Barry Nalebuff, the Yale negotiations expert, talks about how most people fundamentally misunderstand negotiating. We have the misconception that it works like in movies: someone proposes a high number, the other person counters with a low number, and they haggle back-and-forth in a hard-charging contest of wills. But that’s not typically how they go in real life.
Most negotiations are not a zero-sum game; there is no fixed-size pie that you are haggling over how to divvy up. Rather, both parties have their own constraints, and they try to find the optimal way to make it work for both of them. Thus, negotiating is often about expanding the size of the pie—working to find creative options to add to the table.
How to negotiate a raise
1. Gather information. Determine how much your time is worth, at least on paper. You can ask coworkers you trust, and use websites like Glassdoor.com, to find out what others in your position (or the position above you, that you are aiming to be promoted to) get paid. Likewise, find out how long it takes before others get promoted, and how often they get raises.
2. Do the work for your manager. In many cases, your manger wants to pay you more, but they are constrained by what their boss says or by a budget they need to stick to. So, you can make your manager’s job easier by writing something they can share with their boss, or by proposing ideas for how to make room in the budget.
3. Show appreciation. Sometimes, you can negotiate by expressing discontent and threatening to quit; but, that can also backfire. Instead, it’s best to share the ways in which you genuinely like your work, and what you like about your boss—and why you’re excited about the future of working together. That will demonstrate that you’re on the same team.
4. Demonstrate that you already have the new role. Ideally, you can show that you are already doing the work of the next level up, so getting a promotion would just formalize it on paper. One framework you can use: show that you were mandated to do X, but that you’ve accomplished X + Y. For example: “My job was to increase sales by 20%, and not only did I do that, but I also helped you recruit two new people to the team.”
Note: Doing so will require you to track your accomplishments over time. Every time you complete a project, or notice an encouraging stat, or receive praise, write it down and save it. That will come in super handy when it’s time for this negotiation.
(I started doing this way too late in my career, and botched a raise negotiation as a result. During a performance review, my boss asked, “What are the main skills you have that have benefited us over the past 3 months?” and my mind totally went blank!)
How to negotiate a starting salary
When you receive a job offer, you’re in a bit of a different position, since you don’t have concrete data to share about job performance (yet). But the same principle applies about wanting to foster a good relationship—since if you take the job, you’ll be working together.
1. Be enthusiastic. There’s no need to play hard-to-get. Reiterate that you are really interested in this specific role at this specific company. The more positive things you can share, the more it shows that you are on the same team—that you want to make this job offer work out, not that you are just trying to squeeze more money out of them.
2. Make it clear you have the right skills. Presumably, they think you possess them, hence the job offer. Yet during the interview process, you probably learned many more details about the role, which you can now use to go deeper: “It seems like it will be really important in the first two months to do X, and thankfully I’ve already done that in my role at Y.”
3. Make it clear that you’re in demand. If you have competing offers (or a counteroffer from your current employer), tell them. Or if you’re in the latter stages of another interview process, even without an offer in hand, you can say that. In the past, I’ve said: “This is my first-choice job by far. If you are able to meet me at $X, I’ll accept right away and withdraw from all my other interviews.”
Note: This is very different than playing hard-to-get. You’ve already established that you like the role and you want to work together. At the same time, there’s reality: you have other opportunities.
My past negotiations
Of course, success in negotiating is never guaranteed. I operate under the mindset of “might as well try”—and as long as you’re polite and positive, there isn’t much to lose.
Sometimes it didn’t work out…
My first job in consulting: The starting salary was standardized for all new “associates.” I tried nevertheless, including showing them two competing, higher offers I had, but they didn’t budge. (I took the job anyway because the role was more exciting and I thought it would set me up better for the rest of my career.)
An EdTech startup: I was first hired as a contractor, getting paid by the hour. When it came time for my two-month evaluation, they extended me a full-time offer. I told them I wanted a couple of days to think about it. (I said I was very likely to say yes, I just wanted some time to reflect because the work had been so intense the last few weeks.) A couple hours later, they called me to say that the offer was rescinded—because I asked for time to think about it, that demonstrated a lack of commitment!
And sometimes it did work out…
Contracting for a nonprofit: I proposed an hourly rate that was way higher than what I thought they could pay, assuming we would then negotiate. But to my surprise, they just said “yes” immediately.
Running a small company: The owner proposed a starting salary that was much higher than I expected. I was really excited about the role and was about to say yes, but decided to first ask for a salary that was 10% higher. He said yes!