Salary negotiation is one of the most dreaded parts of the new hire process. Most people detest it so much, they don’t even do it. But with just a little bit of understanding, you can be very effective at increasing your compensation for every job you’re offered.

In how to negotiate a salary part 1, I discussed the employee and employer psychology of new hire salary negotiation. I also examined some key questions to help you target how much to ask. Now let’s address how to formulate your compensation argument and finally how to ask for it.

Strategize your Argument

Have a figure in your head that would satisfy you. Just saying you want “more” is not going to help anyone. You need to understand what amount ends the negotiation.

Is there anything you would be willing negotiate on? Would you take more money in a signing bonus, or a higher performance bonus? How about stock options? Would you be willing to take a higher bonus for a lower annual salary (maybe not in this economy).

How important is the additional compensation? Would you be willing to decline the offer if they don’t hit your target? If you know that up front, explaining that to your prospective employer is a powerful negotiating tool.

Make the Pitch

Stay Positive. Your attitude and approach may be the single biggest factor for your success. Do not approach this as a confrontation or a zero sum game, i.e. I win you lose. That will not endear you to your employer. You want your employer to WANT to give you more money. This is a win-win situation. You compensate me equitably and I will make your company better. That’s it. Remember you are still wooing your employer. You don’t want to insult your date when you’re about to share your first kiss. Speak about how excited you are about the opportunity. How wonderful you think the job and the company are. Be specific about what you hope to accomplish. You need to sell the vision of yourself, how wonderful this new marriage will be. This is not a sign of weakness or desperation. Employers want excited new employees.

Sell yourself. This may be obvious, but even though you have been offered the job, you should continue to sell your potential employer on your strengths and value to the company.

Be precise in your terms. Respond with a specific proposal of what would make you sign on the dotted line. Explain where your total comp needs to be for the year, and which areas you are flexible. If you can be flexible on salary in exchange for performance based pay, you have a much better shot of achieving your goal.

Thank your employer for listening, regardless of the outcome. If your demands are met, of course you will thank them. But even if they don’t change their offer at all, you should still thank them. “I understand that you can’t increase your offer, but I appreciate your willingness to hear my request. Thank you.” This acknowledgement demonstrates your professionalism and your employer will notice.

And if you do it right, negotiating your salary may make your employer want you MORE. I once was hiring a product manager who I was only lukewarm to hire. After I gave him my initial offer, he countered with an offer that was pretty far beyond what I wanted to pay. But he kept selling how he was going to impact the company, how perfect his skills were for the position, his competing offers, and he convinced me he was worth it. His negotiations skills were so good, it made me want him more, and he went from a lukewarm hire to a “we gotta have him” hire. I eventually met his compensation requirements and I was glad I did. You can certainly do the same.

When negotiating a new job, everyone wants the highest salary they can get. But most employees do a terrible job negotiating. Many people simply accept whatever salary offer is given. And employees who want more usually do such a poor job that they receive minimal additional compensation. I think 2 issues drive this negotiating ineptitude: fear and lack of know how.

Fear. I get it, you’ve just been through an intensive interview process, perhaps with many companies. The last thing you want to do after you receive a job offer is sour your new employer. But try to see it from your employer’s perspective. They have also endured a lengthy and costly process to find the right person for the job – you. They also don’t want to blow it. And depending upon the position, they may want you more than you want them (even in scary economic times).

Now let’s address the know-how mechanics of the process, or “What to do”:

Acknowledge the Offer
Unless you have a good indication of what the offer is before you receive it, I would not start negotiating the salary immediately after you receive it. The employer has had all the time to formulate the offer and plan. You should give yourself the same time to think about it. Thank the employer for the offer and ask if you can think it over for the afternoon or until the next day. Set up a follow up phone call – this is when the negotiating will happen.

Assess (yourself and the situation)

Is this a fair offer? Why do you want more (other than everyone wants more?)

How much do other employees performing similar work at the company or at competitors earn?

This is where Jobnob salaries come in handy. (Yes, a little self promotion never hurts.)

Can you ask friends or other co-workers who had similar roles what they earn? While you may feel uncomfortable asking, it really does help employees to share their salary information. Employers try to dissuade this behavior, but really only for their benefit. Knowledge is power.

How challenging is it for the company to fill this position? Does this require precise knowledge e.g. SAP Business Warehouse Architect or is this a generic job like customer service rep or marketing coordinator. You’re clearly in a much better position in the former, and may have no negotiation position in the latter.

How banded is the job salary range? This is very company dependent. Small companies usually have much more flexibility in what they can pay, as you may be the only person in this position. This benefits you greatly. Larger companies have very specific salary bands they can pay for a specific role, which can severely limit the hiring manager’s flexibility. But even in these strict cases, there is still a range. You can be at the top end of the range (see the Product Manager salary ranges for over 200 companies).

In part 2, I will discuss compensation strategies and how to ask for more.