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know your own worth!
I recently spoke to a young man who had successfully negotiated a 10% raise on his contract renewal. Well done on him, for having the guts to ask, and getting it!
He had been in this position for a couple of months, this was not his first contract with the company. He effectively used the fact that they now knew him and his worth to them, to ask for a higher rate on his new contract.
The best time for salary negotiations is when you get offered a new job or a new contract. And although a 10% increase over the salary offered is at the top end of what you can expect, you should try to improve the package on offer.
Up to a 5% increase should be achievable in most circumstances. To target a larger increase, you will really need to be confident that your market value is well above the offer on the table. And that alone might make you think twice about joining a company that so undervalues your skills or your job category.
What is the ballpark salary on offer? You should have at least some ideas of the salary that you could expect when you apply for a position. To be honest, when I applied for my first industry role I had absolutely no idea, fresh from university with no connections into the industry I was joining, anything was better than my part-time cleaning job!
That was 1987 though. Nowadays there is little excuse to be that ignorant. Some companies will actually ask you what you were thinking of before they make an offer!
You should also be able to get an idea of the salary range for the position that you are applying for by just searching the internet, by asking friends and colleagues (or that mentor or sponsor I mentioned in a previous blog), or the professional organisations you are a member of.
Most companies will provide an expected salary range in the original recruitment advert. For government positions this is always very clear, and the room for negotiation is small or non-existent. For public and private companies there usually is some room to negotiate.
It pays to know how the recruitment process works:
- If you applied via a recruitment agency, they get paid a hefty fee for every successful placement, usually a percentage of the candidates’ salary. So, if you didn’t go via an agency (which is definitely my preferred approach, go via a friend or your network!!!), you should be able to negotiate an additional couple of percent at least!
- After HR sorts through all applications using the company’s own ranking process, the (technical) managers who are involved in recruiting for the position get a list of preferred candidates. From this list we usually interview 2-3 people for every position that we are recruiting for.
- The successful candidate will be provided with an offer when all shortlisted candidates have been interviewed.
- By then the company has invested some serious amount of time in sourcing candidates by placing the adverts, shortlisting, interviewing, and then putting the offer package together. When I mention time, think in money terms, at least $100+ per person per hour spent! They will want to wrap the process up as fast as possible!
- The salary package on offer is normally matching a proposed pay-grade. Each pay-grade has a salary range. You find HR often talking about a comp (compensation) ratio, which indicates how far below or above a salary midpoint for that pay-grade you are.
The Economic Research Institute has a nice overview of common compensation terms.https://www.erieri.com/blog/post/common-compensation-terms-formulas