“Salary negotiation is simply one interaction among many. After it’s done you have to live and work with the people on the other side of the equation for the foreseeable future. If one person walks away feeling like they’ve lost or been forced to compromise it sets up a disempowering context for the rest of the relationship. When it comes to employment, the paradigm of someone winning and the other person losing doesn’t serve either party in the long run.”
~ Michael B. Junge ~
Client Mark Asks: I’ve been asked to take on more responsibility, but no mention has been made of any pay increase. I think this is a good time to ask for a raise, but I feel mentally unprepared to do so. What can I do to gain the courage I need to bring this up while the time is right?
Coach Joel Answers: Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” This quote is true for many aspects of our lives, but especially true when it comes to salary negotiation. Whether you’re negotiating your salary for a new position or asking for a raise at your current employer, if you want to succeed, you must prepare. To mentally prepare yourself, focus on these three facets:
Having confidence in yourself is critical to a successful salary negotiation. Although the outcome of your salary negotiation may significantly impact your livelihood, it’s important to not take the process too seriously. Instead of stressing over the process, relax and enjoy the negotiation and believe in yourself. Believe that with the right strategy you will win the negotiation.
Don’t be so invested in the outcome that you’re unwilling to take risks. If you’re unwilling to take risks, you’ll likely not be willing to ask for what you really want. Be fearless and courageous when negotiating. Of course, courage must come from having confidence in yourself and your value to the company.
Believing in yourself will help you manage your stress during the salary negotiation process. It’s natural to feel awkward, uncomfortable and stressed going into a negotiation. However, instead of trying to avoid the uncomfortable confrontation, that comes with the process, know in your heart that you are worth every penny you are asking for and the more confident in your worth, the more money you can make.
To help build your confidence, understand the fact that your salary is negotiable. The reality is 90% of all human resource professionals expect you to negotiate your offer. With this in mind, they often purposely present a lower offer than they are willing to pay, expecting you to negotiate. Use this knowledge to give yourself an even greater boost of confidence in the negotiation process.
The most common reason why new hires don’t negotiate a salary or employees don’t ask for a raise is they don’t think they deserve more money. As a result, when you undervalue yourself, you underearn – shortchanging yourself and your family! Be confident and believe in yourself! Combine this confidence in your worth with patience, and you’re two-thirds of the way to success.
Patience is a virtue, especially during the salary negotiation process. Most salary concessions happen at (and sometimes after) the deadline. Although you may be tempted to give in early and accept an offer, be patient. Don’t try to rush the process, if you want to increase the chances of getting what you want.
When you consider an offer for less than you want, it’s critical that you fully understand how much you’re losing, by settling for less. When accepting a new position, remember future raises are often a percentage of your salary. By starting with a lower initial salary, you’ll continue to earn less than you would with each of these raises. For years, you’ll feel the repercussions of initially accepting a lower salary. A little patience now can pay off exponentially in the future!
The third component of mentally preparing yourself for negotiating your salary is the acquisition of key pieces of knowledge. This begins with knowledge about the employer with which you’re negotiating. Be sensitive to their economic state. The challenging economy, over recent years, has been difficult for many businesses. For this reason, a hiring manager or your boss may be under pressure to work with increasingly tight budgets. Do your research and be mentally prepared to make concessions to the salary figure in exchange for other benefits or perks that may be easier for the hiring manager or boss to say yes to.
You must also do your research about the salary range for the position you’re interested in, factoring in your specific experience and education as well as your geographic area and cost of living. If you’re asking for a raise, track the results of your hard work, to quantify the value you’ve brought to the company. This knowledge not only ensures you’re requested salary is appropriate and realistic, but also helps solidify your confidence in your value.
Lastly, learn about the company’s needs and how you can fulfill those needs. Reiterate to the hiring manager why you are the best fit for the position and, therefore, worth the salary you’re asking for. When you’re asking for a raise, again demonstrate to your boss why you’re a valuable member of the team. Use quantifiable examples, when possible, to show how you’re activities are best fulfilling the mission of the company, taking advantage of opportunities, and best overcoming the challenges they face. Again, this knowledge not only helps you convince the hiring manager or your boss of your value, but it should also give you an increased level of confidence, which will help ensure your salary negotiation is a success.
Still not ready to approach your boss and ask for a raise? Joel offers coaching to help you overcome the fear that stands in the way and learn effective strategies that will increase your chances of a positive outcome. Click here to learn more about Joel’s salary negotiation coaching.
Talkback: When was the last time you asked for a raise? How did you prepare yourself mentally before starting salary negotiations?
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“Asking what I considered an impossible salary when I didn’t want to work for someone has boosted my pay again and again.”
~ Ethel Waters ~
Will has been working the same job for three years without any raise in pay. Due to the downturn in the economy, his company claims that it just can’t afford to pay more to its employees.
I’ve got some good news for Will and for everyone else who has been working longer hours and hasn’t been rewarded with a bonus or an increase in salary.
That might be changing, according to Mercer, a worldwide consulting firm.
In their annual “employee attraction and retention survey,” Mercer found that more companies plan to focus on money – that’s right, cold, hard cash – as a way to retain and engage the right talent.
Because budgets have been tight during the recession, many employers relied on so-called “non-cash incentives.” These were such things as communicating the value of total rewards to employees, work-life programs, formalized career paths and special project opportunities.
But as the economy recovers, 25 percent of respondents say they’ll rely less on these types of rewards.
Instead, they will focus on base salary increases, short- and long-term variable pay and training and career development to retain and motivate their best people.
So as your employer’s purse strings begin to loosen, now is the time to proactively demonstrate your value to your organization. If you are like Will, still waiting for a long-overdue raise, I recommend doing the following.
1. Make yourself indispensible.
Volunteer to high profile projects that have the potential to affect your company’s bottom line.
2. Align your priorities with key company goals.
Focus on things that matter – to your boss, to his or her supervisor, to company executives and to your shareowners.
3. Eliminate or reduce your time spent “non-essential” work.
Write down your top 10 priorities. Develop strategies to free up more time to spend on the top three and less on the bottom two-thirds.
4. Quantify and communicate your accomplishments.
At the end of each week, write down your key accomplishments and try to assign a dollar amount to your specific contributions.
5. Capitalize on training or personal development opportunities.
Continue to develop your skills and capabilities. That way, when your company begins to expand, you’ll be in a more competitive position (and your resume will be stronger, too, if you decide to venture outside your organization).
6. Don’t shy away from self-promotion.
Think of ways to promote your personal “brand” at the office. There’s a difference between grandstanding and presenting the facts in an objective way.
Someone is going to benefit from this shift in employee compensation and it might as well be you!
Even if salary increases aren’t currently being offered by your employer, valued employees can find ways to negotiate for higher pay. Read Joel’s book, Get Paid What You’re Worth, to find out how you can negotiate a salary increase or a higher starting salary in a new position.
Talkback: Last time you asked for a raise, were you successful? How long will you wait before trying again?
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“Start by doing what is necessary, then what is possible, and suddenly you are doing the impossible.”
~St. Francis of Assisi~
Client Sarah Asks: In this economy, money has to work very hard for us. We want to retain our best employees. How should we allocate our finances to maximize our retention?
Coach Joel Answers: That’s a great question, Sarah. Your company has a number of options—different ways to spend your money. To best motivate your workers to stay with you, you first need to understand them.
Not all workers respond the same way. Some of your options have tax consequences that might matter to your top talent. Others may perceive one or another of these choices as more prestigious or of greater value to them.
So your first step is to know your key players. Assess them. Find out what is most enticing and likely to keep them working for you.
Then choose from these four methods those that will work best for you, your employees, and your company.
1. Competitive salary. This is the first rabbit most businesses pull out of the bag. And for a very good reason. It is effective.A salary that pays market value means there’s no financial incentive for your worker to leave. They can’t expect a better offer elsewhere. And when you pay a little above average, workers may feel they are being paid extra for any small inconveniences that come with the job.
2. Bonuses. Sometimes companies need to see how their finances play out before they can reward their employees. They may give workers an average salary with the promise of a bonus if the company does well.
This has the added advantage of offering motivation. Each employee sees their salary more connected to the success of the company. They may make that extra effort to help the company succeed.
The benefit to you, Sarah, is that the company keeps its bottom line lower in difficult years, but can reward employees and keep retention up by promising bonuses in good years.
3. Fringe Benefits. Top talent may be motivated to stay with the company for certain perks. The choice corner office. Company car. Use of the company jet. Pizza Fridays. A nice company gym or offering child care.
Some fringe benefits offer prestige and status that is more enticing than money alone. Some may fill a compelling need of your workers.
Here is where you really need to know your employees. What kinds of fringe benefits connect with them? Is this something that makes financial sense to the company? Perhaps birthday recognitions are low cost, but highly satisfying to your workers. That leaves money on the table for other retention methods.
4. Stock options or company ownership. When employees are vested with company stock options or a chance to buy into the business you strengthen their commitment to their job. They are much less likely to leave.
You need to decide if this is a financially viable option for employee retention. Does it make sense in your business model?
Sarah, you are wise to consider the best uses of your company’s finances to increase worker retention. With the cost of hiring and retraining, it makes more sense to invest in keeping workers satisfied and happy. You gain the benefit of experienced workers. And happy employees are more productive.
To understand your worker’s motivations and develop a retention plan designed for success, contact Joel.
Talkback: What has your company done to retain employees? What has been most successful?
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“I set as the goal the maximum capacity that people have. I settle for no less. I make myself a relentless architect of the possibilities of human beings.”
~ Benjamin Zander ~
Randy knows his company’s HR operation is in need of a makeover. The combination of the down economy, government regulations, new technologies and recruiting challenges has overwhelmed people with paper-pushing and record-keeping. Randy wants to shift the company’s focus from a “personnel department” where staff is giving attention to individual career salary for human capital management.
As company president, Randy assumes ultimate responsibility for all departmental outcomes. But he knows that his people will support what they help create, so he wants his managers to be involved in designing a new HR direction. After a two-hour brainstorming session, they come up with three action items:
- Adopt an asset focus
- Reward results
- Expect continuous improvement
1. Adopt an asset focus. A company that operates with a human capital management philosophy believes that its people are just as much an asset as its buildings, its inventory or its cash in the bank. The career salary for people needs to be equal to the value being provided.
“We can quantify peoples’ value,” Randy tells his staff. “And we can increase that value by making the right kind of investment in them. But how do we do that?”
Truly treating employees like assets involves a new and different mindset for many corporations. Often, especially in a down economy, people are viewed as liabilities. Both philosophically and in actual accounting, they are treated as costs, an overhead item that can be reduced or eliminated for short term gain.
Instead of the traditional belt-tightening when the going gets tough, now is the time to increase investment in our people,Randy decides. That means recruiting top talent with the same analysis and intensity the company would put into buying a new piece of equipment. It also means setting up a comprehensive people development program that includes management training, career coaching, and a comprehensive succession plan that provides upward mobility and salary increases for those who want a real future with the company. His focus is on human capital management in which career satisfaction and salary are priorities for employees.
2. Reward results. Overall compensation, including salary, benefits, and intangibles, is important, but it must be based on results. And the corporate culture should be set up so that the best rewards go to those who achieve the most impressive results. Along the way, of course, the company should also reward exceptional effort with praise and encouragement, even in cases where the goal or expected outcome didn’t happen. Each department manager will be responsible for evaluation and rewards, based on holding employees accountable for achieving specific business objectives, coming up with new ideas, and contributing to the company’s long-range plans.
3. Expect continuous improvement. Randy sees this strategy as a long term change, and long term means continuous improvement throughout the company.
The principle of continuous improvement originated with Dr. W. Edwards Deming, the management guru who helped the Japanese rebuild after World War II. Rather than making radical, high profile changes in company operations, Dr. Deming adopted the Japanese concept of kaizen, meaning “good change.” Kaizen says that each employee responsible for making small but consistent changes to his or her own operation. Over time, those small, incremental changes contribute directly to the company’s bottom line results.
Kaizen is based on five key principles: teamwork, personal discipline, improving morale, using quality circles, and making suggestions for improvement. Randy and his C-level managers base their human capital management strategy on implementing these principles. They provide monetary rewards, and they treat people as tangible assets by providing coaching and training that lead to career advancement opportunities.
The moral of the story, Randy says: “Invest in your people, just as you would any other tangible asset, and your ROI will go straight to the bottom line.”
If you would like to turn your people into tangible assets, Joel can show you how to do that. Contact him today.
Talkback: Are you seeing your people as assets or liabilities? Share your experience here.
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