How many times have you attempted to negotiate your salary package before saying ‘yes’ to a job that you desperately wanted? Chances are, like plenty of women, you simply said “thanks, I’ll take it” without any discussion or further thought about the salary you have just been offered.
According to a study by Linda Babcock, author of Women Don’t Ask, 7% of women attempted to negotiate their salary package when offered a new job. By comparison, over half of men, 57% in fact, will attempt to negotiate their starting package.
Although negotiating your salary feels awkward at the best of times, it can make a lifetime of difference to your personal wealth and quality of life. In fact, attempting to negotiate your salary before starting a new job can mean the difference between reaching your retirement goals or having to spend additional years in the workforce.
Think of it this way. If negotiations would have resulted in a starting package worth an additional $7,000 in your first year, then over a 35-year career you will have missed out on the equivalent of 8 years worth of salary that you could have earned had you negotiated the higher wage. This is because your starting salary is the base rate against which all future wage rises are leveraged. Pay rises compound over your lifetime and in the end, a small difference in your starting salary will make an enormous difference over the length of your career.
While institutional sexism does affect wage differences between men and women, there are steps that women can take to actively close this gap, starting with pre-contract negotiations.
To do this you need to negotiate early and you need to negotiate effectively.
Start by doing your research and having a plan before you go into your final interview. Do background research to determine what salary levels are in your line of work, taking into account the field or industry you are in and your level of experience.
Use your network of associates for insights into the company’s culture, goals and ambitions. During negotiations, be clear about how you can help your prospective employer achieve its desired outcomes or make your new boss’ life easier
Get the employer to make the first offer and then package up your counter offer, emphasising the communal benefits (ie what’s in it for them?).
Broaden your definition of salary negotiations. Do not fall into the trap of restricting negotiations to an annual wage figure. Consider some of the following:
- A higher rate of superannuation contribution. Do they offer the standard rate and can you negotiate for more to boost your overall package?
- Employee share plans. If one isn’t on offer, would they consider it. Ensure there is a genuine benefit to any such plan or else it is worthless to you.
- Salary sacrificing possibilities. Can you tie your salary to a sacrificing program such as a car leasing program or income protection? This can add great value in real terms.
- Sign on bonuses and vacation days. Particularly during difficult economic times (such as these) it can be easier to gain a one-off signing bonus or additional vacation days than an ongoing higher salary.
- Ongoing education and study support. If you have it in mind to do your Masters or some additional training, perhaps your employer will agree to your education fees (which can be as high as $40,000 for a complete Masters degree). Be sure to emphasise the benefit to the company from your additional expertise.
- KPIs. If your offer includes a bonus tied to KPIs, ensure your KPIs are aligned with those of the company and senior managers. Also ensure they are reasonable and achievable.
Most importantly, don’t be afraid to ask.Even if you were selected from a large pool of candidates and competition was fierce, the company is unlikely to withdraw their offer of employment. If the pool of candidates was small, then you will have even more bargaining power.
Before you start your new job is the very best time to negotiate. Don’t let the excitement and adrenalin over take you. This is a business deal for your services which can seriously affect the remainder of your life so take your time before saying ‘yes’.