How to negotiate and make $1 million in your lifetime
People who don’t negotiate miss out on $500k or more over their lifetime.
I initially doubted this, so I ran the numbers. And — it really is true. If you were offered $50k and negotiated to $55k, you would make $504,607 more over 50 years, with a 2.5% annual salary increase. If you negotiated from $50k to $60k, that increases to over one million dollars.
One million dollars!
When I initially heard that figure, I thought: That’s enough to pay for college – for five kids. Or to buy a very nice house. Or to provide two million meals to people who are hungry in the Bay Area.
When I got my first job out of college, I was so grateful that someone hired me that I couldn’t imagine negotiating. So, I didn’t even try. I was afraid what the company might think if I tried to negotiate. Would I come across as ungrateful, confrontational or entitled? What if they rescinded my job offer?
According to research, I’m not alone. These fears are so common that only 37% of people say that they consistently negotiate salary. Women are four times less likely to negotiate than men — and when we do negotiate, we ask for less and receive 30% less than men.
Yet, employers expect candidates to negotiate. By not negotiating, you leave money on the table that employer expected to pay you. After all, the company made you an offer because they really want you! If the company is afraid they might lose you, you’ll often be amazed what they will offer.
I recently interviewed hiring managers, and many said that they viewed negotiating candidates even more favorably. Think about it: negotiation will likely be a skill you will use in your job — to influence others and to get work done. So, by negotiating your job offer, you are showing them your ability to succeed at the company, too.
Negotiation is misunderstood. When people view negotiation as scary, it’s often because they perceive it to be done in conflict. But, there are ways to negotiate that are objective, fact-based and collaborative.
Below are the three best ways to negotiate — in an agreeable way.
1) Use other offers
Regardless of whether or not you are going to take a job, negotiate your offer. Why? Because you can use this offer to negotiate other offers.
I used this approach in a prior job search. I negotiated each offer that I received, even when I knew I would not take the job. When I finally got my dream job, the company played hardball. I was told “The max we can pay is X. Final offer.” Because I had data, I was able to confidently say, “I really want to work with you, but I received two other offers at a 20% higher salary.” Two days later, they came back and matched my other offers — with a salary they originally said was impossible.
2) Use data from other companies
If you don’t have other offers, or if you are employed already and trying to negotiate during a promotion or a year-end review, use data! Try to find salaries for comparable positions to yours — and use this data. A great source for salary data is Glassdoor.com, which includes thousands of companies and salaries for specific roles.
Another good way is to get salary information is through recruiters and headhunters trying to fill open jobs. Take their calls, and ask for the role’s compensation package, including salary, bonus and stock options.
(I always recommend taking recruiter calls for open jobs, even if you are happily employed. Use these calls to get salary information 1) to see if you are being paid fairly and 2) to use when you try to negotiate internally, during a promotion period or annual review.)
3) Use personal reasons
I was chatting with someone the other day who received an offer and wasn’t sure if he could make ends meet financially if he took the job. His wife was currently unemployed, and they were expecting a baby. “But, I can’t tell them these things,” he said.
Why not? Of course you can — and should.
Recruiters are human — they understand if you need more money to support your family. So, if there are personal reasons you seek a higher salary, tell the recruiter.
What to do when companies won’t negotiate salary
While it’s ideal to always negotiate your base salary (since annual salary increases are based on this), sometimes companies are legitimately unable to increase it. But, this doesn’t mean that all negotiation is off the table.
Get creative! Other things you can negotiate include: job title, bonus, stock options, vacation days, or working from home. Of course, don’t try to negotiate all of these things. Instead, think about what is most important to you, and focus your negotiation efforts accordingly.
Don’t stop negotiating
A common perspective is that once you’ve negotiated your job offer and taken the job, you’re done negotiating. But, by stopping here, you are leaving more on the table.
While it is easiest to negotiate before you take a job, look for opportunities to continue to negotiate in your job — like during promotions, annual reviews or role changes. And use the tactics discussed above to continue to ensure that you are paid well.
Have you ever negotiated successfully? How did you do it? Please share in the comments.