Salary Negotiation Guide: How to best negotiate your salary?

How to negotiate your salary. A short summary:

• Definition: a discussion aimed at reaching an agreement
• Scientifically proven that salary negotiation works
• Fundamentals matter: Have desirable and marketable skills. Be in the right market. Be the top in that market.
• Become the business owner of your own rare service
• Know what your priorities are in a negotiation.
• Manage your expectations beforehand, by knowing salary ranges, etc.
• Listen well to understand your selling points and what you possibly can negotiate
• Get all promises (ex. remote first) in written format
• Share what excites you. Be respectful and committed.
• Leverage Multiple Offers. Use the BATNA Principle.

Introduction

Your heart is pounding as you try to utter the words of your desired salary. Then, silence. The hiring manager looks at their notes, looks up to you and gives you a low-ball offer. You fold, accept the offer and tell yourself you at least tried.

That is not how it should be, and that is why we have written this guide. We want you to get paid, not played.

In this guide, we will go through the key factors in negotiations (evidence-based) and give you practical, step-by-step instructions to get you paid more. A lot of candidates pay thousands to negotiation coaches for the exact premium insights you are about to read. We believe this knowledge needs to be shared, so we are giving it to you for free. If you find it useful, feel free to share it.

Why negotiate? Because it works!

Negotiation is defined as a discussion aimed at reaching an agreement (Cambridge Dictionary, 2019). In this sense, the goal of a negotiation is to find a solution that both parties can accept positively. There, if you as an candidate can positively influence a negotiation outcome in your favour (also known as having negotiation power) is what we will be looking at in this article (Schaerer et al., 2020).

Research has shown that individuals who decide to negotiate their compensation increase their starting pay by an average of $5,000 (Marks and Harold, 2011).

So, asking for a higher wage definitely works, yet why do 60% of all US workers (Parker, 2023) and 50% of UK workers (SIA, 2023) not negotiate for a higher salary?

The Broken Game: Negotiation

There are many reasons why only half of all applicants negotiate their compensation. We tried to split them into the following three categories.

1. "I was not aware"

Most people who do not ask employers for higher pay do not realise they can (Roberts, 2016). Many applicants think the terms of a job offer are being dictated, and they do not know they can ask for more money, better benefits, or more flexible conditions (Make, 2007).

In my opinion, many companies promote this silence around pay for their own benefit, since it makes asking for higher compensation unnatural, an act of courage, rather than a standard business practice.

2. "Seems too risky"

The other group feels ashamed because they do not know how to negotiate effectively, have little or no experience, and fear they might lose the negotiation (Marks and Harold, 2011). So they do not even try, as it pushes them out of their comfort zone and makes them feel anxious about uncertainty.

This worry among candidates is particularly pronounced among employers, who are expected to react negatively to salary negotiation, making job applicants more risk-averse (Marks and Harold, 2011).

3. Cultural and historical stigma

In most cultures and from historical legacies, negotiations, especially those around money, have been heavily stigmatised. A large number of candidates may make them appear greedy or ungrateful, or even jeopardise the offer if they try to negotiate their wages (Marks and Harold, 2011).

Unfortunately, female candidates were found to have lower salary expectations and to be more risk-averse in discussing higher compensation (Grey et al., 2019). According to research, women frequently need to act counter to their assigned gender role of uneasiness and fear to feel they negotiate successfully, which makes them less likely than men to start negotiations (Kugler et al., 2018).

As you might have realised, negotiation is, to a large part, a broken game. It is broken because employers have complete transparency into their salary ranges and budgets, yet rarely share them with you. Especially in larger organisations, recruiters or HR personnel motivate candidates through salary offers. In contrast, you seldom do it "in your life" as an employee or job seeker, with little to no honest feedback on how much money you left on the table or whether you were a good negotiator. How can you improve without such valuable feedback?

But, it does not have to be this way!

The Solution: Negotiator Mindset Shift

With this guide, we want to help you shift your mindset and become a better negotiator and advocate for yourself, instead of feeling uncomfortable or scared to negotiate your compensation.

This is why we advocate shifting your mindset and learning the skills and thought processes of an excellent negotiator. To shift into this negotiation mindset, the following points outline how you should view yourself and the compensation discussions themselves.

Being a great negotiator is a learnable skill that does not have to be pushy or fake. We know context is everything in wage discussions, especially given different social dynamics. Also, discussing this may seem absurd to some readers, but as this is the system most countries and companies operate under, it is, in our opinion, useful to learn this broken game and excel in it.

Negotiation Fundamentals

Become the business owner of a rare service: Your own service.

Permit yourself to see yourself as an equal partner in this business transaction with your employer. To get a job is just another market transaction. This is why we encourage you to see yourself as the owner of your own business. Your labour is your offering, and companies are your customers. Instead of feeling less powerful than your potential employer, shift your mindset and see yourself as the salesperson for a limited offering—the salesperson of your own rare service.

In this way, you become the proud business owner of your own service. View any interactions you have with potential employers through this lens. For example, do not see any compensation discussion as a "you against me", as if they are trying to attack you. Rather than see it as a collaboration, you want to find an agreement that works for both parties. In this way, be an ethical "business owner". Be considerate and honest, with a long-term view.

Step-by-step guide

In this section, we go into more depth into the negotiation process. We go through each step and see everyday use cases.

You will discover how to transform a "good" offer into one that may alter the course of your career, as you avoid premature commitments and even build a bidding war between companies.

How to market yourself more

Before you can even start a salary negotiation with a potential employer, you need to have marketable skills, whatever they might be. You might be great at software engineering, customer success or cybersecurity. Developing a marketable skill is by far the most critical, challenging and time-consuming part of a negotiation, as it takes years before you can even truly start negotiating effectively for yourself. These years are here to prepare yourself to have highly sought-after skills that organisations are proven to be willing to pay a lot of money for. Being in a proven market where you have statistics to back up your pay well makes your life so much easier.

See yourself and your marketable skills as a business owner in a competitive market, and find ways to outperform your competitors with them. If your skills aren't high-quality, top-notch in your industry, and highly sought after, it's hard to sell them. The main goal here is to achieve a sustainable competitive advantage that makes employers prefer you over others. That might be through a highly regarded degree, relevant work experience with a respected organisation, or other trusted references that demonstrate the value you provide.

The best way is to see your services as a return on investment (ROI) for the company. If you have an excellent track record and proof of creating far more value for an organisation than you cost, the service you sell - your own service - becomes so much easier to negotiate.

Some of you might know the startup term 'product-market fit'. Product-market fit is the degree to which a company's service or product satisfies a market (Zott and Amit, 2024). A high product-market fit means your clients are almost begging you to pay money for your service or product, whereas a low product-market fit is when you struggle to find customers every day as a startup.

For illustrative purposes, I have adapted the concept of product-market fit to "Skill-Market Fit".

Skill-Market Fit is the degree to which your skill sets satisfy your potential employers. A high Skill-Market Fit is when organisations almost beg you to work for them, treating you almost like a highly paid athlete. In contrast, low Skill-Market Fit is when you have to endure extended unemployment and feel like no organisation wants to hire you. It is also dependent on how many competitors you have, who are not only willing but also capable of doing the same work. This illustration of "Skill-Market Fit" might help you understand the importance of a solid foundation so you can be powerful in salary negotiations.

Before you continue reading, make sure your skills are marketable, that you have trusted references (such as work experience or degrees), and that you do not shy away from showing them nicely on your personal website, LinkedIn, or CV. Be clear on what you offer, why you might be a fit and what makes you unique.

Preparing the negotiation

Your priorities

In case you have landed a job interview at a company you want to work for, do your homework first.

Homework here involves clarity on what you specifically are looking for in the particular job, your priorities, and what the market is willing to pay for.

To this end, we have built a priority calculator that helps you be clearer about what matters most to you. In this calculator, you need to distribute 100 points across five categories: compensation, location, purpose & career growth, work/life balance, and ownership of the business. There are no correct answers, only the ones that feel right to you. By using this calculator, you will find out your priorities, which can become your non-negotiables and musts in a compensation discussion.

Once your priorities are clear, you are prepared to have a meaningful discussion with your employer so they understand them as well.

What you can expect

Knowing your priorities is not enough. You need to be very explicit in knowing what you can expect. Managing your own expectations is crucial to seeing whether your priorities and demands are realistic in the first place. For example, thinking you can work remotely as a nurse or that you can expect a salary twice what the market or your company usually pays for your specific role is not realistic or advisable.

The goal is to get your hands on as much data as possible to gain a holistic picture of your worth. For example, go on forums, salary pages, company review sites (like Glassdoor, even though it sucks in our opinion), Levels or any other place where you can find out what you can expect from your future employer in terms of wage, bonuses, remote work, career progression and so on. You need to make decisions based on data points, not on negative emotions like fear.

Tip: If you know an individual at your target organisation or market, approach them and gain insider knowledge of the market's strengths and weaknesses, as well as the company's. These people are often also financially incentivised by your target company to recommend candidates they believe fit their employer, so they would definitely be interested to recommend you if you have not applied yet.

Your standing and selling points

The last preparation is to know your leverage points. Understand what makes you unique and desirable to employers. You need to be able to see through the recruiter's eyes and understand why they want to talk to you and hire you, so that you can identify and leverage your unique points as arguments once negotiation starts.

Once you know your priorities, have a holistic and realistic understanding of the company and the market, and know where you stand in this context, you are prepared to secure whatever matters most to you in the negotiation phase, such as a higher salary or additional vacation time.

In the negotiation

Congratulations. You might be in a first job interview with your future employer, or you might have already received a job offer. This part focuses on the negotiations themselves.

Listen! Understand. Find your unique selling point.

If you have ever worked in sales, you may have heard it before. Still, it is so vital always to repeat this: "The greatest salespeople are not the ones that talk, but the one that listens, understands and frame the solution in the language the prospect can understand."

Before you can have an excellent negotiation, you need to understand what the company is truly looking for, so that you can showcase and frame yourself in a language that makes you desirable. Therefore listen!

Or even better, before the first job interview, write a long list of questions to understand better the criteria the hiring managers need to evaluate you. If you ask these targeted questions, it not only helps you understand and find your unique selling point, but it also shows that you have come prepared, excited, and interested in the company as a whole.

Here is a small list of questions I usually ask in a job interview to better understand the context:

• What do you like the most about working at your company? What do you dislike?
• What are you looking for in an ideal candidate? What qualities, skills or traits does this person have?
• What can the new employee expect in the next 3 to 6 months from this role?
• What would make a new hire successful in the first year? How do you measure performance?
• What are you most proud of yourself for having done at your company?

The basic goal is to ask targeted questions you want to explore and let them talk as much as possible. Your goal should be to listen 80% of the time and talk 20% of the time. With these questions, you can steer the discussion to where you want to go and later align and frame your background to what they are looking for. Because of this, you will know where to push and where to let go.

Get all promises in written format

If you are in the interview stage and have heard the selling points of your future employer that you value, such as a remote-first policy, an uncapped bonus, specific benefits, or potential stock ownership, make sure to write them down.

Once you receive the written offer, re-check that these verbal promises are in writing. For example, if your interviewer mentioned a remote-first policy but you do not see it written, follow up with HR to ask why it is not in the contract. Make sure the promises that are important to you are captured correctly in the contract before you sign it.

Share what excites you. Be respectful and committed.

From my own experience, when I showed what truly excited me about this new opportunity and employer, I usually received a job offer. In this case, even though the compensation offer was less than I had expected, I reframed it in terms of what excites and even inspires me about this opportunity. For example, the mission inspired me, and I am excited to be in such an interesting position with the company.

The leading headache for companies is high turnover and the need to constantly rehire, which is not only tremendously expensive but also creates an environment where more employees may want to leave. So staying outwardly excited will lower the recruiter's hesitancy and might even increase your salary range.

Be as transparent as the interviewer

Suppose you are in the first interview without any concrete offer from the company, and the recruiter asks you how much you are making now or what your compensation expectations are for the next role. In that case, they are most likely trying to gauge your lowest acceptable offer. In these cases, it makes sense to reply: "Right now, I am focused on whether we are a great fit first. Once we are both sure we are a great fit, I am sure we will find a competitive package later." In this way, you keep the conversation going while reflecting the same level of transparency as your interviewer, while being positive, and showing your willingness to partner.

Suppose the employer is very upfront and transparent, sharing salary ranges and breakdowns for this specific position. In that case, you might also be as transparent as the potential employer, or as much as you feel comfortable sharing. That means I often had cases where I was transparent about my current salary and my expectations for a future employer, while remaining open to negotiation. So it depends on a case-by-case basis.

Slow-Down

Any pro negotiator knows the importance of slowing down. Do not prematurely shoot your shot.

If a recruiter asks something in the lines of: "We would love for you to join us. If we align on your expectations, can we expect to hear from you this week?".

Instead of prematurely agreeing, you need to understand the details and slow down any premature commitments. This is why I would answer "I am really excited about the people, the company and the mission. I would like to finish up a few other conversations, so that I can make a fully informed decision." or mention that you cannot be the lone decider in this critical decision: "I need to discuss this with my partner and family. I will come back to you once I have a chance to discuss. Is this fine for you?"

This is a decisive move, since your decision-makers are outside the recruiter's reach. A conversation with your spouse, mentor, or even a hypothetical "board of advisors" cannot be cut short by saying, "We need your answer today." An unseen line of protection has been introduced. This gives you time to reflect, make sure the offer is truly what you want, or explore ways to get an even better offer.

By getting this job offer, you are not receiving a gift. You are making an important sale—a sale of your rare service. Therefore, do not close the sale before you discuss the price or are truly confident in the compensation.

Leveraging Multiple Offers. BATNA Principle.

One of the most powerful negotiation moves as an employee is to have an alternative offer. This principle in academia is called Best Alternative to a Agreement (or short BATNA). It basically means the best option you can pursue if the current negotiation fails. BATNA is a powerful strategy because it demonstrates your autonomy and true strength, given that you have multiple options available (Schaerer et al., 2020).

It is scientifically proven that a potential job offer from another corporation improves the candidate's negotiation with a second company (Pinkley et al., 2019).

Pulling this off is quite tricky and depends on how in demand your skills are, but this is how I landed my previous full-time job. I had multiple competing offers from Microsoft, an AI startup, and the only consulting company I had ever applied to, and then let them outcompete me. In the end, I chose the consulting company, as it was such a foreign concept for me (coming from the startup world), they were highly professional, and I was convinced I would learn the most with them (which, in hindsight, was correct). Also, they gave me an excellent compensation package.

The best way to let them bid for you is by 1. getting at least one offer, 2. telling the potential future employer you need more time to decide (to buy yourself some time) and 3. Sharing it with the competing company. Be transparent with the other company. You can also write them an email, such as:

"Dear recruiter,

I have a concrete offer from a competing company and will need to make a decision soon. Your position is still very much in the running. As I highly value transparency, I wanted to share this news with you and see if there is any way to speed up decision-making or interviews.

Looking forward to hearing from you.

Kindest regards,"

By being respectful, transparent, and honest, the competing company will definitely do its best to give you a compelling, if not better, offer. If they do, you can even go back to the original offer and tell them you have an even better one, and see how they react.

You can also apply this principle when you are currently employed: tell your current employer you have a better offer and they need to match it. Ethically speaking, I personally do not think it is a good look if you are doing this, as it seems you are almost burning bridges with your current employer. But you can treat it almost like a joker card: you can pull it off only once and likely get what you want if you intend to stay at your current employer.

Collaborate. It is a partnership after all.

As you have realised, the most fundamental principles of negotiations are simple. Be respectful, honest, considerate and constructive. As previously mentioned, getting a job is a normal market transaction, yet negotiations are not. Rather they are a relationship-building process.

Since you are looking for a long-term relationship, your goal should not be to get the best deal for yourself, but to find one that is most beneficial for your future employer, the organisation. You need to keep the longer term in mind and be considerate of what is possible and what is not. If you are not sure, ask politely: "Is this negotiable?" and see how they respond. (Make, 2007).

You will want to collaborate and negotiate your compensation on reasonable terms, which should create understanding between you rather than friction.

Framing

Key in negotiation is how you frame everything. Always make sure you are respectful, honest, positive, and open to collaboration. Framing is the way you present information, which influences how listeners interpret it (Kaplan, 2008; Garvin and Roberto, 2005).

We encourage you to use framing to your advantage, which steers negotiation towards a positive, common understanding or evokes the fear of missing out in your employer. In this case, framing that builds long-lasting trust is shown to lead to mutually beneficial outcomes (Druckman and Olekalns, 2013). However, make sure you don't abuse any trust since it is fragile, and betrayals can seriously jeopardise outcomes and even ruin your reputation (Lount et al., 2008)

After the negotiation

To finalise your negotiation, you need to make a decision. Review your priorities again, why you were initially interested in this job, and see if the offer makes sense for you.

I personally value a transparent feedback loop. After I have signed the offer, I will call the recruiter, personally thank them again, and be excited about this opportunity while asking for feedback. You can first ask for general feedback, and if you are interested, also ask about the negotiation. The goal here is to get as much information and transparency to see how you can improve yourself and your negotiation skills.

Conclusion

In this guide, we have learned what negotiations are, how to shift your mindset to become better at them, and how to get paid more with step-by-step instructions.

Now it is your time to negotiate. Get paid what you believe you deserve.

In case you have any feedback or comments on the above guide, feel free to contact us anytime. We would love to hear from you.

References

Do you want to read more in depth what the science says? Have a read at the following referenced articles for further information:

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