Salary Negotiation: Make More Money, Be More Valued

I've come across a number of interesting positions that are available only through these guys. But we never get 15 minutes into a conversation before they're asking about salary history. The implied message is that the number you give is going to decide if your resume gets passed onward or not. So going too high, say 2X, would certainly kill your chances.

I've tried the "let's get to a fit before negotiating salary" and I actually had one recruiter say "sorry, this is how we roll". I dumped that guy, but it keeps coming up.

I know the OP's advice was to avoid this route and get to the hiring manager. Just curious what to do about these people.

I don't think anyone is saying to not have an idea in mind ahead of time of what your goal number is. The point Patrick is making is to just not be the first one to state a number.

Just because they've attempted to anchor the discussion at a low rate doesn't mean that you don't already have another mental anchor known only to you of your goal number.

But the argument is that if you are the one to give your number first, you could lose out on money you could have gotten because you had no idea that they were willing to offer even more. It's hard to state you want $X/year and then ask for $1.1X a few minutes later. If you are the first to state a number and you ask for $100k/year and they were willing to offer $150k/year, you will never find out about that extra $50k/year.

You say: "I want $100,000."

They say: "Oh, well, we were thinking more like 60,000"

You say: "Ok, how about 80,000?"

They say: "Done."

If they were willing to pay 100k, you've just lost 20k. They know what they are willing to pay, you don't. You're at a disadvantage and need to gain more info. The one who speaks first loses. Instead:

You say: "I really am impressed with this company and I'm sure you will offer me a very competitive salary."

They say: "60k"

You say: "That's great! I was thinking anywhere from 60k up to 130k."

Now you've set the range and the negotiation will more likely end up where you want. You won't lose money doing this. BUT you might gain money if they say, "90k" right off the bat and you didn't expect them to offer that much. Then you can offer the 90k-120k range and even if you only gain 5k after that, you're much better off than if you spoke first.

On edmunds.com there was a fantastic undercover used-car salesman expose where they talked about this. The salesman would always ask people what they wanted to spend each month on a car. No matter what they said, (say, $300) the salesman would then counter with the question, "up to?..."

Inevitably people would be embarassed or confused and offer a higher number. The article said the tactic worked so well that the salesmen would jokingly greet each other in the hall by saying "up to?.."

So think about the range.

I make a good salary. I very know quite well what a top level salary for my position in my area is because I have a large network of friends doing the same thing and it is a clearly defined role (as most technical jobs are). I would want to put my number out there first because we're going to be negotiating in a very specific range. I still want to hold off until after they've decided they want to hire me (that helps my leverage), but when push comes to shove I want my number out there first.

My friend works in marketing. Definining her salary is much more difficult. Marketing titles can really vary - what is an associate? What is a specialist? What is a product manager? What is a brand manager? There are some brand managers making six figures and some making $25k. In her case, she wants to change jobs because she is horribly underpaid. Almost any salary would be an improvement. Her throwing out a number first could only be detrimental and so she will wait until she hears the number on the table.

As a side note, always compare total compensation not just salary. In the two examples above, we both want to get MBAs. Having our next company pay for the MBA would be worth a lot of money. I would take 10,000+ a year less for a place that will pay for an MBA over one that doesn't. Don't forget about bonus, healthcare, 401k matching amount & vesting, overtime, vacation, flexibility, etc etc etc. And negotiate it all at once.

From the employer's position the "I think you're likely to botch it" bet is not a bad one: employees don't know the employer's value function for the work, but the employer can have a pretty decent model of the employee's value function for steady income (tip: eliminate your short-term need for steady income and many negotiations become a lot easier).

For the employee, hoping for an accidental or poorly-informed over-offer is rarely justified. Employers usually have many past negotiation experiences and many sources of information for what other employers are paying, whereas employees usually have few. Similarly, the employer's side of the exchange is primarily liquid and easily quantified (cash+benefits) whereas the employee's side is poorly quantified and illiquid (the employer usually can't directly "sell out" your past labor and partially recoup if he decides it was worth less than he expected).

Expecting employers to err on the side of overpaying with any sort of frequency seems theoretically hard to justify, and that is certainly not in line with my experience. Unless you know the employer wants you specifically (as opposed to any instance of the class you represent), I think it's almost always better for employees to open with what they consider a high number and let the employers try to talk them down.

The reasons are best explained here: http://en.wikipedia.org/wiki/Anchoring

They want to hit somewhere above your minimum. They don't want to hit your minimum (since it may be volatile) and they really, really don't want to hit below your minimum. And they are okay with hitting their maximum.

In my location it costs 15-20k to find a senior engineer you want to hire. Once that happens, you really, really don't want to lose them in salary negotiations, or to another offer. So you don't lowball them. If they give you a number they can lowball themselves, but if they don't, then you offer something near your maximum.

Your advice is that you give them a number so high that you're sure it's above their anchor and that it gives them no information about your anchor. But that doesn't change their anchor, and not giving a number at all is pretty close to that, while being nearly risk-free to you.

Of course, once they've asked for a number, you've refused, and they've pushed on it, it may not be risk-free to fight anymore. At that point, I'd agree: Aim for the sky.

They want to see that you can produce code. So if you can point to features/apps that you developed, or how you optimized some feature somewhere, that's what they want.

You can also either a) engineer your transfer to the part of the company which makes money or b) engineer your work duties such that they include things which will help career growth. For example, A/B testing both prints money and gives very relevant, justified metrics which are likely to include things motivational to decisionmakers at current and future employers. If you are an engineer in a company which doesn't A/B test but could, you should make that sale internally, and then nominate yourself as the obvious person to implement it.

One way: Did you work on a feature that was then used to sign up a client that is now worth €X?

Make shit up.

I'm dead serious. Not in terms of "This product never existed and I'm going to lie to you", but in terms of "Everyone loved that feature I did, it probably helped retain 3-5% of our clients alone, and we were able to hire another two people the following year, so that probably works out to about 10% growth."

So: my feature improved helped grow sales by 13%.

I worked in support once for an outsourcing company where I was paid only a little over minimum wage and given a number of SLAs to keep (which I usually exceeded).

When I found out years later about the actual costs to the customer of the work I was doing (management flatout refused to give us any of these numbers) I realized that I could have worked about 4 days a week on the same monthly salary and they would still have made a substantial profit on me.

Seriously, if you're working on $YADDA_YADDA, then obviously there should be some justification for it, either to yourself or your manager. That's what you need to get down, stuff like: improved response times by x%, killed y open bugs, removed z lines of code, whatever your project's current major issues are.

And if you can't come up with an easy justification like that, why are you doing it? :)

"I worked as part of a team that $x. My role on the team was $y."

-His main role was working on a software process that generated XYZ benefit for the free users

-He increased the efficiency of that process, allowing the company to increase the XYZ's they created by 100%

-Free users who had XYZ were n% more likely to buy

-Sales were worth an average of ABC dollars

-Multiplying it all out, he was responsible for increasing the bottom line by a lot

Now, he had to make a lot of estimates, and ask people he knew at his company for estimates on some of the information. But by amassing all this information he can make a much stronger case for his value than if he could only talk about the technical work he did.

Anchoring research helps clarify the question of whether to make the first offer in a negotiation: by making the first offer, you will anchor the negotiation in your favor. In fact, Mussweiler and I have shown that making the first offer affords a bargaining advantage. In our studies, we found that the final outcome of a negotiation is affected by whether the buyer or the seller makes the first offer. Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer.

http://hbswk.hbs.edu/archive/4302.html

http://en.wikipedia.org/wiki/Anchoring

The whole article could use a lot more science. I suggest reading "59 Seconds" from Richard Wiseman.

It all really boils down to options and what is at stake. In my class negotiation, I literally had nothing at stake(the grade wasn't tied to winning negotiations). In real life though, if you don't have options and you only have one offer and you are pretty sure you won't get any more, this is harder to execute. On the other hand, if you don't have a lot to lose, you can be somewhat irrational.

Note, you are not giving your current salary number, just what you expect.

If it is way overboard, the company should still make you an offer if they like you. From then on, it is up to you: if you have a better option, go with it; if you don't, emphasize that you are willing to find some middle ground because you dig something unique about the company. You can say how you understand they can't pay what you'd like but because you are excited about industry x and enjoyed the culture, you'd consider middle ground figure of _____.

Final caveat: There is such as thing getting TOO good of a deal ... and then getting fired soon after because you couldn't deliver on the expectations you set relative to your salary.

a) You really know what you're worth to the person across the table. (In a crazy-hot market, it's hard to get a good handle on this. And if you're mentally constrained by your current salary, negotiated in a down market when you had no experience, it's hard to break free of that. It's also hard to evaluate your own skills as others see them...)

b) You are completely comfortable with asking for, say, 1.5x what you're worth with a straight face;

c) when the person across the table visibly flinches or chuckles or hedges - and they will; books on negotiation explicitly teach you to do this - keeping that straight face and defending the number you just asked for.

So I incline to the opinion that patio11 is giving the right advice for his audience: The kind of people who secretly think of themselves as vastly overpaid and are secretly ashamed of it. I know from painful experience that if you send me into a room and ask me to anchor my own price my natural-born tendency is to tie that anchor around my own foot and then throw it into the Atlantic Ocean.

This might not mean much to you overall, but don't confuse it with strong negotiation skills.

Right. One thing my dad taught me is that if they want to sell it more than you want to buy it (or vice versa), you win. If you're feeling insecure about your value, I'd say that matters a lot more than, say, who throws out a number first.

I think software engineers can come up with a few skills that makes them more valuable than other applicants by a quantifiable amount. In my case, I have extensive experience with streaming audio and video across web and mobile devices. Having built and maintained the streaming video infrastructure that powers RushLimbaugh.com, JimRome.com, CoastToCoastAM.com, BobAndTom.com as well as their corresponding mobile sites and apps while I worked at ClearChannel, I have the experience to cut months off of similar projects for my current company. That alone was worth the 37.5% increase over my last salary to them.

An important principle of negotiation is knowing their interests as well as you can. And presenting a representation of yourself which strongly satisfies those interests.

Basically, all the work is done before the negotiation; the point of negotiation is where it all comes together and you use all that pressure you've built up to (politely) bear.

If you have a take-home project, great, you can hit it out of the ballpark by adding all the professional polish that virtually no other applicant will do — have it build, solve corner cases, or casually note that it was tested on 3 platforms; whatever's vaguely appropriate. Virtually everyone else cuts some corner somewhere. Most will submit a minimal answer, to a question which resembles — but isn't — the take-home question.

To the company struggling to find a good coder, this makes you a drool-worthy thing to purchase, like the newest Mac. They will calculate what they're losing in not having your increment of productivity, and that will pressure their decision.

(That said, I prefer to state the number first as an anchor, because I research relevant salaries, but whatever. ;)

Then do those things. In six months, remind them about the conversation (I'm sure it'd go better if you had a reliable way to jog their memory, eg email). If you're worried about them backing out, maybe follow up halfway through to see if they agree that you're on course and that they understand you meant it.

I go into the room and do lots of listening at the start. I'm told something like a 3% raise. I say that's very interesting.. blah blah and the manager thinks then it's done.

Then I ask to confirm what my job title is, and what my responsibilities are (write them down). Then I go through a list of all the things I've done or am doing in the last year (prepare well in advance) and I get the manager to say if that item falls within my responsibilities, or if it's "over and above" my current title. Also then make sure the manager comments on how valuable that "thing" is. I drag this on.

Eventually, we have a list of 5 things I'm doing that are "expected" and 20-30 things I regularly do that are "over and above" and highly valued in the manager's own opinion.

From there, it's quite clear I deserve a higher raise.

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Another thing I've done is compare the increase in cost of living to my (potential raise) - When the manager told me 3%, I mentioned my rent had increased 10% and gas had increase more than 25% in the last year... so in fact a 3% is actually a salary cut.

Work portion: I focused my work on what provided value, not what was difficult or what was in my job description. One of my big achievements was saving the company roughly $1.2MM with a week of work.

I also found out who would be responsible for approving my raise/promotion (my boss and his boss) and what they valued. My boss pretty much just valued results and didn't care how long you worked, where you worked from, etc. But his boss cared a lot about office presence, face time, filling out mandatory reports that no one read, work hours, etc. So I made sure to satisfy both of them, even though I could easily accomplish all my work in just a few hours a day.

Negotiation portion: first, I found out when budgets were set, which was in September. Since performance reviews were done in December, that meant that by the time a performance review came about, your raise would have already been decided.

Then in May, I had a meeting with my boss where I told him something like "I'd like to have a meeting to discuss compensation sometime next month." So he knew it was coming-there was no surprise. Also note the timeline, the actual discussion was in June, giving my boss and his boss plenty of time before budgets would be fixed in September.

Then I made two write-ups: one presenting the value I'd contributed in terms my boss would value, and one presenting the value I'd contributed in terms his boss would value. I then made my case to my boss, focusing on the value I'd provided, and asked for the double promotion so that I could fall back down to a single promotion if that didn't fly.

This was not a perfect approach, but even this much was enough to put me in probably the top 95% of engineers trying to negotiate a raise.

I should mention that pretty much the entire approach above came from Ramit Sethi's book I Will Teach You To Be Rich.

In these situations, it might make sense to volunteer the first number in the negotiation, and to go high with it. Don't mention your current salary. Just talk about how the cost of living is a big adjustment (be precise about your multiplier, citing a data source), relocation is a big adjustment, etc., so accordingly, $X sounds reasonable. (Where X = the first number you mention; you do not make reference to your starting point before arriving at X. The hiring manager or HR person usually won't work backwards and reverse-engineer your starting point, but rather, will treat X as the anchor. The mere fact of having a rationale leading up to X makes X seem credible).

The other thing I'd say is not to make X a wildly ballsy figure, or to pull it out of thin air. You should have a very realistic reasoning for having arrived at X; it shouldn't be complete bullshit. Giving a number that is wildly off the top end of the pay scale for a position is a sign of naivete, which is often a signal that you're not actually qualified for the position (or that you're overqualified, in which case, why are you applying for this position?). Your anchor X should be somewhere at the high end of what your research tells you is a realistic range for the job in question.

You're probably much more experienced than I am, but I thought a good 80% was new to me, and incredibly useful. Perhaps in the abstract I knew many of the principles, but to see them elaborated down to the level of actual conversations that happen during the negotiation was very valuable.

Sounds trite, but it's true. If your employer knows you are never a threat to leave, they will never try to convince you to stay with monetary incentives.

Once you are willing to leave, shop around and "interview" with your employer too. Figure out what the best overall deal is at that point.

In the long run, it would be better if programmers were better are valuing themselves. In the short run if programmers stopped giving numbers, it'd be better.

Some exceptions to this: 1. You work a government job where your salary is public knowledge 2. You are unemployed and they can just call your previous employer. 3. You listed your current boss as a reference and they're probably getting a call anyway. 4. You expect that they're going to perform an extensive background check that might uncover your salary anyway.

I later found out that I wouldn't be an employee, but a 1099 contractor responsible for all my taxes, making the rate even lower than I initially thought. Needless to say, they will have to more than double my hourly rate when summer comes for me to stay.