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How to Negotiate Your Salary

08.13.2014
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I’m often surprised how many software developers neglect to do any salary negotiations at all or make a single attempt at negotiating their salary and then give up and take whatever is offered.

Negotiating your salary is important—not just because the dollars will add up over time and you could end up leaving a lot of money on the table—but, also because how you value yourself and how you handle yourself in a salary negotiation will greatly influence how you are perceived at the company you are working for.

Once you are part of a company it is difficult to shake the first impression that has been pinned on you. If you handle salary negotiations in a tactful way that indicates your value while still respecting your prospective employer, you’ll likely paint yourself in a more positive light which can have huge implications on your future career with that company.

negotiating How to Negotiate Your Salary

Negotiations begin before you even apply for the job

Your ability to negotiate your salary will be greatly influenced by your reputation. Think about a famous athlete or movie star, how much negotiation power does having a well-recognized name have for either of these professions? The same is true for software development or any other field. The more recognized your name is, the more power you will have when it comes to negotiations.

So what can you do to build up a name in the software development field?

For some people it will happen by chance, but for most software developers it will require some careful planning and tactics. If you follow this blog, you probably know that I highly recommend building a personal brand and actively marketing yourself as a software developer.

The basic strategy to do this is to get your name out there through as many different mediums as possible. Write blog posts, get on podcasts, write books or articles, speak at conferences and user groups, create video tutorials, contribute to open source projects and whatever else you can do to get your name out there.

Since, marketing yourself isn’t the topic of this post, I won’t go into details here, but if you are interested in learning more about marketing yourself as a software developer, you can check out this post on the topic or if you want a real in-depth treatment of the topic, you can check out my How to Market Yourself as a Software Developer course.

Just remember the better job you do of marketing yourself and building a reputation, the easier it will be for you to negotiate. This might even be the most important factor. I’ve worked with software developers who have been able to literally double their salaries based on nothing but building up a bit of a personal brand and online reputation.

How you get the job is extremely important

The second biggest factor that will influence your ability to negotiate your salary will be how you got the job. There are many different ways to get a job and not all of them are equal. Let’s examine a few different ways you might get a job.

First, you might get a job by seeing a job posting and cold-applying to that job posting with your resume and hopefully a good cover-letter. In fact, many job seekers think this is the only way to get a job. This is in fact the worst way to get a job. If you get a job in this manner, it is difficult to have a good negotiating position, because you are in a much weaker position than the employer. You are the one taking all the initiative and asking for the job.

The person with the greatest need always has the disadvantage when negotiating anything. Ever played monopoly? Ever tried to negotiate with someone who didn’t really need anything from you, but you needed one of their properties to complete your monopoly? How did that go?

Another way to get a job is through personal referral. You know someone who works at a company, they personally refer you for the job and you end up getting offered the job. This is definitely a much better situation than just applying for a job. In fact, you should always try to get a personal referral when you are actively seeking a job. In this situation, the prospective employer might not even know that you are actively looking for a job—so, your need is going to register as less. And, because you got a personal referral, you already have some credibility. You are essentially borrowing the credibility of the person who referred you for the job. I’m sure you can figure out that the higher credibility of the person who referred you for the job, the higher credibility you will have. This credibility will greatly influence your ability to negotiate when given an offer.

Ok, so how else can you get a job? How about the best way possible? When the company who offers you a job finds you and comes after you either directly offering you the job or asking you to apply for it. How the situation presents itself will influence your negotiating power. Obviously, your best situation would be if a company knows of you and directly offers you a position without even an interview. In that case you’ll be able to just about name your own price. But, any time an employer directly seeks you out, you’ll have a very good position to negotiate from.

Now, you might be thinking “yeah right, an employer is not going to directly seek me out, much less offer me a job without an interview.” I’ll admit, it is somewhat rare, but it does happen. The best way to make these kinds of opportunities happen is to build up a name for yourself and market yourself like I mentioned in the first section of this post.

First person to name a number loses

money How to Negotiate Your Salary

Ok, so now that we’ve covered the preliminaries—which are actually the most important part of negotiating your salary—let’s get into the actual details of negotiations.

One important thing to understand is that the first person to name a number is at a distinct disadvantage. In any kind of negotiation, you always want to act second. Here’s why:

Suppose you applied for a job and you expected that the salary for that job was $70,000. You get offered the job and the first question you are asked is what your salary requirements are. You state that you are looking for something around $70,000. Perhaps you are even clever and say somewhere in the range of $70,000 to $80,000. The HR manager immediately offers you a salary of $75,000. You shake hands, accept the deal and are pretty happy—only there is one big problem: The HR manager had budgeted a range from $80,000 to $100,000 for the job. Since you named a number first, you ended up costing yourself potentially as much as $25,000 a year—whoops.

You might think this is an extreme example, but it isn’t. You have no way of knowing what someone else is expecting to offer until they tell you. Revealing your number first puts you at a distinct disadvantage. You can’t go up from the number you state, but you can certainly be talked down. So, when you name a number first, you have no upside, but a big downside potential.

Oh, but you are more clever than that you say. I’ll just name a really high number. This can blow up in your face as well. If you name too high of a number, you might not even get countered, or you may get countered very low in response. It is almost always to your advantage to have the employer name a number first.

The only exception to this is when an employer is purposely going to low-ball you. This situation is pretty rare, but if you have a good reason to suspect this will happen, you may want to name a number first, to set an anchor point. Why? Because if you get a low-ball number, it may be difficult to get an employer to come up a lot from that number. Of course, in that situation, you probably aren’t going to have much success no matter what you do.

But, what about when you are asked to name a number first?

Don’t do it. Just say “no.”

Yes, I know this is tough advice to follow, but let me give you some specific situations and some ways to deal with them.

Continue reading...

Published at DZone with permission of John Sonmez, author and DZone MVB. (source)

(Note: Opinions expressed in this article and its replies are the opinions of their respective authors and not those of DZone, Inc.)

Comments

Fabien Bergeret replied on Thu, 2014/08/14 - 6:17am

I've been headhunted twice in my 20 years career.

The first time, I negociated a 30% raise on my previous salary. The second time, a 50% raise :-) (being the pray is sometimes better than being the hunter)

When applying for international positions, it's easy not so say any number: there was a position that was offered me, which could be located either in Germany or in Belgium. The cost of living being different on these both countries, I managed not to give any number...

Raj Pal replied on Thu, 2014/08/21 - 10:47am

The primary means of recruitment where I live is via third-party job consultants and recruiters hired by IT companies to perform the initial screening, background checks etc. and deliver the resumes of shortlisted candidates (said resumes having been accessed from major job portals) to them for conducting technical interviews. Sometimes companies also directly get in touch with candidates who have registered on their own internal job portals, as and when there are vacancies in the relevant departments.

Irrespective of the route taken, one of the very first questions you're asked is about your expected annual salary (this CTC i.e. Cost to Company is the entire amount they'll be paying, including their contributions to various savings schemes/funds as well). Recruiters refuse to proceed unless you mention a number, and vague ranges aren't accepted either. As for your current salary, I like how you say that technically it’s none of their business. I completely agree, but unfortunately there are no restrictions at all here on what sort of personal questions they can ask you. If you pass the technical rounds and reach the HR round, they require all candidates to show them their previous 3 or 6 months' original payslips and even sometimes tax forms, so there's no salary or perk-related detail they don't know. Naturally their offer is going to be tailored so they don't "overpay", not unless you find yourself in the rare situation where they are desperate for talent (perhaps because a project is going to start soon and they're short of personnel), and more importantly you know this is the case.

Moreover, queries about one's marital status, number of kids/dependants are all par for the course - unbelievably intrusive and maybe even grounds for discrimination but who cares? No employee-friendly policies here. Required to stay back daily well past the official timings or work regularly on holidays? Better not complain if you want to retain your job, and overtime pay is an unknown concept here. I'm talking about the top IT companies BTW, not some fly by night code shops or startups (where of course there are no regular timings and that's fine). How else can these companies quote cut-throat rates for all those outsourced projects?

So, what sort of room for negotiation do you think exists in such a climate for a non-superstar average Jane or Joe?

Fabien Bergeret replied on Thu, 2014/09/04 - 4:36am in response to: Raj Pal

In my country (France), it's totally illegal to ask a candidate for previous payslips or tax forms (I've never had an interview where I was asked for this kind of information).

It's also theoretically illegal to ask the marital status and the number of kids, however it is frequently asked.

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