Salary Negotiation: Steps, Tips and Examples

What is Salary Negotiation?

Salary Negotiation is defined as the act of demanding a deserving salary from the organisation in exchange for the services provided. Salary means the compensation, package, or benefits that a job candidate will be getting for his contribution to a company, and negotiation means discussing to reach an agreement on what is the suitable amount of salary to be given to an employee by an employer for their work.

• It includes things, such as overcoming the fear factor, understanding how much your skills are worth, and reaching an agreement on a package to which both parties agree through a professional and respectable conversation.
• It is a professional skill, that is required in different stages of a career to get fairly compensated for skills, experience, and contributions to the organisation.
• Salary negotiation is not only about negotiating the base monthly salary, which is the fixed amount paid to an employee, but there are many components in the package that an employee can negotiate according to his need.

People often join jobs without negotiating and later find themselves in a situation where they work so hard but receive less compensation. Most people hesitate to negotiate salary because they believe they are risking the offer and simply do not know how to initiate the conversation. Salary negotiation will ensure that your salary aligns with the value you provide to an organisation.

Components of Salary Package

1. Base Salary: It is the fixed amount that is paid to an employee every month.

2. Bonuses and Incentives: It is the amount you will get if you do overtime work or complete any accomplishment.

3. Provident Fund (PF): It is also known as Retirement Fund. It is also part of the total package, which is paid collectively when the employee retires from any organisation.

4. Other Benefits: There are several other benefits, like if you have to travel far away due to a job, then you might be paid rent, which is some part of your package, medical insurance, etc.

Steps to Negotiate Salary

1. Do Proper Research: Before the process of negotiation, the employee should do the proper research to understand the real worth of their skills and experience in the industry. To do that, the employee can check the salary range from sites such as Glassdoor, Payscale or Salary.com. Employees can compare these salaries with the position for which they have applied. They can also ask the people of their network, such as friends and relatives if they are working in the same field. After doing this, they will get a rough estimate of the target salary. It also prepares them to justify their request with proper facts.

2. Know Your Value: Besides the market value, employees should also know their personal value, which is the unique contribution and impact they can make to the employer. They should be able to articulate their achievements, skills, and strengths, and how they align with the employer’s needs and goals. They should also be able to highlight their potential, and how they can grow and learn in the role. Knowing their own value will help people build their confidence and credibility, demonstrate enthusiasm and fit for the position.

3. Ask for More than You Want: When you are making your salary request, it is better to demand a little more than your desired amount, but it should be in a reasonable range according to your research. Because the employer is most likely to negotiate the initial offer you can compromise and agree to a mutually agreeable amount. Asking for more than you want also shows your self-worth and shows you are not going to settle for less and also, have good belief and confidence in your skills.

4. Be Flexible and Creative: Salary negotiation is not all about your base salary, but it is about your whole compensation package, which may include benefits, bonuses, stocks, and rental expenses. You should explore different combinations which suit you the best. For example, if the salary offered by the employer does not meet your requirement you can ask for an increase in bonuses or more stock options. Being flexible and creative will help you find a win-win solution and also show that you are not rigid and unreasonable

5. Be Respectful And Professional: As we know, this process of salary negotiation is very sensitive. It can also cause conflict or a bad impression for the employer. So, you have to be very respectful and professional in communication. You should avoid unnecessary talks such as family or personal issues. And focus more on the value you can bring to the company and market standards during communication. Being respectful also builds trust with the employer, and your chances of getting a positive response will also increase.

Examples of How To Negotiate Salary Offer

Case 1: You have received a job offer from a company where you wanted to work, but the salary is lower as compared to market value and expectations. How could you negotiate for a higher salary without risking the offer?

Response: Thank you for the job offer. I am very excited to get the opportunity to work with you and your team. I appreciate the salary offer, but I was hoping for a higher range based on my research and value. According to my research, the average salary for xyz position is {SALARY YOU FOUND BY RESEARCH}. I believe I can bring a lot of value to this organisation through my skills and knowledge. I also have x years of experience in the company, and I helped increase its revenue by 10% and performed several successful internships. So, can you consider {SALARY YOU WANT} as a salary, which is closer to market value and aligns with my qualifications and skills?

Case 2: If you got a job offer in which a fair salary is offered according to market value, but you want to negotiate other perks in the compensation package such as more bonuses, benefits, etc.

Response: I am very thankful for this job offer. I am excited to be a part of this organisation and contribute through my skills and expertise. The salary also seems fair according to my expectations. But, I am interested in knowing information about other perks such as bonuses and health insurance. I think for a better performance-based bonus, medical insurance and a flexible work time. I think these elements are important for my motivation, work-life balance and job satisfaction. I will feel more appreciated and motivated if the package is a little more generous.

Case 3: This time, the overall package is good, i.e., the salary offered in the job offer is more than your expectation and you are also getting other compensation benefits. So how could you properly accept the offer?

Response: Thanks for the job offer. I am really excited to be a part of this organisation and contribute the best of my skills. The salary is above average, which is impressive. I am happy that my skills and experience are getting recognition. I accept the offer without hesitation. I am looking to join the company and contribute to the company’s success.

Conclusion

Salary Negotiation is an important aspect of joining the job. It will save you from unfair pay and you will be paid according to your value. I have tried to summarise the steps for negotiating simply, but it is a skill which requires a lot of practical learning to be mastered. In short, you can negotiate with the help of good communication skills by emphasizing your achievements and through a collaborative approach.