a deal with a client, but it can often be more emotional and anxiety-fueled.

Adopt a negotiation process and templates to help rationalize the situation, calm any anxieties and ensure you are well prepared for the discussion.

If you have any comments or questions about anything in this article, I’d love to hear from you. Drop me an email.

Mike Lander is the chief executive officer and founder of Piscari, which empowers agency leaders with better negotiation skills and insights into how procurement professionals work.