You’ve done a good job. You’re making an impact on the bottom line of your employer. You’re contributing positively to the company culture. So you’re thinking: Maybe this is a good time to time to ask for a raise? It most likely is. But as many young professionals have learned, negotiating salary is a tricky business.
After all, you don’t want to ask for the moon. But at the same time, you want to be paid what you’re worth. So what do you need to know to remain practical, yet hopeful, when seeking a raise? To help answer that question, we asked members of the Young Entrepreneur Council this question:
What is crucial to consider when negotiating salary with an employer?
Listen to their advice on negotiating salary carefully. Then set out to earn what you’re worth!
1. Keep Profitability In Mind
As a business owner, I have to know what salary is fair, based on the ROI coming from any one position. Chances are most employers have a set number in mind for any specific position with a few exceptions for superior talent. It’s crucial to remember that a business has to be profitable, so while you feel you may be worth more, a business knows what they can afford based on their size and profitability.
2. Negotiate Creatively
With salary negotiations, people overlook creative options. For example, in my first tech job, the hiring company wouldn’t go above a starting salary, so I negotiated a five-figure increase after six months (based on an early performance review). At the six-month salary meeting, I showed how I over-delivered and negotiated double the increase. It pays to consider all options when negotiating.
3. Use Objective Third-Party Criteria
The goal is for both you and your employer to feel your salary is fair. The best way to negotiate a fair salary? Use objective third-party criteria from salary calculators on Glassdoor and Payscale. That is, instead of just saying I should be paid $120,000 instead of $100,000, provide your employer with sources showing that $120,000 is a fair salary for someone with your skill set in your geographic area.
4. Show What You Can Do
Instead of asking for more money, show them why you deserve to get paid a higher salary. Show employers what you have done and what you can do to continue growing the company. Make yourself a valuable asset to employers by building up your portfolio. This gives them the opportunity to offer you more based on your track record.
5. Ask for an Exact Number
When it comes to negotiating salary, be ready to ask for the exact number that shows you know the market value of your position. This shows the employer you know what you’re talking about and your worth as a professional in your industry. Telling the employer a range will most likely result in you getting the lowest amount in the range. Stick to your exact number, and you will be more successful.
6. Sell Yourself
One of the main reasons individuals settle for less than they are worth? They are hesitant to sell themselves. Your salary is an investment in you as an asset to the company. By confidently illustrating what you can do — what comes along with your “purchase price” that will make your supervisors and the company’s lives and business easier — you can negotiate a higher number than offered.
7. Leverage Multiple Offers
I know it’s easier said than done, but you need to be willing to say no. This is why, when negotiating salary, it’s always best to seek other offers while you’re employed. Your goal: to have multiple offers from desirable employers on the table. You can then leverage the other offers to get a better understanding of your value in the marketplace and maybe even have them compete.
8. Show and Tell
Employees will look for people who can make the great contributions to their organization’s goals. They want someone who has it all — talent, skill and attitude. So prove that you have all three. Leverage your experience and qualifications to show your true value and potential. And remember: Companies have salary benchmarks for certain positions, so you must do your research before the negotiation.
9. Revisit Compensation
Negotiating a high salary right off the bat is a mistake. I am willing to increase compensation for great team members, but don’t want to hire someone that comes off as greedy. I suggest getting a commitment from management to revisit compensation after a three-month period based on agreed-upon benchmarks. After all, at that point you’ve proven your worth so can demand the salary you’ve earned.
10. Follow the ‘If They Were to Let You Go’ Rule
I always have tried to build a case why I should be paid a certain amount when negotiating salary. When you think about the “if” rule and if they let you go, would it be easy to have you replaced in no time? Or will it take time to find someone like you? This goes back to the value you bring to the table and whether you understand that value. It’s also about helping the executives gain awareness of what you bring to their company and why it wouldn’t be the same without you.
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC has also launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.