Once you spend some time on the other side of the negotiations table, you will realize that there is a pretty wide salary band of what the company would be willing to pay you and your peers to do your job. Some people are shocked to find out that two people that do the exact same job at the same company could be getting paid up to a 30% difference in salary. What is the main reason for the gap in salary? It really comes down to how well those people negotiated their salaries. If you think you are underpaid, don’t despair! By knowing where the band is, you can more easily get what you deserve.
1. Know how much you can ask for and still be in the Salary Band. The truth is that companies obviously don’t want to pay employees salaries at the high end of the salary band, but they can pay employees salaries at the high end of the band. This is why the band exists. Your job is to know where the band is so you know what kind of decision is just a matter of a manager paying you a little bit more (within the band) and asking to make a special request (outside of the band). If you know the high end of the band and you ask for a raise that brings you up to what your peers make, it can be as simple nod by your manager to get what you should be getting.
2. Know how much is too much because it is out of the salary band. On the flipside, if you walk in with confidence and ask for salary that is outside of your salary band, your manager could start seeing this as a request to move into another salary band (that may involve a promotion and title change). Although this is not necessarily a bad idea, it is just a different kind of negotiation in the eyes of your manager and would impact all sorts of other human resources issues for the manager (requisitions, open job searches, creating a new job description, impact on other members of the team, changing roles and responsibilities, etc). This may not be what you are actually asking for. Either way, it is really important for you to know where the lines are for your salary band so you can what you need.
Understanding salary bands is critical for negotiations when you are asking for a raise within a company that you are staying with and you have already tied to a specific salary band. It gets a little trickier when you are in a negotiation with a new company because the hiring manager may have the authority to pick you up and put you in an entirely different band. Again, this isn’t something to fear, it just means that you are going to need some more information in order to get what you deserve. Understanding the salary band is important, but again it is only a part of the whole picture.
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OK, this is one of my secrets that I’m going to share with you. One thing everyone wants to know is how much of a jump in compensation should we get when we change jobs? There is a certain art to this, but there is a process that I use. My father told me when I was starting out that I shouldn’t change jobs unless the offer is 20% higher than my current compensation.
Salary Increase Benchmark
My father does deals for a living, so I’ve learned from a pretty good teacher about salary increases. In taking his lessons to heart, not accepting what someone tells me at face value, why take his word that 20% is enough? I didn’t. Over the course of my career, when I’ve changed jobs, my average increase in compensation is 30% and on average I’ve increased my salary 16% per year.
Negotiating higher salaries is a function of communication, experience, and confidence. When we have our story straight and our minimum compensation threshold defined, there is no losing in the negotiation. If we are offered what we want, then great. Otherwise we walk. It’s simple.
What people tend to forget when looking for their next career move is that the company we just interviewed with spent thousands of dollars just to get us in that chair. That’s an investment they’re not keen to lose when they find a candidate they covet. That knowledge immediately swings negotiations in our favor. Have confidence and get the salary you deserve!
For FREE sample salary negotiation letters, just fill out the form below with the subject “Max” and we’ll send them to you right away.
A Salary Calculator is a very useful tool for going into a negotiation but there are definitely a lot of pro’s and con’s with leaning too heavily on what you learn from a salary calculator.
1. Salary Calculators are an easy way to get a quick datapoint on what you should be earning. They can be fast and easy to get access to (often free).
2. Lots of smaller companies that don’t have access to more expensive data or don’t have comparable hires to you will rely heavily on salary calculators. Although you may disagree with the number that they are thinking about, it is vital to know what they are thinking.
1. Salary Calculators are based upon survey data in order to figure out the industry averages. Depending upon the depth of the research, the averages can often ignore a lot of the smaller companies. It is much harder to get data on companies with less than 100 employees (they often don’t report their data and the data can be harder to find). This means that salary calculators are not always based upon data that is appropriate for the company that you are talking to.
2. Salary Calculators are usually only based upon titles and years spent at a job. Often companies will inflate or deflate titles to make up for lower or higher salaries. We all know that an assistant manager position at a Fortune 500 company is a lot different from an assistant manager position at a two-year old startup. Salary calculators can lump all of this together and not necessarily give you the information that you need.
3. Salary calculators can be difficult to us in negotiations because there are so many of them out there and other than the summary data, you usually cannot get access to the underlying data or a sense of how accurate it can be. The other person across the table from you could have a different salary calculator based upon a different set of data as well.
You should definitely look for a salary calculator as another data point, but you still need to do the additional homework in order to figure out what benchmarks are most appropriate for your personal situation. Your goal is to walk into a negotiation with appropriate salary information that represents you. With that kind of information, you will have a lot easier time getting what YOU deserve.