When we think about improving our personal finances, the first solution that may come to mind is to shop less, go out less and otherwise deprive ourselves.
Though cost-cutting has its virtues and its place, another surefire way to brighten your financial outlook is to just make more money, which could mean picking up a side job or … negotiating your salary or a raise.
Whatever the case, it’s a fact that women make less than men in almost every occupation. (The only field in which they make more—if you define 0.3% more as “more”—was bookkeeper/accountant/auditing clerk.) In 2011, they made, on average, 82% of what their male colleagues made, though female financial managers made an even worse 65% of what their male coworkers did!
Clearly, these depressing numbers need to be addressed. And one way to do so is to not let yourself become a statistic. Read on to learn more about the importance of negotiation and how you can do it.
Negotiating in a Nutshell
Negotiating is the delicate and, for many, anxiety-producing dance that happens between you and a potential or current employer that determines your income or the fee you’ll receive for a gig.
Sometimes the dance is as short as an employer naming a fee and an employee accepting it. Sometimes the dance is a multi-round process in which the sides go back and forth, naming numbers, nixing offers and finally reaching a compromise that may include other aspects of compensation such as title, vacation, flex time or bonus.
Why It’s Important
Your income is one of the biggest influences on the kind of life you’ll live. What you negotiate for yourself will affect whether or not you’ll be able to afford that trip to the Galapagos, Christmas gifts for your kids or a big unexpected medical bill.
For that reason, negotiating is one of the most important skills you can pick up. If you learn this one thing, it will ripple out to every aspect of your life—and improve it.
Women especially need to pay special attention to negotiating for all reasons. First, they earn less than their male colleagues with similar experience. They also make less than men at every single level of education.
We can decry sexism all we want, but one of the main culprits could be that women do not negotiate as often as men do. A 2012 study of 3,000 business school graduates showed that for their first jobs, half of the male graduates negotiated, while only 31% of the female graduates did. And even if women do negotiate just as often, sexism may rear its ugly head: Within a few years, the women in the same study did start to negotiate more often, but they got worse results.
How to Negotiate
When it comes to negotiating your compensation, your primary goal should be to increase your income/salary, and if that doesn’t happen, to improve your compensation in other ways such as more vacation, flex time or better benefits. Here’s how to do it whether you’re dealing with a new employer or a current one:
Negotiating When Starting a New Job
1. Always, always, always negotiate when starting a new job.
Don’t just accept the first offer they give you. Starting a new job is absolutely the best time to negotiate. Your starting salary with an employer sets the baseline for all future raises.
2. Don’t name a number.
Get the employer to name a number first, and then when they do, even if the number is higher than you expected, explain kindly, but with a poker face, that it was less than you were expecting and ask whether there’s any more they can do for you. Emphasize what you bring to the company that will immediately add value and say that you therefore believe you’re worth $X more. (Read below for tips on what to do if it seems you’ve really reached the maximum offer.)
Negotiating a Raise at Your Current Company
1. Kick ass at your job.
Just showing up and doing your job, isn’t enough—you need to be exceptional.
2. Record your value.
Spend a few months quantifying what your work has brought to the company in terms of revenue, new accounts or whatever other measure is important to your company’s goals. Then, when you make your case, the numbers will make the case for you.
3. Time it right.
Don’t ask for your raise just after you failed to deliver on something important for your boss. Similarly, don’t approach your manager when you know he/she has an overfull plate. Aim for a time when he or she will have the energy to take on the new task of working your raise into the budget.
Negotiating in General
1. Make it about the company’s needs.
When you negotiate, don’t talk about your own needs and wants, but frame your request in terms of how you will or already help the company reach its goals. Get them to believe that they should pay more for your expertise and/or accomplishments.
2. Do your research.
Ask others in your field how much someone with your title and experience should make, and look it up on sites such as Salary.com, GlassDoor.com, PayScale.com and ValuationResources.com.
3. Practice, practice, practice.
With a mirror, a friend, your sister, your goldfish and your house plant.
Negotiating for Women in Particular
Studies show that women may be perceived negatively even just for asking for a raise. While that’s maddening news, you should keep that in mind if you want your request to be successful.
Hannah Riley Bowles, a professor at the Harvard Kennedy School of Government who has extensively studied women and negotiation, recommends that at the same time you make your request, you also communicate your desire to maintain good relationships at work. For instance, if you’re negotiating with someone who is not your direct boss, you can say something like, “My team leader advised me to do this,” or, if you are dealing directly with your boss, also ask, “What do you think?” to communicate that you want to take her opinion into account.
If Your Request Fails
… with a new employer
You could always try offering to take on duties that were not originally part of the job description—something that would be easy for you, but valued by the company.
If you sense that the company would like to sweeten the deal for you but truly doesn’t have room in its budget, try negotiating benefits such as flex time, and ask to revisit the issue in six months. In the meanwhile, record all the ways you’ve helped the company achieve its goals so you’ll be ready for your six-month review. But you should definitely use your own judgment. You don’t want to overreach and come across as unreasonably demanding before you even begin!
… with your current employer
Ask what you could do going forward to merit an increase and whether you can revisit the issue in six months. Similarly to above, you can also suggest that you'll take on expanded responsibility in exchange for a pay increase. Again, you'll need to demonstrate how what you're offering will benefit the company's bottom line.
What You Can Do Now
- Take a look at your personal goals, as well as your department’s and the company’s. Think about what you can do in your role to help your company achieve those goals.
- Log your accomplishments. Do this at least once a week, if not in a quick five minutes at the end of every day. Put numbers to each accomplishment wherever you can, and frame your achievement in terms of the goals mentioned above. This will help you not only get a raise but also help you when you’re polishing up your resume for a new job.
No one will fight for you but you. If you’re waiting for someone to notice how hard you’ve been working, you’re not going to get that raise. But remember that in order to achieve your goal of being well-compensated, you must be able to put yourself in the shoes of your future employer or your current boss or department head so you can show them why it makes sense for them to pay you more.