Written by: Jillian Climie.
I’ve spent my career inside compensation teams helping companies determine what to pay new candidates and employees. Now, at The Thoughtful Co, I help women negotiate their pay with their employers. Below I’m sharing five common mistakes I see people make when negotiating, in hopes you can avoid them next time you go to ask for more money.
1. Saying too much. We usually have many reasons why we are asking for more money. These can include increases in role scope, a new team structure, market changes, how much value you add to the team, new skills or education you've obtained, and direct contributions you make to key company initiatives. Oftentimes when people communicate these reasons in negotiations, they end up saying them all at once – and it can be very hard to digest. Figure out your rationale, but also do the work to turn that rationale into three clear, impactful points. You can say a lot with a little, and tying to key team or company metrics can help. Three points will stay in someone’s mind, whereas fifteen points may feel important, but the impact can get lost. Practice being clear, concise and direct with what you're asking for, and know when to stop talking. I've seen people asking for something and then talking so much that they almost talk themselves out of the negotiation. Practice when to stop and use silence as a strength.
2. Waiting too long. This is one of the most common mistakes I see, and it impacts people at all levels of their career. We think about asking for more money for months, or even years, before we actually do it. Typically, this means by the time we ask, we are frustrated and almost ready to leave the company if we don’t get the money right away. This is not the best position to be starting a negotiation from, especially when the conversation is with your direct manager or leader. Budget constraints can be real, meaning there can be certain times when your leader may not have any money to allocate to pay increases. If you’re asking at one of those times, when you’re already frustrated, it doesn’t set the stage for a productive conversation. Instead, bring up the ask when you’re first starting to think about it. There will be fewer time constraints and less pressure on the conversation. It allows your leader to review their budget, your compensation structure, and hiring and promotional structures, and come back to you with a plan. Still be clear with your leader about when you’re expecting an increase and follow-up with them so it’s top of mind, but bringing it up sooner can set you up for a better path to a “yes”.
3. Not allocating time and resources. It’s important to understand the gravity of a negotiation. For most of us, at no point in your life will you have the ability to impact your long-term wealth so significantly. Studies have found a difference of $1,000 in your starting salary can mean a cumulative difference of more than $500,000 over your career. Even if you’re not at the start of your career, getting just a little bit more salary can have a large impact over time. Therefore, give yourself the space and time to practice, prepare, and research. One of the main reasons we see negotiations not going well is when the person is not prepared. As I mentioned in my previous article, how you frame the ask matters, especially for women – and that means you have to practice. Additionally, investing in advisors like The Thoughtful Co for compensation negotiation support, employment lawyers for contract reviews, and accountants for tax support may seem like an unnecessary up front cost, but the return on investment is significant. When else can you have such a direct impact to your wealth?
4. Agreeing to an offer in the moment. No matter how much you’re offered real-time in a negotiation, we advise our clients to practice saying, “Thanks for this, I’ll take it away and get back to you.” It is so hard to rationally evaluate an offer when you’re in the middle of a negotiation, especially if there are different elements of compensation at play (salary, bonus, equity, benefits, etc). You might have a positive reaction to a value that’s communicated to you, but then realize you won’t see any payouts from the structure until multiple years down the road. It can be easy to get caught up in the emotion of a conversation and say “yes”, and then be upset with yourself afterwards.
5. Over-focusing on external factors. Negotiating is hard, and to make it easier, it can be tempting to focus on external factors outside of yourself – for example, market data, inflation, or the current economic environment. However, asking for more money is inherently personal. You’re communicating why someone should give you more money, not your team or other employees. When you base your negotiation on external factors, it can mean you’re negotiating for everyone in the company, not just yourself. Focusing on you and the unique value you add is so much more powerful. It makes the person on the other side of the table understand what would happen if they didn’t have you on their team. Focus on your skill-set first, and then use external factors as back up as needed.
Book an introductory call with us at The Thoughtful Co if you’re going through a new job offer, performance review or internal negotiation process – or just want to talk about your compensation with your leader. We help our clients on average achieve a +25% increase in their compensation packages. We would love to see how we can help!