Hate to haggle over money? Worried that you might lose an attractive job offer if you focus too much on salary?
Well, consider this: Research shows you could lose over $1 million over your career if you choose not to negotiate when receiving job offers. Don’t make this mistake. Learn how to negotiate effectively to earn more money and gain the respect of the hiring manager. If you don’t, you’ll make lifestyle sacrifices, be paid less than what you’re worth, and leave a lot of money on the table.
Look at this example of a past job offer I negotiated.
Base salary = $150,000
Equity = .4%
Performance bonus = $0
Final Negotiated Compensation
Base salary = $200,000
Equity = 1.25%
Performance bonus = 15%
Don’t limit negotiations to salary
Discuss all the details when defining your relationship with the hiring manager and employer. Define expectations and agree on everything up front. You can negotiate salary, benefits, stock options, work schedule, start date, geographic location, vacation days, professional development, success metrics, bonus, expense reimbursements (e.g., cell, commute, relocation), and your performance review schedule.
A productive negotiation is more like a dance than a tug of war. Good negotiation involves both parties collaborating to solve a puzzle, so building rapport and trust are essential. You and the hiring manager should be talking and thinking together to align expectations and define a mutually beneficial exchange of value.
Find ways to be helpful. According to a comprehensive analysis of 28 studies on negotiation, the most successful negotiators cared as much about the other party’s success as their own.
The negotiation sets the stage for how you and your manager will work together and how you will reach an agreement when you have different points of view. No one wants to be taken advantage of or start the relationship on the wrong foot.
Push through fear to prioritize your future
Most people want to avoid conflict. And many of us, myself included, suffer from imposter syndrome, which are persistent feelings of inadequacy and self-doubt despite evident success.
These uncomfortable feelings grow from the root of fear. Never negotiate from fear because fear distorts reality. You may fear that a negotiation will jeopardize the job opportunity, but the opposite is true. You have everything to gain and nothing to lose.
If you express genuine excitement and gratitude for their offer and present your preferences with a positive, respectful tone, negotiating will get you more money and more respect from a hiring manager. Most managers don’t want to hire a pushover who lacks confidence or does not know their value. Remember, they offered you the job because they believe you are the best fit for the role.
Of course, there are always outliers, but do you want to work for someone who would pull an offer because you tried to engage in a fair and reasonable discussion to ensure a mutual exchange of value? If a company does retract an offer because you asked for more, be grateful. You just dodged a bullet. Working for that employer would not likely provide the growth opportunities to guide you toward your career goals.
Let’s examine the three phases of effective negotiation:
- Prepare to win
- Give and take
- Agree or walk
Prepare to win
Activate a winning mind-set. Are your beliefs holding you back? Removing limiting beliefs is the most important and most challenging part of asking for more. You must suspend your fears, insecurities, and self-doubt. I know, easier said than done. I struggle with this all the time.
But this is one of those times in your life where the stakes are too high for you to lose the mental battle. Push through your fear. Prioritize your future self and the people you love more than your fear of asking for more. Being well prepared will build your confidence and support a winning mind-set.
Think like a detective. Information is power. Most people don’t invest nearly enough time preparing. The outcome of the negotiation rests on your level of preparation, so do your homework. Conduct research on the company, hiring manager, and salary base rates for your desired position and industry. Conduct a detailed search on the hiring manager and read everything available about their background, work history, interests, and affiliations. I’ve invested many hours looking for clues and prepping by reading a hiring manager’s 1,500 tweets and everything else I could find online. This knowledge will help you craft questions to extract useful information and influence the manager.
I usually invest 8-12 hours preparing for an interview or negotiation. One time, I spent two days driving from San Francisco to Los Angeles and back to accompany the founders of a start-up to a customer meeting in order to better understand the job opportunity.
Understand your leverage. Reflect on how much value you bring to the employer. How unique are your skills and experience? Do you bring key relationships or opportunities? Are you easily replaceable? How urgently do they need to fill the position? Who has more leverage? How badly do they need you versus how badly do you need this job? This consideration highlights why you want multiple offers to give yourself leverage and create scarcity.
“Negotiations are won by whoever cares less.”
—Naval Ravikant, cofounder AngelList & successful tech investor
Set optimistic goals. People who expect more and ask for more get more.Set optimistic but credible goals based on your research. Confidence and self-esteem play a significant factor in negotiation. Think through best- and worst-case outcomes. But write down only your desired salary, work schedule, and other details of the best-case scenario.
Make a list of negotiables and rank them by priority. At the appropriate time, share your prioritized list with the hiring manager to build trust and trigger reciprocity. Rank-ordering helps them understand your interests without giving away too much information. Ask the hiring manager to share their priorities and look for opportunities for mutually beneficial tradeoffs.
Here is an example of how you might rank your priorities:
- Stock options
- Work schedule
- Geographic location
- Vacation days
- Professional development
- Success metrics
- Expense reimbursements (e.g., cell, commute, relocation)
- Performance review schedule
- Start date
Prepare arguments and questions. Write out your three strongest arguments about why you are an excellent fit for the job. Anticipate how the hiring manager will respond and identify potential counterarguments. Develop a list of your weaknesses they might identify and turn vulnerability into strength. Proactively talking about your weaknesses can encourage the hiring manager to minimize them and argue the opposite.
Write down “what” and “how” questions to help you identify underlying motivations. For example:
- What’s the biggest challenge you face?
- What’s the most important thing the person in this role will do to help you?
- How will this hiring decision impact the rest of your team?
- How on board are people on your team with filling this role?
- What happens in the next two to three months if you don’t hire someone?
Come prepared to communicate why you want the job and how it fits into your long-term career goals. Writing down your questions, arguments, and counterarguments will ensure you are well prepared.
Give and take
Share information to get information. Be vulnerable and make the first move by sharing your priorities, preferences, and fears. Never lie. Make your authenticity work to your advantage. In his best-selling book Give and Take, organizational psychologist and leading expert Adam Grant shows how the best way to earn trust is to show trust. His research offers a wealth of evidence to show that “Most people are matchers: they follow the norm of reciprocity, responding in kind to how you treat them.”
Put yourself in their shoes. Show that you understand the hiring manager’s perspective, mind-set, and worldview. All of us have a deep desire to feel understood. Your ability to understand their goals, constraints, incentives, and emotions gives you an advantage. People are driven by emotions more than logic. Build rapport and connection to establish trust and uncover useful information. If you prepare correctly, you will understand your counterpart and be ready to ask the right questions.
Show you are listening. Listen actively to words and tone of voice and watch their body language closely. Use your emotional intelligence to read the emotion behind their words. But it’s not enough to see and understand their perspective. You need to acknowledge their situation and show you’re listening. You don’t need to agree with their viewpoint, but you need to understand it. Once they feel you are listening, they’re more likely to be honest and tell you something that may prove useful in the negotiation.
Pay close attention to nonverbal communication. Body language and tone of voice have a significant impact on what is communicated. Notice gestures, facial expressions, tone of voice, eye contact (or lack thereof), posture, and other ways people communicate without using language. If you are speaking to more than one person, notice the dynamic between colleagues.
Maximize your ability to pick up clues and prioritize communication better to understand the emotion and meaning behind words. Get time in person whenever possible or use a video call as a backup.
Preferred hierarchy of communication methods:
- In-person meeting (first choice)
- Video call
- Phone call
- Text (last resort)
Listen more, speak less. The listener is in control because a person reveals information when talking. And the listener can guide the conversation by asking the right questions. Avoid asking yes-or-no questions. Instead, ask questions that start with “how” or “what.” Avoid “why” questions because they can come across as an accusation and put the other party on the defensive.
Use silence as a tool. Pause and let the other party fill the silence. Make the hiring manager feel they are in control. Probe and gather information to uncover the unknowns that you don’t expect.
Employ mirroring to build trust. Expert negotiators use a technique called mirroring to build trust and keep their counterparts talking. Mirroring is a type of imitation. You can mirror words, body language, or tone of voice to signal respect and concern.
Repeat the last three words of what your counterpart said in the form of a question, and then be quiet for a few seconds. For example, if the hiring manager says, “this role is critical to ensuring customer satisfaction,” you can use mirroring by responding with…” ensuring customer satisfaction?” The person will instinctually elaborate on what they said to keep the conversation going. Nod your head in agreement and mirror their body language. Mirroring works on a subconscious level because people trust people who are similar to themselves. If you pay attention, you will notice you instinctively do this all the time when interacting with people.
Use labeling to reveal unspoken feelings. By labeling unspoken feelings, you invite the other person to describe what they are feeling but may not be saying aloud. Expert negotiators use labeling to neutralize negative emotions and reinforce positive feelings. If you detect tension, concern, or an adverse reaction during your conversation, use labeling as a tool to acknowledge emotion and help diffuse it.
Use neutral words in the form of a phrase or question to label the emotion followed by a few seconds of silence. This will help disrupt intensity and bring the emotion out into the open. By naming it, you show you understand how they feel. A label is a neutral statement of understanding.
Use phrases like these:
It sounds like you are concerned about …
It seems like you have a different perspective about …
It looks like you disagree on …
Using labels will encourage your counterpart to respond and either agree or disagree with what you say. Once an issue is brought out into the open, you can discuss it and find a solution. Labels help you dig beneath the surface and uncover your counterpart’s behavior and perspective’s emotional drivers.
Create fear-of-missing-out (FOMO.) Convince the hiring manager you are unique and will be hard to replace or find elsewhere. In any negotiation, you need leverage to apply pressure to the other party so you can achieve your goals. Although leverage is never the only thing that matters, it is a powerful tool.
Make it clear you are serious about joining their company and excited by the opportunity. But make sure the hiring manager is aware you have other job offers competing for your attention. Be prepared to honestly answer questions such as “Do you have any other offers? If we make you an offer tomorrow, will you say yes? Are we your top choice?”
Share and gather useful information to inform the agreement. Weave the above techniques naturally into the conversation. Remain flexible and adaptable. And don’t rush the process. Enlist the hiring manager to help solve problems. Be genuine and use persuasion principles outlined in my previous email “How to get multiple job offers” to influence.
Agree or walk
Make the first move. Communicate your salary expectations as a range before you receive a formal offer. This sets a strong anchoring effect that influences the employer’s proposal and the rest of the negotiation. You may be surprised by research that says negotiators who put forward their offer first usually come out ahead. Most people think you gain an advantage by letting the employer make their offer first, but the conventional wisdom you read on the major job sites is wrong and not evidence-based. Overwhelming evidence shows there is usually much more to gain by making the first move.
In salary negotiations, the initial anchor is the best predictor of the final salary. Waiting for an offer only makes sense if you are very uncertain about value. However, base rates for compensation adjusted for years of experience, geography, and company size are well-known. The credibility of your offered salary range depends on having a legitimate rationale to back it up. Anchors are so powerful that they even affect the judgment of experts who think they are immune to such influence. For example, real estate professionals who believe they are experts on the local market are still heavily influenced by a home’s list price.
Making the first offer also sets the tone and establishes you as confident, well-prepared, and knowledgeable about your value. High anchors direct the hiring manager’s attention toward your strengths; low anchors direct attention to your weaknesses. Making the first move and setting a high anchor also gives you flexibility and room to make strategic concessions, which will make the hiring manager more satisfied with the outcome.
Recruiters will often ask about your salary expectations on your first call. Always offer a salary range (e.g., $103K to $110K) and make your best-case scenario the bottom of the range. Also, use a non-round number for the bottom of your salary range. This implies you have made specific assumptions and method to calculate the number. Make sure that you can explain your beliefs for your salary range and that your proposal is designed around the base rates for the role, geographic location, and company size. I recommend setting the low end of your salary range not more than 10-15% above the top of the industry-established salary range you uncover in your research.
What do you do if an employer beats you to the punch and gives you an offer or shares the salary range before you share your salary expectation? First, recognize that you are being anchored. Second, make sure you express your enthusiasm and gratitude for their offer. But avoid getting sucked into a compromise and don’t let it influence your response. If their offer is far off the mark, ask them to explain their reasoning or tell them their initial offer is so far off that you don’t feel it’s a fair or productive place to begin.
Next, respond with your predetermined salary range based on your research and goals. Don’t just state your desired salary. Justify your expectations by explaining your strongest arguments regarding how you will provide value. And express your needs based on your situation. For example, be honest about a large student loan or family members you are financially responsible for supporting. Then pause, be silent, and wait for them to respond.
Negotiate the whole deal at once. Resist the temptation to tackle one issue at a time. For example, don’t agree to a salary first, then move on to other topics. Negotiate multiple issues simultaneously, not serially. Consider the value of the entire deal at once. Don’t fixate on salary or any single point. If you get stuck on one issue, deflect and redirect the conversation to consider other negotiables. This strategy will help you and the hiring manager grapple with tradeoffs and problem-solve together. Use the word “fair” to put them on the defensive and gain concessions. Ask them to explain why they think their offer is “fair.” Focus on the most critical elements of the deal. But don’t over-optimize and haggle on every minor detail. Also, avoid giving ultimatums because they can come off the wrong way and box you into a corner.
Don’t split the difference. Meeting in the middle often leads to a bad deal for both parties. Solve the puzzle with the hiring manager to address each party’s priorities and constraints but stand firm on your most important goals. Expert negotiator Chris Voss believes strongly in this principle. He wrote a book, Never Split the Difference, about his life’s work as a veteran FBI negotiator and founder of the Black Swan Group, a consulting firm that trains Fortune 500 companies to handle complex negotiations.
Push boundaries to understand the territory. Getting the hiring manager to say “no” to a request is helpful because it makes them feel in control and secure and helps you recognize where the boundaries are. Don’t be afraid to find the edge. If necessary, force them into a “no” by mislabeling an emotion so they can correct you. For example, you may say, “It seems you can’t make compromises on this issue.”
Conflict brings out the truth. At some point in the discussion, you are likely to hit a core disagreement. When you hit a wall, seek advice to help problem-solve. Tell the hiring manager you value their opinion and ask an open-ended question related to what they would do or recommend if they were in your position.
Understand the power of the person you are negotiating with. Are they the decision-maker or do they need to get approval? How much influence do they have? Do you trust them, and do they have a vested interest in hiring you? You’re generally not negotiating with one person. Usually, a team is involved, even if the rest of the people are behind the scenes. The amount of flexibility a hiring manager has to negotiate often depends on the company’s size and how their budgets are structured. Large companies tend to restrict the flexibility of the hiring manager, while start-ups and small businesses are usually more flexible and will make accommodations if they believe you are the best person for the role.
Speak in a calm and positive tone. Strive to come across as easy-going, good-natured, and solutions-oriented. Avoid aggressive confrontation. If you feel attacked, pause and avoid responding from anger. Instead, ask a question so they can elaborate. Don’t be defensive or reactive. Reserve your direct, assertive voice for when you need to push back. It will have more impact if you reserve it for only the most critical points of the negotiation. And don’t forget to smile.
Imagine you’re negotiating on behalf of someone you care about. If you have trouble advocating for yourself, imagine you’re in charge of getting a job for your spouse, sibling, or friend. How hard would you negotiate in that situation? You might assume that you’re the best advocate for yourself, but research published in the Journal of Personality and Social Psychology shows that many people—especially women—tend to do better when negotiating for someone else.
Summarize your understanding. Summarize what you hear and ask the hiring manager if your understanding is accurate. They can correct you if you have not described the situation accurately. By getting them to say, “That’s right,” they feel understood and affirmed, and you are more likely to make progress. And if you are unsure whether they are fully transparent and honest, you can use summaries to get them to reaffirm their agreement.
Agree or walk away. Hopefully, you can agree on essential terms after working together to define a mutual exchange of value. However, if you are stuck and not making progress, you must always be willing to walk away. If not, you are very unlikely to get what you want.
People sense desperation, and many hiring managers have incentives to get the most for the least, so they will exploit any weakness. Create a deadline to push the process forward to help get unstuck. Often a deadline will rush the other side to be more impulsive. If appropriate, you can also share the terms of a competing offer and say, “I’d rather come to work here. Is there anything you can do to make this an easier decision for me?”
Make sure to get details of the final agreed-upon offer in writing.
After you have received one or more job offers, you will enter the final step of making a decision. To figure out whether a decision is good or bad, you need to understand what could be gained or lost and the likelihood of each job offer leading you closer to your goals. Instead of relying on tried but not-so-true tactics like pro and con lists, you need to pull out your full arsenal of mental models and decision-making tools.
To learn more, sign-up for the “High-Performance Playbook” email series (it’s free), where I share the best evidence-based strategies, tactics, and frameworks to advance your career and make more money.