Create leverage to Negotiate salary with HR for higher compensation

How to Negotiate Salary with HR? A Step-by-Step Guide to Master the Art!

November 17, 2023

Learning how to firmly negotiate salary with HR is imperative!

Imagine happily accepting a job offer but regretting it later because now you believe you deserve a better deal.

This might happen because your colleague got a better deal, or the market value of this job role is higher, or your responsibilities exceed your earnings, or some other reason. In any case, powerful negotiation tools can help you secure a job offer with a significant raise & a much better compensation package.

“Our research shows that you will end up losing up to ₹2-4 lakh per annum on a base salary of ₹ 10 lakh if you don’t negotiate.”
~ Soujanya Vishwanath, co-founder, Pink Ladder.

The importance of salary negotiation is clearly known to you, but not everybody utilizes the tools of negotiation in the best way. Therefore, this article will help you visualize what your best package looks like, materialize your bargaining power, build your negotiation package bundle, frame your ask, and reach a Job offer that’s a win-win for both you and your company.

1. How to Strengthen Your Base Compensation Ask?

1. a. Three Anchors of Your Demands:

💡  Three factors ensure you don’t settle for a deal that will frustrate you later. Alternative + Reservation + Aspirations

1. a. i. Alternatives: How to build your BATNA?

What is BATNA?

💡 BATNA Stands for Best Alternative To Negotiated Agreement.

This refers to the other options up your sleeve when the deal does not seem to work out. Hence it helps you materialize your power to walk away from a deal that would not have made you happy anyway.

The term BATNA was coined by Harvard authors, Roger Fisher, and William Ury, in their book, Getting to Yes: Negotiating Agreement Without Giving In.

Step 1:

In your salary discussions with HR, define what you want to achieve.

Example: 30% raise, working close to home, a certain designation, meeting people of influence, rapid advancement in career, etc.

Step 2:

Brainstorm what are the other possible ways of achieving the desired result from the salary negotiation.

  • Do you have another job offer?
  • Are you currently employed?
  • Would you consider taking time off?

Step 3:

Get an official agreement on your plan or have a failproof solution to fall back on. Also, note down the cost & availability of your option.

💡 Note: If a recruiter finds out that you have an offer from a rival firm, he might downplay the firm in an attempt to make your BATNA less appealing to you and get you to agree to a deal.

Step 4:

Identify your counterpart’s BATNA by asking questions.

  • Any connections you have at the hiring firm might also help you identify the firm’s BATNA.
  • You can also ask the recruiter directly how many candidates the firm is considering for the role. But remember, the firm will exaggerate the strength of the firm’s BATNA.

1. a. ii. Reservation: the breakeven point of the deal

Defining a base pay where a “yes” looks as good as a “no”, goes a long way. You know at this point if switching jobs into this company is really worth it or not.

1. a. iii. Aspirations: tying your career jump to your goals

Your long-term career goals should set a benchmark for what you wish to achieve with this deal.

These can be a base percentage of the raise you need, opportunities you wish to explore, or people you want to work with that will lead you to your career goal.

1. b. Elements That Can Be Negotiated In A Job Offer

While salary is an essential element of the job offer, it’s better not to get blinded by salary alone.

Instead, focus on the value of the entire deal: responsibilities, location, travel, flexibility in work hours, opportunities for growth and promotion, perks, support for continued education, and so forth.

  1. b. i. Elements that we can negotiate regardless of company size:
  • Base Pay
  • Variable pay based on performance
  • Perks & Benefits Package: child care, health, and dental insurance, group life insurance, disability insurance, stock benefits, referrals client acquisitions.
  • Job title: the official name of the position you are being offered
  • Paid time off
  • Work location
  • Relocation expense coverage or accommodation costs
  • Learning & upskilling opportunity

  1. b. ii. Elements we can negotiate with Big companies:
  • Career advancement opportunities at the job
  • Car allowance
  • Employee benefits that the specific company offers
  • Signing bonus

  1. b. iii. Elements we can negotiate with Small companies:
  • Coworkers & manager
  • Travel expectations and work hours
  • Job classification & commitment: full-time, part-time, or contractor role
  • Job description & responsibilities: Scope of responsibilities
  • Perks: Tuition reimbursement, professional dues, conference attendance, or continuing education.
  • Networking opportunity

1. c. Prioritize your elements:

Importance of Prioritizing Your Elements

  • Simply mentioning—A, B, C, and D as your demands may not be the best option; the relative importance of each element helps you stay on track. You can list A as the most important, B as the second most important, and so on.
  • This way the recruiter doesn’t end up offering you C & D while chucking out A & B.

Wharton professor, Adam Grant on Business Insider, suggests this is how you can place your preferences: salary can be most important to you, followed by location, then vacation time & signing bonus.

Read about:

How to Tactfully Answer “What are Your Salary Expectations?”

2. How To Figure Out What The Company Needs?

2. a. Identifying what they want:

  • Engage in a genuine conversation about what they are after.
  • Understand the other party’s true needs, desires, fears, preferences, and priorities.
  • Show a willingness to help them resolve whatever issue they have.

Professor Leigh Thompson at the Kellogg School of Business at Northwestern University says that 93% of all negotiators fail to ask these “diagnostic questions” in circumstances where getting them answered would significantly improve the outcome of negotiations.

Questions that you can ask:

  • What are your biggest priorities/goals right now?

Intent: How you can help them attain those goals.

  • What are the current issues that the company is facing right now?

Intent: How you can resolve the issue with the resources or connections you have.

  • What are the types of professional collaborations that may help the company?

Intent: Leveraging your network to present your value.

  • Is there any other open position that you’re finding

hard to fill?

Intent: Helping the company find a suitable candidate through your pool of resources.

  • Apart from my responsibilities, what are the other areas where the company may need assistance in?

Intent: Trying to find other areas where your skills will be an asset to the company.

  • How immediately do you need the position to be filled?

Intent: If you can join sooner, it’s even better for the company.

2. b. Dealing with Middle Men

When there is a Recruiter/HR manager involved, it becomes difficult to move them because they might have a genuine cap on the compensation while not having the essential authority to go beyond it. In that case, you may either imply having a salary discussion with the Recruiter to make a strong case to the authority head.

You may hear something like this:

“The salary on this position is set by HR—I really can’t go up at all.”

Your sample answers for these situations:

  • “I understand exactly where you’re coming from, and what you’re saying makes perfect sense. I’ve spent a considerable amount of time researching the standard salary range for this position. From my perspective, based on my experience level, I do believe that the figure should be a bit higher. Would it be possible for you to share these thoughts with HR and get back to me?”
  • “I definitely understand, and I’m wondering if we might be able to have a discussion with HR about my unique credentials and experience. I’ve done quite a bit in my previous roles that I feel justifies my move into the next salary band.”

3. Bundle Your Compensation Package That’s A Win-Win!

Building a bundle of packages that meets your as well as the company’s interests is called communal packaging.

Sample Package 1

Similarly, you can build 3-4 variations of this that match your situation.

💡 Bonus: While you are negotiating, you can approach the Cases with “If…then…” alternatives, proposing different offerings & asks.

4. Five Boosters To Building Your Bargaining Power in Negotiation

Research the industry standards of pay & aim for the highest. Glassdoor is not the most effective if you are aiming for a well-rounded compensation package, ask your connections and be clear about what they are receiving. How strong is their background relative to yours?

4. a. Bargaining Power Sheet

  1. a. i. Proof of performance or skills you offer:

It’s a one-page summary that shows exactly how awesome you are as an employee. List any accomplishments, awards, and customer or co-worker testimonials (“You saved me when you did XYZ! Emails count as testimonials too!) you’ve received since your last review. You want to demonstrate your value to your boss.

  1. a. ii. The value you bring to the table:

There are 8 types of values that you can bring to the table, which we also discussed in one of our previous articles:

  • Revenue Generation
  • Awareness Increase as Marketing Goal
  • Attracting Customer
  • Happy Customer
  • Company Growth
  • Happy Employee
  • Cost Reduction
  • Process Efficiency

Value beyond company expectations: Apart from your role, what other connections/ relationships/ resources/ influence do you have that can benefit the department or the company you are going to join?

  1. a. iii. Alternatives:
  • Another job offer or your current job can play as an alternative to the job offer.
  • While you use these options as leverage, you should balance that by saying why—or under what conditions—you would be happy to forgo those options and accept an offer.

  1. a. iv. Other factors to leverage on:
  • Geographic location
  • Years of industry experience
  • Years of leadership experience
  • Education level
  • Career level
  • Skills
  • Licenses and certifications

4. b. Time your negotiation pitch

There are three ways you can use the time to your advantage:

1. You can manage multiple offers at hand

  • This can be difficult to achieve but you can try to delay one offer while you are trying to land another.
  • One way you can do this is by asking for a later second or third-round interview.

2. Not disclosing your numbers until the third round of interviews

  • If you have managed to reach the third round, this means the recruiter thinks you’re potentially the right candidate for the job, and your stocks are the highest at this time.

3. Setting a re-evaluation deadline

  • Think not just about how you’re willing to be rewarded but also when.
  • You may decide to chart a course that pays less handsomely now but will put you in a stronger position later.

Read more: How to showcase your achievements better that others?

5. How to leverage your best negotiation moves throughout the interview

Basic Dos and Don’ts of Salary Negotiations

DOs

  • Research online, talk to ex-employees, and understand the company’s objectives and how your role will help it achieve them.
  • Hold off on discussing salary until after the employer has offered you the position.
  • Asking what the typical salary range is for employees in the company with that position
  • Asking what the company's budget is for the role
  • Saying you'll accept any reasonable offer
  • Saying that they're better informed to estimate how much you're worth to the company than you are
  • Always mention that the range you have included is negotiable.

DON’Ts

  • Be the first to suggest a salary or range
  • Settling for the first offer and not negotiating at all
  • Accepting the offer without first asking for time to consider it
  • Not asking for an offer in writing (if one isn’t naturally provided)
  • Treating the HR negotiation as more of an ultimatum than a compromise
  • Requesting the salary you need instead of the salary the position merits
  • Raising negotiation points one after another instead of consolidating them

5. a. Interview Stage 1

The salary negotiation starts with the first interview. The interview is all about building your bargaining power by showing that you are ideal for the role.

Employers generally ask for your last salary and give you a 15-35% hike on it. It is advised that you do not answer this question in the first round of interviews.

APPROACH 1: Putting off the salary discussion

  • “I’d like to learn more about the company and culture before discussing salary.”
  • “I feel as though it’s a little early in the process to talk about salary requirements.”
  • “Let’s revisit the salary question later. I want to make sure we both feel like I’m a great fit for the organization first.”

APPROACH 2: Answering when you must

  • Focus on Market Value
  • Give your current number (including benefits, bonuses, and the like) and then quickly move the conversation along to explain the number you’re looking for.
  • Focus on explaining your new skills or responsibilities, your market value, and how you’re looking to grow, explains Victoria Pynchon, the Founder of She Negotiates, Consulting & Training.

5. b. Negotiation Stage: How to present your stance for higher compensation:

  • State why you deserve this with the experience of value you bring to the table.
  • State how you will help the company reach its goals.
  • Ask for suggestions:
  • “What are your suggestions with which we can reach my Priority A?”
  • “What alternatives do you suggest to my Priority C, that will be feasible for both the company & me?”
  • Sample answer (Toggle to view)
  • Before I can accept your offer, I want to address the proposed compensation. As I shared with your recruiting manager, I have more than ten years’ experience in digital marketing and have worked in leadership positions for the past six years. In my last role, I increased the number of marketing influenced leads by nearly 40 percent year over year and helped the company secure 25 percent higher annual revenue. Given my experience and expertise, I am seeking an annual salary in the range of INR 8,50,000 to INR 10,00,000, which is slightly higher than your offer of INR 8,00,000.
  • I know I can bring a great deal of value to ABC Company and help you exceed your revenue expectations this year.

  1. b. i. When your prospective employer refuses to accept your offer:

Instead of letting your recruiter reach a dead end, shift the discussion with genuine questions:

  • “I am open to discussing alternative compensation such as increased performance-based bonuses. What are your suggestions on this?”
  • “Seems like that took you by surprise. Tell me more…”
  • “What is the budget for this position based on?”
  • “How can I help you move more in my direction?”
  • “I can see how that might be difficult, given where we are today. Perhaps we can talk about X, Y, and Z.”

  1. b. ii. When you lack proof of performance but you’re confident enough:

  • You can join at a minimal raise or 0% raise.
  • Explain that you are confident of your performance and you’d like a re-evaluation at a deadline (3 to 6 months into the role).
  • Sample cases: (Toggle to view)
  • If the employer is willing to give 6% raise with a re-evaluation discussion at the end of 6 months, you can counter the offer with a 7% raise and re-evaluation after the end of 8 months.
  • If work-from-home or fewer work from office-days were a criterion, six months in, you’ll probably be in a better position to persuade the employer that you’ll work conscientiously away from the office.

Tips for Salary Negotiation after Performance Review

  • Present proof of accomplishments made at the organization.
  • Provide HR with a pre-determined figure
  • Talk about your positive impact on other team members
  • Include positive testimonials from executive managers, team leaders, and supervisors.
  • Upskill and exceed initial expectations
  • Remember your worth during salary negotiation with HR.

  1. b. iii. Negotiating at your current role:

Do not approach the issue with the mindset “I deserve this…”

  • Recommended approach when there has been an increase in responsibilities.

‘I really enjoy working here and find my projects very challenging. In the last year, I’ve been feeling that the scope of my work has expanded quite a bit. I believe my roles and responsibilities, and my contributions have risen. I’d like to discuss with you the possibility of reviewing my compensation.’

  • Recommended approach when there has not been an increase in responsibilities.

‘I am really enjoying working here and I intend to stay for a longer term. I was hoping to discuss the possibility of reviewing my compensation and the next steps I can take to meet the expectations of the company, that will get us to an agreement.’

5. c. Anticipating & preparing for tough questions

Question: Do you have any other offers?

  • Example 1: (When you’re only interviewing with the current company)
  • “I’m still appealing early in my job search. I’ve applied to a number of job opportunities that will let me use my skills in data therapy to help teach clients, but this position is most exciting to me. I think this job position is a mainly good fit for my skill set because I can influence my important experience working with complex data sets.”

  • Example 2: (When you’re interviewing in other Industries)
  • “I’m really happy to be under deliberation for your role and look forward to the final steps and preferably receiving an offer. I wanted to inform you that I’m also interviewing with another company and have received an offer from them.
  • They are looking for an answer as soon as possible, so I wanted to know what you’re timing looks like and what extra steps need to follow to get to the offer stage?”

Question: If we make you an offer tomorrow, will you say yes?

  • Example:
  • “I’m extremely interested, although, I’d of course want to look over the offer.”

Question: Are we your top choice?

  • Example 1:
  • “Yes, because I can use my A, B, and C skills and get a chance to work on D and E as I have always wanted to. I know we haven't talked specifics on money yet but I'm confident we'll be able to find a number where we're both happy.”

  • Example 2:
  • “Well, there are several great opportunities available to me, and this job is definitely one that I want, because [rest of the yes answer].”

💡 Pro-tip: Practice your interview questions beforehand, with an acquaintance ideally working at the same position, you are eyeing. Don’t know where to find them?

Click here: https://bit.ly/3M5zjYt

6. Ending The Negotiation Right!

6. a. Closing the discussion

  • Conclude the discussion by expressing your commitment to making the offer work.
  • Review the details and ensure you have gathered all necessary information.
  • Provide a "respond by" date and stick to it.
  • Allocate sufficient time for making a decision to ensure it aligns with your goals.

6. b. Accepting the offer

  • Show gratitude for the offer in a follow-up email after the discussion.
  • Review and confirm the terms of the job offer letter.
  • Send an acceptance agreement within 24 hours of closing the deal.
  • Seek information from the recruiter or hiring manager about the next steps.

6. c. Rejecting an offer elegantly

When declining an offer, do so promptly and professionally:

  1. Send a clear and non-emotional message.
  2. Thank the hiring manager for their time and consideration.
  3. Provide a professional but non-specific reason.
  4. Offer to stay in touch for future opportunities.

💡 Despite your strong background, the company may not be able to compensate you fairly for your time. In those situations, it is alright to let the opportunity slide and welcome bigger opportunities.

One way to lead yourself towards handsomely compensated packages is to have a network that pushes your name for gem career openings.

We have been doing this for 100s of candidates at Sparklehood. We are a community of Top 2% professionals, where growth leaders support each other with top professional advancements. With professional growth in Sparklehood, Building credibility as a senior leader has become easy and possible!

Visit: Sparklehood