Written by: Jillian Climie.
As women, we find many ways to talk ourselves out of negotiating our compensation. The three most common reasons that I hear are: 1) I just felt lucky to get the job so I didn’t feel that I needed to negotiate, 2) I wanted to prove myself first before asking for more money, and 3) I didn’t want to come off as aggressive so I decided to wait for the right moment.
The “right” moment unfortunately is unlikely to come, as asking for more money often feels awkward, especially given we are socialized to be agreeable and likable. However, instead of continuing to delay negotiating, we have to start asking for the compensation that we deserve, when we deserve it. This article outlines the importance of negotiating now, and how delaying it can be detrimental over the long-term.
Why it’s better to ask for money now versus later
1. Compensation typically works in percentage increases. The hiring manager or Human Resources team that is determining an increase in your salary for a promotion, new role or other adjustment will most likely use a percentage increase (for example, a 12% increase in salary). Therefore, every dollar you don’t negotiate for now has a multiplying effect in the future, as you are losing out on many future percentage increases on that additional dollar over time. Even asking for a small amount now can have a material impact on your future wealth. Studies have found a difference of $1,000 in your starting salary could mean a cumulative loss of more than $500,000 over your career.
This also means that your starting salary in a new role is important, as it’s the base for all future increases. It's the anchoring point for your current employer, any future employers, as well as for you and how you value yourself. So while you might not want to negotiate that new job offer, understand the significance of it in how your compensation will play out over the long-term.
2. You realize it’s not as bad as you thought. We can often build up negotiating into a negative event in our heads. We stress about it until it doesn't seem worth it. Really, once you do it, you realize it’s not that bad. It’s a part of your manager’s (or hiring manager’s) job – this is not the first time an employee has asked for more money and it will not be the last time. If you’re negotiating with someone in Human Resources, this is likely a part of their every day.
I’ve had many clients who have been ecstatic after their first negotiation, regardless of the outcome in dollars, as they no longer feel nervous to negotiate in the future. They realize it's part of an employee-employer relationship, and almost always wish they had done it sooner. Know that negotiating does not need to be an aggressive, negative experience; it can actually strengthen your relationship with your manager (see my article here on why asking for more money doesn’t need to be negative).
3. You will get better at it over time. Negotiating is a skill that you can get better at over time through practice and experience. The first time is usually the hardest as it’s new and uncertain, but the more you do it, the easier it will become. You will learn what you need to do in advance of a negotiation to make sure you feel completely prepared going into it. You will know where you may and may not have flexibility to negotiate with your employer, and what data you need to gather in advance. And you will start building confidence in your ability to negotiate, which in turn will make you even better at it.
4. Time value of money. This is a financial concept that essentially means having a certain amount of money now is better than having that same amount of money at some point in the future. The rationale is you can invest that money now, meaning it can be worth more in the future from the investment gains you make on a compounded basis. Alternatively, taking that money at a later point means you are missing out on those potential investment gains. This concept may or may not impact you in practice right now depending on if and how much you invest, but it could in later years.
5. If you don’t ask for it, you most likely will not get it. I believe that most companies try to pay their employees fairly. However, doing this in practice can be a lot of work – proactively keeping up to date on what the market is paying for specific roles in specific industries, proactively thinking about employee performance and when they may be undervalued, proactively ensuring promotions are occurring at the right time, etc. While many of us believe we will receive increases to our compensation or benefits right when they are warranted, this often doesn’t happen. Unfortunately, you typically have to prompt the reviews or discussions instead of your employer. That is why asking sooner is important; the further you delay and hope for others to come to you, the more frustrating it can get. Additionally, compensation increases can take time to implement based on budget or resource constraints, so asking right away will get the process started earlier.
6. You share your wisdom with others. Once you negotiate, you will see the positive impact it can have. So many of my clients are excited about this new learned skill and are eager to share with their friends or networks. This is crucial, as it creates a knock-on effect for women everywhere. It can help us to stand up for what we deserve and start to close the gender pay gap (which still sees women with full-time jobs making 84% of what their male counterparts earn). The sooner we do this, the better.
While we can always find excuses to delay asking for more compensation or benefits, it’s important to understand the impacts of pushing it off. If you need support in getting prepared for negotiating your compensation, please reach out to us at contact@thethoughtfulco.net – we would love to help.