Salary negotiations: strategies and best practices

Salary Negotiation

The Technique of Salary Negotiation: Discussion of Different Scenarios

While salary becomes one of the primary considerations that individuals look for in choosing a job, issues affecting salary is not discussed openly and are not often contemplated by job hunters, like salary negotiations. Salary negotiation is the process of creating a consensus between the job hunter/employee and the employer on how much the latter will pay the former for his/her skills, knowledge and expertise. This process is primarily communication-centered; however, negotiating salary takes more than just simple verbal communication with one's employer in order to be successful in it.

However, another part of the salary negotiation process is its business dimension -- that is, salary negotiation is also a business transaction. The transaction described in salary negotiation is when two parties discuss the agreeable amount of money at which the employee or job hunter will be given just compensation for his/her services.

In effect, because salary negotiation is both a communication process and a business transaction, it becomes a process that should be handled with skill. The 'art' of salary negotiation must involve the following elements, which will be discussed extensively in the texts that follow: (1) a careful scan of the specific industry the job hunter is applying for; (2) determining the minimum and maximum salaries given to the job applied for (or other jobs similar to the job's description); and (3) careful assessment of one's skills, knowledge, and experience in order to justify the job hunter's preferred salary.

In this paper, salary negotiation is discussed in the context of different scenarios. However, while these scenarios differ in their nature, each discusses one element of salary negotiating skills enumerated earlier.

A common situation in job hunting nowadays is the profile of the highly-educated job hunter, who has strong, credible education credentials, having just finished a Masters degree in his/her chosen field. However, the highly-educated job hunter is not as experienced when compared against Bachelor's degree holder-individuals who have had extensive experience in the job and knows the industry well. This is a dilemma for the Master's degree holder-job hunter, whose high qualifications are impeded by the fact that s/he is not equipped with the practical skills to ensure his/her potential employer that s/he is worth more the salary the job hunter has in mind.

Porter's (2004) analysis of salary negotiations among MBA graduates showed that in this group of job hunters, the company has more concerns than the job hunter himself/herself. This is because it was found out that generally, Master's degree holders tend to be offered generously by companies, resorting also to offering signing bonuses in order to entice a potential employee to join the company/organization. Moreover, the sample, MBA graduates, were identified to have rated companies unfavorably when they were offered low salaries, as compared to the favorable ratings of companies who have offered high salaries. These findings show that a company's credibility and image depended also on the job hunters' perception of it, which can help increase or decrease the company's chances of finding a suitable individual for the position being offered to job hunters.

Kaptik (2005) echoed Porter's analysis of the greater advantage that Master degree holders have over companies during salary negotiations. Scanning how much Master degree holders are being offered at present, the figures showed that $30,000 is the lowest starting salary for Master degree holders, specifically MBA graduates. This means that salary negotiation can still be increased if the job hunter will make clear to the recruiter/employer how s/he is worth more than the lowest starting salary for Master degree holders.

A practical advice given by Needleman (2006) is to calculate the costs of working for the company as its employee offering a specific kind of service and expertise. While daily expenses like food allowance and transportation expense (among others) are taken into account, it is also recommended that the job hunter consider his/her Master's degree as part of his/her investment for the job, and must thus 'calculate' and include this as well to come up with a salary range and specific amount that s/he can negotiate with the recruiter/employer.

Another scenario that happens in the workforce today is the number of military personnel who have Master degrees and are making their transition as members of the civilian sector. The profile of the military personnel is specifically identified as: a Master degree holder, making the transition as a civilian, and wants to be offered compensations similar to ones s/he received while in the military.

This scenario requires the individual to analyze and scan carefully the sector s/he is already in (the civilian sector) and the industry s/he wants to be employed in. The job hunter must consider the fact that compensations may be entirely different between the military and civilian sectors; a quick scan of the general workforce compensation packages offered by these sectors would equip the job hunter with the necessary information that s/he needs to negotiate not only his/her salary, but his/her compensation package as well.

Sims (2006) suggested that job hunters make a checklist of the compensations that s/he want to receive from the companies s/he is applying for, with a comparison of these packages across all companies applied at. In this particular scenario, it is recommended that the job hunter should first list a comparison of compensation packages available between the military and civilian sectors, then create another checklist for all compensation packages offered among companies applied at in the civilian sector. This way, the job hunter is able to look into his/her application in the proper perspective, that is, to be not too demanding with what is being offered him/her, but allowing him/her also to demand a salary range and compensation package worthy of his/her being a Master degree holder.

In this scenario, the job hunter will be able to negotiate successfully is s/he will veer away from discussing compensation in terms of his/her experience as a military personnel. It is important to keep in mind that s/he is already a civilian who is well-qualified for the job not because s/he had been a member of the military, but because s/he has the knowledge and skills needed for the job/position. Adopting this perspective will smoothen the negotiation process and avoid creating tension and/or antagonism between the recruiter (who is a civilian) and the job hunter (who is making the gradual transition to being a civilian).

The last scenario to be discussed is a commonplace situation among employees: asking for a raise as an employee of the company. In this scenario, it is very essential that the employee carefully assess his/her skills, knowledge, and experience in order to create a solid and valid argument why s/he deserves a raise.